GST filing may seem routine, but small mistakes can lead to serious consequences – from delayed refunds to full-blown audits or legal notices. Over the years, many taxpayers have faced penalties, interest, and litigation due to filing errors that could’ve easily been avoided.

In this blog, we cover the most common GST mistakes and how you can stay compliant and stress-free.

1. Mismatch in GSTR-1 and GSTR-3B

The Mistake:
Taxpayers often report different values in GSTR-1 (sales return) and GSTR-3B (summary return). This mismatch, especially in output tax liability, is a red flag for the department.

The Impact:
Many show cause notices have been issued for under-reporting sales or excess ITC claims due to these mismatches.

How to Avoid It:
Always reconcile data before filing. Use accounting software or reconciliation tools that match invoices with return summaries.

2. Wrong GSTIN or Invoice Details

The Mistake:
Entering incorrect GSTINs, invoice numbers, or dates when filing returns.

The Impact:
This leads to buyer-supplier mismatches in GSTR-2A/2B, denying input tax credit (ITC) to the recipient. It also affects vendor relationships and credibility.

How to Avoid It:
Double-check GSTINs and invoice data before uploading. Automate invoice validation where possible.

3. Claiming Ineligible Input Tax Credit (ITC)

The Mistake:
Many businesses claim ITC for purchases that are not eligible – such as blocked credits under Section 17(5) or for invoices not uploaded by suppliers.

The Impact:
ITC claimed on ineligible items like motor vehicles, food and beverages, personal expenses, or non-compliant vendors leads to reversal, interest, and penalties. Several high-profile litigations have occurred on this ground.

How to Avoid It:
Verify every ITC claim against GSTR-2B and ensure it falls within eligible categories. Maintain supplier compliance checks.

4. Non-Reversal of ITC on Non-Payment to Suppliers

The Mistake:
As per Rule 37, if a payment to a supplier is not made within 180 days, the availed ITC must be reversed.

The Impact:
Failure to reverse leads to interest liability and scrutiny during GST audits.

How to Avoid It:
Set payment reminders. Track aging reports and automate ITC reversal entries where needed.

5. Not Reporting Nil or Non-Operational Returns

The Mistake:
Registered persons often skip filing returns during non-operational months thinking it’s not required.

The Impact:
Non-filing results in late fees and cancellation of registration. It also blocks e-way bill generation.

How to Avoid It:
Always file nil returns on time. It’s a legal obligation under Section 39 of the CGST Act.

6. Incorrect HSN/SAC Code Usage

The Mistake:
Using wrong or generic HSN/SAC codes in invoices and returns.

The Impact:
This affects classification, tax rates, and can lead to disputes in case of assessment or refund claims.

How to Avoid It:
Refer to the official HSN/SAC directory. Use industry-specific codes to ensure accuracy.

7. Delayed Filing of Annual Return (GSTR-9/9C)

The Mistake:
Many taxpayers miss the deadline for filing annual returns or provide inconsistent figures compared to monthly returns.

The Impact:
It triggers department scrutiny. Audits and notices under Section 61 or Section 65 may follow.

How to Avoid It:
Start reconciling data in advance. Match GSTR-1, 3B, and books before preparing GSTR-9 or 9C.

8. Incorrect Export Filing or Missing LUT

The Mistake:
Exporters either miss filing LUT (Letter of Undertaking) or file returns with errors in invoice values.

The Impact:
This causes withholding of refunds and export benefits under Rule 96 of CGST Rules.

How to Avoid It:
File LUT at the start of each financial year. Reconcile export data with shipping bills and FIRC documentation.

9. Ignoring Reverse Charge Mechanism (RCM)

The Mistake:
Not accounting for GST under RCM on import of services, GTA, or legal services.

The Impact:
Non-payment of RCM attracts 18% interest and demands during departmental audits.

How to Avoid It:
Identify all RCM services and automate their tax calculations and payment workflows.

Final Thoughts

GST compliance isn’t just about filing returns – it’s about filing them accurately. The cost of errors isn’t just monetary; it could mean legal hassles, frozen working capital, or reputational damage.

Tip: Use automation tools, reconcile regularly, and don’t hesitate to consult a GST expert or Chartered Accountant – especially if your filings are high-volume or complex.