Goods and Services Tax (GST) is one of the most significant tax reforms in India. Whether you run a small shop or a large company, understanding your GST obligations prevents costly penalties and legal trouble.
Who Must Register for GST?
GST registration is mandatory if:
- Your annual turnover exceeds Rs. 40 lakhs (goods) or Rs. 20 lakhs (services) — lower limits apply in special category states
- You make inter-state supplies (regardless of turnover)
- You sell through e-commerce platforms (regardless of turnover)
- You are a casual taxable person or non-resident taxable person
- You receive supplies on which reverse charge applies
Voluntary Registration
Even if your turnover is below the threshold, voluntary registration can be beneficial — it lets you claim input tax credit and improves your credibility with larger buyers who want to claim ITC.
Types of GST
- CGST – Central GST, collected by the central government
- SGST – State GST, collected by the state government
- IGST – Integrated GST, levied on inter-state supplies; shared between centre and states
GST Returns You Must File
- GSTR-1 – monthly/quarterly outward supply details
- GSTR-3B – monthly summary return and tax payment
- GSTR-9 – annual return
- GSTR-9C – reconciliation statement (for turnover above Rs. 5 crores)
Input Tax Credit (ITC)
ITC allows you to offset the GST you paid on purchases against the GST you collect on sales. Proper invoice management and timely filing are essential to claim ITC correctly.
Common GST Penalties
- Late filing: Rs. 50 per day (Rs. 20 for nil returns) up to Rs. 5,000
- Tax short-paid: 10% of tax due (minimum Rs. 10,000)
- Tax evaded with intention to defraud: 100% penalty
- Wrongful ITC claim: 100% penalty
GST Department Notices and Audits
If you receive a GST notice (ASMT-10, DRC-01, or scrutiny notice), respond within the deadline with proper documentation. Do not ignore notices — non-response leads to ex-parte assessment. A tax advocate or GST practitioner can draft responses and appear before GST authorities on your behalf.
E-Invoicing
Businesses with turnover above Rs. 5 crores must generate e-invoices on the GST portal for every B2B supply. Non-compliance means the supply is treated as if no invoice was issued, and the buyer loses ITC.