Common GST Errors (Part 1)

By | February 14, 2019
(Last Updated On: February 14, 2019)

Common GST Errors (Part 1) जीएसटी की आम गलतियां

Common GST Errors: Errors in CLASSIFICATION

GST Errors in Classification -1

kind of outward supplies like Taxable supply, Exempted supply, Zero- rated supply, NIL rated supply, Supplies to SEZ unit / developers / Deemed Export and Merchant Export etc. are not appropriately classified as per  GST law.

Whether the classification of goods/ services is in conformity with the Schedules / Notifications?

GST Errors in Classification -2

  • Classification of goods as a service (and vice versa) or
  • Classification of item under one chapter heading into another ( Wrong HSN Codes)

 leading into

  • incorrect rates of GST discharged,
  •  wrong exemption claimed,
  • wrong determination of time of supply.
  • In incorrect ITC availment.

Example could be classifying outdoor catering as food and beverages, which would result in differential GST, rate of 13% (since outdoor catering is liable for 18%, whereas food is liable for 5%).

Note : Input Tax Credit would be available for an outdoor caterer but the same is not available  for restaurants

Whether the HSN classification is verified to confirm the rate of tax on goods and services?

Whether the HSN details for inward and outward supply are verified?

Whether the SAC code/HSN code is as per the law?

Whether the HSN/SAC classification is same as followed in erstwhile law if applicable?

GST Errors in Classification -3

 A mixed supply wrongly classified as composite supply (and vice versa), would generally result in excess/short discharge of GST.

For example, applying different rates of GST on goods and transportation charges would mean a violation of composite supply provision. You needs  to charge full GST on the rate of goods.

GST Errors in Classification -4

 Raising of tax invoice as supply of goods instead of supply of services for job work activity performed on principal’s goods.

GST Errors in Classification -5

 GTO services classified under GTA ( Goods Transport Agency Services ), and considered for reverse charge outward liability.

GST Errors in Classification -6

Classifying EOU ( Export Oriented transactions ) or other deemed export transactions as zero-rated supply under GST

GST Errors in Classification -7

Change in Rate of Tax during the year

Goods or Services may be continued to be classified under Old Rate of Tax, whereas there may be change in Rates of Tax during the year .

Whether there has been any change in rate of tax during the period by way of amendment in rate of tax notification or exemption notification?

GST Errors in Classification -8

GST may have been paid under Forward charge basis, whereas GST may have to be paid by the recipient under Reverse Charge Basis

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