The governing legislation comprises the Central Goods and Services Tax Act, 2017, the State GST Acts, the Integrated GST Act, 2017 and the rules, notifications and circulars issued under them. The rate structure has been rationalised through GST Council decisions from time to time, so the applicable rate for each supply should be confirmed against the current schedule and the correct HSN or SAC classification.

Two features drive almost all compliance work in practice: input tax credit flows only where the supplier has actually reported and paid, and the return system is largely auto-populated and time-barred, which leaves very limited scope for later correction.

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GST Registration: Who Must Register

Turnover-based registration. Registration becomes mandatory once aggregate turnover in a financial year crosses the prescribed threshold. The threshold differs for suppliers of goods and suppliers of services, and lower thresholds apply in the notified special category States.

Compulsory registration irrespective of turnover. Registration is required regardless of turnover in several situations, including:

• Persons making inter-State taxable supplies of goods
• Casual taxable persons and non-resident taxable persons
• Persons liable to pay tax under reverse charge
• E-commerce operators required to collect tax at source, and specified suppliers supplying through them
• Persons required to deduct tax at source under the GST law
• Input Service Distributors
• Agents supplying on behalf of other taxable persons
• Persons supplying online information and database access or retrieval services from outside India to unregistered recipients in India

Types of registration. Regular taxpayer, composition dealer, casual taxable person, non-resident taxable person, Input Service Distributor, TDS deductor, TCS collector, and SEZ unit or developer. Each has its own return set and compliance rhythm.

State-wise registration. GST registration is State-specific. A business with premises in multiple States requires separate registration in each, with separate returns, separate credit ledgers and separate compliance calendars.

Composition scheme. Available to eligible small suppliers within the prescribed turnover limit, with tax payable at a concessional rate on turnover. The trade-off is significant: no input tax credit, no tax invoice, no inter-State outward supplies of goods, and the buyer cannot claim credit either.

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The Return Cycle

For regular taxpayers

• GSTR-1 — statement of outward supplies, filed monthly, or quarterly under the QRMP scheme with the Invoice Furnishing Facility available for the first two months
• GSTR-3B — summary return with payment of tax, filed monthly or quarterly under QRMP, with tax paid monthly through the prescribed challan
• GSTR-2B — auto-generated static statement of input tax credit available for the period, which is the basis on which credit must be reconciled before filing
• Invoice Management System — the facility to accept, reject or keep pending inward invoices before they flow into the credit statement, where applicable

For other categories

• CMP-08 and GSTR-4 — composition taxpayers
• GSTR-5 and GSTR-5A — non-resident taxable persons and OIDAR service providers
• GSTR-6 — Input Service Distributors
• GSTR-7 — persons required to deduct tax at source
• GSTR-8 — e-commerce operators collecting tax at source

Annual

• GSTR-9 — annual return, required where aggregate turnover exceeds the prescribed limit
• GSTR-9C — self-certified reconciliation statement, required above a higher prescribed turnover limit

Important practical points

• Returns cannot be filed out of sequence; a pending earlier return blocks later filings
• GSTR-3B is progressively being hard-locked to auto-populated figures, which makes accuracy in GSTR-1 and in credit reconciliation critical before filing
• Continuous non-filing can lead to suspension and cancellation of registration
• There is an outer time limit beyond which returns cannot be filed at all

Due dates, thresholds and return formats are amended frequently through notifications. The position applicable to your registration and period should always be confirmed.

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Input Tax Credit: Where Most Money Is Lost

Input tax credit is the single largest compliance risk in GST, because the conditions are cumulative and the deadlines are absolute.

Conditions for claiming credit (Section 16)

1. Possession of a valid tax invoice or prescribed document
2. Receipt of the goods or services
3. The supplier has reported the supply, and the credit appears in the recipient’s auto-generated statement
4. The tax has actually been paid to the government by the supplier
5. The recipient has furnished the relevant return

Additional requirements

• Payment must be made to the supplier within the prescribed period, failing which the credit is reversed with interest and can be reclaimed on payment
• Credit must be claimed within the time limit prescribed for the financial year — broadly, by the return for a specified month following the end of the year or the date of filing the annual return, whichever is earlier

Blocked credits (Section 17(5)) Credit is not available on specified items, including motor vehicles below the prescribed seating capacity except in defined cases, food and beverages, outdoor catering, health services, club and fitness memberships, works contract and construction of immovable property on own account except plant and machinery, goods lost, stolen, destroyed or given as free samples, and tax paid under specified demand provisions.

