Compliance under GST Regime - Returns & ITC Matching

GST, which stands for Goods and Services Tax, is a comprehensive tax system implemented in India to replace several indirect taxes. It has brought in a lot of changes in the way businesses operate in the country, and one of the biggest changes is the compliance requirements. In this article, we will take a look at the compliance requirements under GST regime with a specific focus on Returns and ITC matching.

What are GST Returns?

GST returns are the periodic documents that a registered taxpayer is required to file with the Indian tax authorities. These documents contain information about the taxpayer's sales, purchases, and tax liability for a particular period. GST returns are mandatory for all registered taxpayers, irrespective of whether they have made any sales or purchases during the period.

Types of GST Returns

There are various types of GST returns that a registered taxpayer needs to file. These returns have to be filed on a monthly basis or a quarterly basis, depending on the turnover of the taxpayer. Some of the important GST returns that a registered taxpayer needs to file are:

GSTR-1: This return contains details of all outward supplies made by the taxpayer during the period.
GSTR-2: This return contains details of all inward supplies made by the taxpayer during the period.
GSTR-3: This return contains details of the taxpayer's tax liability for the period.
GSTR-9: This is an annual return that contains a summary of all the GST returns filed during the financial year.

What is ITC Matching?

Input Tax Credit (ITC) is one of the key features of GST. It means that a taxpayer can claim a credit for the tax paid on purchases while calculating their GST liability. However, to claim ITC, the taxpayer needs to ensure that the details of their purchases match with the details of the supplier's sales.

ITC matching is an important compliance requirement under GST. It is done to ensure that the taxpayers are claiming the correct amount of ITC and that there is no tax evasion. The GST portal matches the details of the taxpayer's purchases with the details of the supplier's sales. If there are any discrepancies, the taxpayer needs to rectify them before the due date of filing the return.

Consequences of Non-Compliance

Non-compliance with GST return filing and ITC matching requirements can result in various penalties and fines. Some of the consequences of non-compliance are:

Penalty for late filing of returns
Interest on the amount of tax payable
Penalty for incorrect details in returns
Disqualification from claiming ITC
Prosecution for tax evasion

Conclusion

Compliance with GST return filing and ITC matching requirements is essential for every registered taxpayer. Non-compliance can result in severe penalties and fines. Therefore, it is important for businesses to ensure that they file their returns on time and accurately match their purchases with their suppliers' sales.