Mumbai, India's financial capital, is home to a diverse array of businesses — from small startups and traders to multinational corporations. While GST has brought uniformity in taxation, it also comes with stringent compliance requirements. Many businesses, especially MSMEs and startups, often make avoidable errors in their GST filings, leading to penalties, blocked Input Tax Credit (ITC), and departmental notices.

Here’s a detailed look at the most common GST filing mistakes businesses in Mumbai make — and how to stay ahead of them.

1. Filing Returns Late or Missing Due Dates

Mumbai-based businesses, particularly smaller traders and service providers, often delay return filing due to manual processes or lack of awareness.

• Impact: Late fees, interest penalties, and disqualification from filing subsequent returns.

• Pro Tip: Always maintain a GST calendar. Automate reminders or hire a professional GST consultant to keep you updated with deadlines like GSTR-1, GSTR-3B, and GSTR-9.

2. Mismatch Between GSTR-1 and GSTR-3B

One of the most common GST issues is the mismatch between outward supply details in GSTR-1 and summary returns in GSTR-3B.

• Impact: Triggers notices from the GST department and may cause scrutiny.

• Pro Tip: Before filing GSTR-3B, cross-verify the outward sales reported in GSTR-1. Reconcile monthly and keep documentation ready.

3. Incorrect Claim of Input Tax Credit (ITC)

Many Mumbai businesses wrongly claim ITC on ineligible goods/services or claim more than what’s reflected in GSTR-2B.

• Impact: Reversal of ITC, interest, and penalties.

• Pro Tip: Claim ITC strictly as per GSTR-2B. Also, ensure vendors are compliant and have uploaded their returns timely.

4. Not Reconciling Books with GST Returns

Businesses often file returns without reconciling with their books of accounts or ERP software, which can lead to discrepancies.

• Impact: Discrepancies may lead to audits, denial of ITC, or tax liabilities.

• Pro Tip: Perform monthly reconciliation of GST returns with accounting records and bank statements.

5. Wrong GSTIN or Invoice Details

Errors like incorrect GSTINs, invoice numbers, or missing HSN codes are frequently observed in filings, especially among fast-moving retail businesses.

• Impact: Denial of credit to the recipient, buyer dissatisfaction, and loss of credibility.

• Pro Tip: Use GST-compliant invoicing software with validation checks to avoid manual mistakes.

6. Ignoring Annual Return Filing (GSTR-9)

Many businesses in Mumbai skip filing GSTR-9, assuming it’s not mandatory or due to lack of understanding.

• Impact: Penalties of up to ₹200 per day and increased scrutiny.

• Pro Tip: GSTR-9 is mandatory for businesses with turnover above ₹2 crore (as per current threshold). Seek expert help if needed.

7. Using Wrong Tax Rates or SAC/HSN Codes

Incorrect classification of goods/services and applying wrong tax rates is another common mistake.

• Impact: Overpayment or underpayment of GST, notices from department.

• Pro Tip: Always refer to the latest GST rate chart and SAC/HSN code list issued by the government or consult a tax expert.

8. Not Reporting Nil Returns

Many businesses forget or skip filing Nil returns when there are no transactions during the period.

• Impact: Attracts late fees and creates compliance gaps.

• Pro Tip: Even if no business was conducted, Nil GSTR-1 and GSTR-3B must be filed.

9. Improper Reverse Charge Mechanism (RCM) Treatment

Businesses often fail to identify and pay tax under RCM when required, such as on legal services or GTA.

• Impact: Tax evasion notices and liabilities.

• Pro Tip: Maintain a checklist of RCM-applicable services and ensure timely self-invoicing and payment.

10. Ignoring Department Notices or Show Cause Notices

A common mistake is not responding to GST department notices on time due to negligence or delay in tracking emails and dashboard alerts.

• Impact: Escalation of cases, fines, or cancellation of GST registration.

• Pro Tip: Regularly monitor the GST portal and emails registered with GST. Take immediate professional help if a notice is received.

Conclusion

Avoiding these common mistakes in GST filing is crucial for maintaining seamless operations, avoiding penalties, and staying compliant in Mumbai’s competitive business environment. Whether you’re a small shop owner in Dadar or a tech startup in Powai, accurate and timely GST compliance can save money, time, and legal hassles.

If you’re unsure about how to manage GST filings or are already facing issues, it’s advisable to consult a professional GST expert in Mumbai for personalized support.