Apportionment and reversal Where inputs are used partly for business and partly for other purposes, or partly for taxable and partly for exempt supplies, credit must be apportioned and reversed as prescribed under the rules, with an annual recomputation.

The practical discipline Reconciliation of purchase records against the auto-generated credit statement — every month, before filing, not at year-end. Differences must be traced to the supplier and followed up while the correction window is still open.

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E-Invoicing and E-Way Bills

E-invoicing. Applicable to businesses whose aggregate turnover exceeds the notified threshold, which has been lowered in stages. Covered businesses must generate invoices through the Invoice Registration Portal to obtain an invoice reference number and QR code. An invoice not registered where e-invoicing applies is not a valid document, which puts the recipient’s credit at risk. Time limits apply for reporting invoices to the portal for certain categories of taxpayers.

E-way bills. Required for movement of goods where the consignment value exceeds the prescribed limit, generated before movement begins, with validity linked to distance and provision for extension and updating of vehicle details. Discrepancies between the e-way bill, the invoice and the goods in transit are a frequent cause of detention, tax and penalty proceedings.

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Reverse Charge, Place of Supply and Exports

Reverse charge mechanism. In notified cases, the recipient rather than the supplier pays the tax — including import of services, specified goods and services, and supplies received from unregistered persons in notified categories. Tax must be paid in cash, not by using credit, and credit of the tax so paid is available subject to the usual conditions. Self-invoicing requirements apply in specified cases.

Place of supply. These provisions determine whether a supply is intra-State or inter-State, and therefore whether CGST and SGST or IGST applies. Errors here are expensive: tax paid under the wrong head must generally be paid again under the correct head and refunded separately.

Exports and SEZ supplies. Zero-rated supplies may be made either under a Letter of Undertaking without payment of tax, with refund of accumulated input tax credit, or on payment of IGST with subsequent refund. The Letter of Undertaking must be renewed for each financial year. Export documentation, shipping bill and bank realisation records must align with the returns.

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Refunds

Common refund situations include accumulated credit from zero-rated supplies, accumulated credit on account of an inverted duty structure, excess balance in the electronic cash ledger, tax paid on supplies later found not to be a supply, deemed exports, and refunds arising from appellate orders.

Refund applications are time-barred, require prescribed documentation and statements, and are frequently issued with deficiency memos where documentation is incomplete. Provisional refund is available in specified cases, and interest is payable where sanctioned refunds are delayed beyond the prescribed period.

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Notices, Scrutiny and Audits

Businesses commonly encounter:

• Scrutiny of returns, with discrepancies communicated for explanation
• Notices seeking information or clarification, including on registration, refunds and mismatches
• Demand proceedings for tax not paid, short paid, erroneously refunded, or credit wrongly availed — with different limitation periods and penalty consequences depending on whether fraud or suppression is alleged
• Departmental audit of a registered person’s records, and special audit in specified cases
• Inspection, search and seizure, and detention of goods in transit
• Registration suspension or cancellation for continued non-filing or other specified defaults, with a time-bound revocation process

Timely, well-documented replies matter enormously. Most escalations begin as a routine mismatch that was answered late, answered incompletely, or ignored.

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Interest, Late Fees and Penalties

• Interest on delayed payment of tax, and on wrongly availed and utilised input tax credit
• Late fee per day for delayed filing of returns, subject to prescribed caps
• General penalty provisions, and higher penalties in cases involving fraud, wilful misstatement or suppression
• Reduced penalty where tax and interest are paid within the timelines specified after a notice or order
• Detention and confiscation consequences for goods moved without proper documentation
• Denial of input tax credit to customers, which is often the most damaging commercial consequence of a supplier’s non-compliance

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Documents and Records Required

• GST registration certificate for every State, with login credentials
• Sales register with invoice-wise details, HSN or SAC codes and place of supply
• Purchase register with supplier GSTIN and invoice details
• Debit notes, credit notes and amended invoices
• Export invoices, shipping bills, Letter of Undertaking and bank realisation records
• Import documents — bill of entry and IGST payment particulars
• Stock and inventory records
• Bank statements and payment records
• E-way bills and transport documentation
• Reverse charge computation and self-invoices
• Input tax credit register and reconciliation working
• Previous returns, challans, notices and replies
• Books of account, trial balance and audited financial statements for annual reconciliation

