GST Mistakes That Can Cost You Crores – How to Stay Compliant

GST compliance is not just about filing returns—it’s about filing them correctly and on time. Even small errors in GST filings can lead to penalties, interest, and unnecessary scrutiny. Businesses that fail to comply with GST rules often end up paying lakhs, or even crores, in fines.

Inspired by The Tax & Legal Playbook, this article highlights common GST mistakes and how to avoid them.

Top GST Mistakes Businesses Must Avoid

1. Wrong ITC Claims

Input Tax Credit (ITC) helps businesses reduce their GST liability, but claiming ineligible ITC can result in:

• Heavy penalties and interest charges

• Reversal of ITC with added liabilities

• Increased scrutiny and possible legal action

To avoid this, ensure that ITC is claimed only on eligible expenses, backed by proper invoices and documentation.

2. Late Filing of Returns

GST return deadlines are strict, and missing them leads to:

• Interest on delayed tax payments

• Late fees accumulating over time

• Increased risk of GST audits

To stay compliant, businesses must set up a GST filing schedule and ensure timely submission of returns.

3. Mismatch in GSTR-1 & GSTR-3B

Discrepancies between GSTR-1 (outward supplies) and GSTR-3B (summary return) often trigger:

• GST notices and demand for clarifications

• Risk of tax liability adjustments

• Additional compliance burdens

Businesses should reconcile GST data regularly to ensure both returns match.

4. Not Updating HSN/SAC Codes

Using incorrect HSN (Harmonized System of Nomenclature) or SAC (Service Accounting Code) codes can lead to:

• Charging incorrect GST rates

• Incorrect tax calculations and liabilities

• Penalties for non-compliance

It’s crucial to keep up with the latest GST rules and apply the correct tax rates for goods and services.

Lesson: Compliance is More Than Just Filing Returns

GST compliance goes beyond return filing—it’s about accuracy, timely submissions, and proper documentation. Businesses must ensure:

✔ ITC claims are valid and well-documented 

✔ Returns are filed before deadlines to avoid penalties 

✔ GSTR-1 and GSTR-3B are reconciled correctly 

✔ The right HSN/SAC codes and GST rates are applied

Want to Avoid GST Errors and Ensure Compliance?

A small mistake in GST can lead to major financial losses. Reviewing filings regularly and seeking expert advice can help businesses stay compliant and penalty-free.