GST & MSME Compliance: A short overview of the Common Mistakes

1. Payment to Vendors Within 180 Days:
If payment to your vendor isn’t made within 180 days of the invoice date, you must reverse the ITC utilised in the GSTR-3B of the due date immediately following.
Important distinction:
• ITC availed: Credit available in your electronic ledger but not yet used.
• ITC utilised: Credit actually used to pay output liability.
• Reversal is required only for ITC utilised, not availed.

2. Payment to MSME Vendors:
Payments to MSME vendors must be made within 15 days, not 45 days!
The 45-day limit applies only if there’s a formal agreement between the buyer and the MSME. The non compliance attracts liability under MSME Act as well as disallowance under the Income Tax Act – 1961 under section 43B(h).

3.  E-Way Bill Requirements:
An E-Way Bill is required for consignments valued at ₹50,000 or more (including GST).
Special Cases- Required:
• Interstate movement of goods by principal to job worker.
• Interstate supply of handicrafts.
Even if the taxable value is below ₹50,000, adding GST can push it past the threshold, making an E-Way Bill mandatory!

4. GSTR-2A vs GSTR-2B:
• GSTR-2A: Dynamic and changes as suppliers upload invoices.
• GSTR-2B: Static and auto-generated by the 14th of each month, reflecting outward supplies filed until the 13th.

Why the 13th?
Under the QRMP Scheme for taxpayers with turnover up to ₹5 crore:
• GSTR-1 is filed quarterly.
• For the 1st and 2nd months of the quarter, taxpayers can share invoice details via the Invoice Furnishing Facility (IFF) until the 13th of the next month, enabling buyers to claim credit.

5. TDS Under GST:
When supplying goods to Central/State Government, local authorities, or government agencies worth ₹2,50,000 or more, TDS @ 2% will be deducted.