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The GST Compliance Calendar

Monthly

• Preparation and filing of GSTR-1 or the Invoice Furnishing Facility
• Download and reconciliation of the auto-generated credit statement against purchase records
• Action on inward invoices, where the Invoice Management System applies
• Reverse charge computation and payment
• Preparation and filing of GSTR-3B with payment of tax
• Filing of GSTR-6, GSTR-7 and GSTR-8 by the categories concerned
• Reconciliation of GST ledgers with the books of account

Quarterly

• QRMP returns and monthly tax payment through the prescribed challan
• CMP-08 for composition taxpayers
• Review of credit ageing, vendor defaults and pending reconciliations

Annually

• Renewal of the Letter of Undertaking for exporters, before the start of the financial year
• Annual apportionment and reversal recomputation for common credits
• Claiming of any pending credit within the statutory time limit
• Filing of GSTR-9 and GSTR-9C, where applicable
• Reconciliation of turnover and credit with the audited financial statements

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Common GST Mistakes We See

1. Reconciling input tax credit at year-end rather than every month, when correction is still possible
2. Claiming credit on blocked items — employee welfare, motor vehicles, construction and similar heads
3. Ignoring reverse charge on imported services, legal services and other notified categories
4. Charging CGST and SGST where IGST applied, or the reverse, owing to place-of-supply errors
5. Wrong HSN or SAC classification, resulting in an incorrect rate and consequential demand
6. Missing e-invoicing after crossing the turnover threshold, which invalidates invoices already issued
7. Allowing the Letter of Undertaking to lapse and continuing to export without payment of tax
8. Not issuing credit notes within the statutory time limit, making the tax adjustment unavailable
9. Failing to reconcile the GST portal ledgers with the books, so differences accumulate unnoticed
10. Ignoring notices and portal communications until the matter escalates to a demand order

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How Delhi Legal Company Can Help

Delhi Legal Company provides end-to-end GST compliance support, integrated with bookkeeping, accounting and tax services so that returns, books and financial statements reconcile throughout the year.

• Registration and amendments. New registrations across States, additional place of business, casual and non-resident registrations, core and non-core amendments, and cancellation or revocation support.
• Return preparation and filing. GSTR-1, GSTR-3B, QRMP returns, composition returns, ISD, TDS and TCS returns, and annual returns with reconciliation statements.
• Input tax credit reconciliation. Monthly matching of purchase records against the auto-generated credit statement, vendor follow-up on defaults, credit ageing analysis and reversal computations.
• Advisory on classification and rates. HSN and SAC classification, rate determination, exemption analysis and composite versus mixed supply questions.
• Place of supply and transaction structuring. Review of contracts and billing patterns to determine the correct tax treatment, particularly for services, inter-State supplies and cross-border transactions.
• E-invoicing and e-way bill support. Applicability assessment, system configuration, process design and resolution of portal issues.
• Export and SEZ compliance. Letter of Undertaking filing and renewal, zero-rated supply documentation, and refund applications with supporting statements.
• Refund management. Preparation and filing of refund applications, response to deficiency memos and follow-up through sanction.
• Notices, scrutiny and audit support. Drafting replies to scrutiny notices and show cause notices, compiling documentation for departmental audit, and representation support before the authorities.
• Health check and past-period review. Review of earlier filings to identify exposure, unclaimed credit and correctable errors before the statutory windows close.
• Support for foreign-owned entities. GST treatment of cross-border services, import of services under reverse charge, intra-group charges, export of services and refund claims.
• Training and process design. Practical training for accounts teams on invoicing discipline, documentation, and month-end GST closing.

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Our Working Process

1. Assessment. We review registrations, turnover, transaction types, States of operation and current filing status.
2. Health check. We reconcile past filings with the books, identify mismatches, unclaimed credit and open exposures, and share a corrective plan.
3. Setup. Data formats, invoice-level reporting requirements, reconciliation templates and a filing calendar with cut-off dates are established.
4. Monthly cycle. Data collection, reconciliation, review sheet for management approval, tax computation, payment and filing — with acknowledgements shared as proof.
5. Reporting. Monthly summary of tax paid, credit availed, credit at risk from vendor defaults, and any pending action items.
6. Annual closure. Statutory time-limit checks, annual reversal computations, annual return, reconciliation statement and alignment with audited accounts.

