GST Compliance: Everything That You Must Know

GST Compliance: Everything That You Must Know

Major tax reform in the country has been ushered in by implementing the new GST tax system. The new system combines federal, state, and local taxes into a single, fungible tax. This needed improvement in reduced administrative red tape and improved tax collection system transparency. Since its implementation, the new system has benefited most small and medium-sized firms that depend on technology to handle online tax filing and registration. Businesses must continue to comply with the new GST compliance rating requirements, and all enterprises must follow the government-imposed guidelines for GST compliance.

What is GST Compliance?

All taxpayers registered for the Goods and Services Tax (GST) must abide by its laws and norms. The government has established the GST compliance rating, in which taxpayers are assigned a compliance rating score, to track how firms adhere to the GST compliance checklist. The compliance grade may have a broader effect, influencing anything from tax refunds to supplier partnerships. The main goal of introducing the GST compliance rating is to inspire taxpayers to be compliant and submit GST returns on time.

The GST compliance rating is scored on a scale of 0 to 10, where 10 is the highest and 0 is the poorest. According to the GST Act, anyone registered for GST may receive a score from the government. Every taxpayer will begin on an even playing field, according to the GST Network (GSTN), and will then be graded depending on how consistently they comply with GST moving forward.

What is the GST compliance rating?

The government will rate the company's compliance with the GST so that other companies may know how compliant they are with the tax department. This GST compliance rating will be determined by factors including timely submission of monthly and yearly reports, providing information about input credits used, taxes paid, etc.

These ratings will be updated regularly, and the specifics will be made available to all firms in the public domain. As a result, small companies can select the vendor that complies with GST the most for their operations.

What is the GST ecosystem?

All State/UT Commercial Tax departments, Central Tax authorities, Taxpayers, Banks, and other stakeholders would be connected through a uniform GST system. Every player is a part of the GST ecosystem, from the taxpayer to the tax expert to the tax office to the GST site to the banks to the accounting authorities.

GST Registration Compliance

The registration of GST is the primary step. On the website, the registration process may be finished online. Although the procedure is rather simple, there are a few considerations to make to remain compliant. Based on a company's yearly revenue, GST registration compliance is necessary.

  • Applicable to companies dealing with commodities provision and have annual sales of more than Rs. 40 lakhs.
  • Applicable to companies who provide services and have a revenue of more than Rs. 20 lakhs in the last fiscal year.

Businesses under the yearly sales threshold must register for GST and comply with other GST regulations. The CBIC, or Central Board of Indirect Taxes and Customs, has enforced significant fines for disregarding the GST registration requirements. A fee of Rs. 100 per day would be assessed as the punishment for tardiness. An additional delay in GST registration will result in a Rs. 200 penalty. According to the CGST Act's non-compliance recommendations in Section 122, these penalties are appropriate. We have some of the Best Chartered Accountants in Bangalore on our team who can guide you through the GST registration process.

Tax Invoice Compliance

Businesses with GST registrations must follow the invoicing compliance requirements to transfer the input tax credit. Businesses must create a proforma invoice for every sale of products or services as part of their standard operating procedures. The tax invoice compliance must comply with the requirements by having the following elements.

  • Invoice number and date
  • Shipping and billing address
  • Customer name
  • Customer and taxpayer's GSTIN
  • HSN code (Harmonised System of Nomenclature/ SAC Code (Services Accounting Code)
  • Place of supply
  • Item details,i.e., description, quantity, unit, the total value
  • Rate and amount of taxes
  • Taxable value and discounts
  • Signature of the supplier
  • Whether GST is payable on a reverse charge basis

All the things must be stated on the GST invoice for a firm to comply with the requirements of invoicing compliance. If a GST invoice is not sent or is incorrectly invoiced, a penalty of up to Rs. 10,000 or 100% of the tax owing (whichever is larger) will be assessed.

GST Return Compliance

Every registered business must submit monthly, quarterly, and annual returns. The sort of company activity has the biggest impact on how often returns are made. The GST website's Returns area is where the GST return compliance must be submitted online. Our GST advisory can help you fill out the forms needed to file GST Returns that are listed below:

  • GSTR-1 is a return where details of sales are filed with the government. No tax will be due after submitting this return.
  • GSTR-3B is a streamlined return to disclose a tax period's total GST obligations. It must be self-declared each month to provide an overview of all outgoing supplies made, claimed input tax credits, determined tax liabilities, and paid taxes. All taxpayers who are GST compliant should submit it.
  • The GSTR-9 return, which includes information on supplies received from inbound purchases made during the prior year under various tax heads as well as information on taxes owed and paid, is annually submitted by taxpayers subject to the GST, having a turnover of over Rs. 2 Crores in the prior fiscal year. It is a compilation of all the GSTR-1, GSTR-2A, and GSTR-3B returns submitted monthly or quarterly throughout that year.


Understanding the need to be GST compliant is crucial for you as a business owner, but that knowledge is insufficient; you also need to grasp what it takes to become compliant in the first place. At Manoj Kumar D & Associates, we highly recommend being GST-compliant. We can assist you with the GST registration process. Hire our experts for a speedy service. Our highly experienced consultants can help meet your business requirements professionally.

Frequently Asked Questions

How do I check my GST compliance?

When a business registers, a GSTIN is given to the owner (Goods and Services Tax Identification Number). You may track your GST compliance rating using this number.

What is GST non-compliance?

GST non-compliance refers to the following instances:

  • Failing to keep track of the products for which one is required to pay taxes.
  • Providing or receiving commodities violates laws or regulations to avoid paying taxes.
  • Selling any taxable items without first registering.

What is the compliance after the GST registration?

A business that registers for the Goods and Service Tax needs to submit revised invoices for the time frame starting on the registration's effective date and ending on the certificate's issue date.

Who is eligible for GST No?

The Goods and Services Tax Act of 2017 mandates that any firm with a turnover of at least Rs. 40 lakhs register for GST.

What is the GST penalty?

According to Section 125 of the CGST/SGST Act, anybody who violates any provision of the Act or any regulations adopted under this Act for which no specific penalty has been imposed shall be subject to a fine of 10% of the tax amount, up to a maximum of 25,000.

What is rule 7 of GST?

Rule 7 of GST states:

Sl. No. Category of registered persons Rate of tax
(1) (2) (3)
1 Manufacturers, except those of items that the government may have notified 0.5% of the total revenue in the State or Union territory
2 Manufacturers of the supplies listed in clause (b) of Schedule II's paragraph 6 2.5% of the total revenue in the State or Union territory
3 Any additional supplier qualified for the composition levy under Section 10 and the rules set out in this Chapter 0.5 percent of the total turnover of [goods and services] supplied taxable in the State or Union territory]

Is GST required below 20 lakhs?

The GST laws specify that any turnover up to Rs. 20 lakh is entirely exempt from GST, along with Rs. 10 lakhs for special category states like Jammu and Kashmir, which is entirely exempt from registration. Any turnover exceeding these amounts, however, must be registered.

What are the 21 Offences under GST?

The GST legislation outlines stringent punishment criteria and 21 offences for Indian taxpayers to follow to guarantee seamless intrastate or interstate trade of products, reduce corruption, and create an effective system for tax collection.

Is GST required for small businesses?

GST is not applicable for small businesses having a turnover of fewer than 20 lakhs.