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Who We Work With

• Traders, manufacturers and distributors with inventory and e-way bill obligations
• Service providers, consultants and IT and software companies, including exporters of services
• E-commerce sellers and operators dealing with tax collected at source and multi-State supplies
• Businesses registered in several States with separate credit ledgers and filing calendars
• Exporters and SEZ suppliers managing Letters of Undertaking and refund cycles
• Indian subsidiaries and branch offices of foreign companies with cross-border and intra-group transactions
• Businesses facing notices, audits, backlog filings or registration cancellation

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Conclusion

GST compliance is a data-matching exercise conducted every month, under deadlines that do not extend and with credit that does not wait. The businesses that manage it well treat reconciliation as a monthly closing discipline, follow up on vendor defaults while corrections are still possible, and answer departmental communications promptly and completely.

Delhi Legal Company manages GST registration, returns, reconciliation, refunds and departmental matters as part of an integrated finance and compliance function — protecting input tax credit, avoiding interest and penalties, and keeping returns and books in agreement.

Get in touch: info@delhilegalcompany.com | +91-9599332456

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Frequently Asked Questions (FAQs)

1. Who is required to register under GST?

A. Registration is mandatory once aggregate turnover crosses the prescribed threshold, which differs for goods and services and is lower in the notified special category States. Registration is also compulsory regardless of turnover for inter-State suppliers of goods, casual and non-resident taxable persons, persons liable under reverse charge, e-commerce operators and specified suppliers on such platforms, Input Service Distributors, and persons required to deduct or collect tax at source.

2. Do I need separate GST registration for each State?

A. Yes. GST registration is State-specific. A business with a place of business in more than one State must register in each State, and each registration has its own returns, electronic ledgers and compliance calendar.

3. Which returns must a regular taxpayer file?

A. Primarily GSTR-1, the statement of outward supplies, and GSTR-3B, the summary return with payment of tax — monthly, or quarterly with monthly tax payment under the QRMP scheme. Annual return in GSTR-9 and, above a higher turnover limit, a self-certified reconciliation statement in GSTR-9C are also required.

4. What is the QRMP scheme?

A. The Quarterly Return Monthly Payment scheme allows eligible small taxpayers to file GSTR-1 and GSTR-3B quarterly while paying tax monthly through the prescribed challan. The Invoice Furnishing Facility lets such taxpayers upload invoices in the first two months of the quarter so that their customers’ credit is not delayed.

5. Can a GST return be revised after filing?

A. No. GST returns cannot be revised. Errors must be corrected through amendments in a subsequent period’s return, and only within the statutory time limit for the financial year concerned. This is why review before filing is far more important than under earlier tax regimes.

6. What is GSTR-2B and why does it matter?

A. GSTR-2B is the auto-generated statement showing the input tax credit available for a period, based on what suppliers have reported. Credit must be reconciled against it before filing, because credit not reflected there is generally not available — regardless of whether the invoice and payment exist.

7. What are the conditions for claiming input tax credit?

A. Possession of a valid tax invoice, actual receipt of the goods or services, reporting of the supply by the supplier so that it appears in the recipient’s credit statement, payment of the tax to the government by the supplier, and filing of the relevant return by the recipient. Payment to the supplier within the prescribed period is a further condition, failing which credit is reversed with interest.

8. Until when can input tax credit for a financial year be claimed?

A. Credit must be claimed within the statutory time limit — broadly, by the return for a specified month following the end of that financial year or the date of filing the annual return for that year, whichever is earlier. Once that window closes, the credit is lost permanently.

9. On which expenses is input tax credit not available?

A. Blocked credits under Section 17(5) include motor vehicles below the prescribed seating capacity except in specified cases, food and beverages and outdoor catering, health services, club and fitness memberships, works contract and construction of immovable property on own account other than plant and machinery, goods lost, stolen, destroyed or given as free samples, and tax paid under specified demand provisions.

10. What happens if a supplier does not file returns or pay tax?

A. The credit does not reflect in the recipient’s statement and cannot be claimed, and credit already availed may have to be reversed with interest. The commercial remedy lies in vendor management — regular reconciliation, prompt follow-up and contractual protection such as withholding the tax component until compliance is confirmed.

11. What is the reverse charge mechanism?

A. In notified cases the recipient, rather than the supplier, is liable to pay the tax — including import of services and specified categories of goods, services and suppliers. The tax must be paid in cash and cannot be discharged using input tax credit, though credit of the tax so paid is available subject to the usual conditions.

12. When does e-invoicing apply?

A. E-invoicing applies once aggregate turnover exceeds the notified threshold, which has been reduced in stages. Covered businesses must report invoices to the Invoice Registration Portal to obtain an invoice reference number and QR code. An invoice not so registered is not a valid document, and the recipient’s credit is at risk.

13. When is an e-way bill required?

A. For movement of goods where the consignment value exceeds the prescribed limit, generated before the movement begins. Validity is linked to distance, with provision for extension and for updating vehicle details. Mismatches between the e-way bill, the invoice and the goods in transit frequently lead to detention and penalty proceedings.

14. How are exports treated under GST?

A. Exports and supplies to Special Economic Zones are zero-rated. They may be made under a Letter of Undertaking without payment of tax, with refund of accumulated input tax credit, or on payment of IGST with subsequent refund. The Letter of Undertaking must be filed afresh for each financial year.

15. What is the composition scheme and who should consider it?

A. Eligible small suppliers within the prescribed turnover limit may pay tax at a concessional rate on turnover with simplified quarterly compliance. The trade-offs are significant — no input tax credit, no tax invoice, no inter-State outward supply of goods, and no credit for customers — so it suits businesses selling largely to end consumers.

16. Is the annual return mandatory for every registered person?

A. GSTR-9 is required where aggregate turnover exceeds the prescribed limit; below that it is optional. The self-certified reconciliation statement in GSTR-9C applies above a higher turnover limit. Certain categories, such as composition taxpayers and Input Service Distributors, have different requirements.

17. What are the consequences of not filing returns?

A. Late fee for each day of delay subject to prescribed caps, interest on tax paid late, blocking of subsequent filings because returns must be filed in sequence, blocking of e-way bill generation after continued default, suspension and eventual cancellation of registration, and denial of credit to customers. An outer time limit also applies, beyond which returns cannot be filed at all.

18. Our GST registration has been cancelled. Can it be restored?

A. Where cancellation was ordered by the officer, revocation may be applied for within the prescribed period, generally after filing pending returns and paying dues along with interest and late fee. Time extensions are available in specified circumstances. Acting quickly matters, as the revocation window is limited.

19. We have received a GST notice. What should we do?

A. Identify the type of notice and the response deadline, reconcile the underlying data before replying, and file a complete, documented response within time. Many notices are routine mismatches that close on a proper explanation; the same notice ignored becomes a demand order with interest and penalty. We review, draft and file replies and provide representation support.

20. Can GST refunds be claimed, and how long do they take?

A. Refunds are available for accumulated credit on zero-rated supplies, inverted duty structure, excess cash ledger balance, deemed exports and appellate orders. Applications are time-barred and documentation-intensive. Timelines depend on the completeness of the application and departmental processing, with provisional refund available in specified cases and interest payable on delayed sanction.

21. Do foreign companies supplying services to India need GST registration?

A. It depends on the nature of the supply and the recipient. In many business-to-business cases the Indian recipient pays under reverse charge. Suppliers of online information and database access or retrieval services to unregistered recipients in India have their own registration and filing obligations. The position should be assessed transaction by transaction.

22. Can you handle GST alongside our bookkeeping and accounting?

A. Yes, and it works considerably better that way. When the same team maintains the books and files the returns, sales, purchase and credit data reconcile continuously instead of being reconciled for the first time at the annual return stage.

23. Can you review our past GST filings for errors?

A. Yes. A GST health check reviews earlier returns against the books and the portal data to identify unclaimed credit, wrongly availed credit, classification errors and mismatches — while the amendment and credit windows are still open and voluntary correction is possible.

24. How do I get started?

A. Write to info@delhilegalcompany.com or call +91-9599332456. We will review your registrations, filing status and immediate exposures, and share a clear scope and quotation before any work begins.