What is GST Compliance? Have you heard about the recent Golgappa Vendor Notice which had gone viral on social media? In case you haven’t heard about it yet, then let me share the details with you.
Recently there were a lot of reports by multiple news channels that a pani-puri vendor in Tamil Nadu was summoned by the GST Department. Not for a Pani-Puri Order obviously. The article claimed that the GST Department summoned the vendor citing the reason that the Pani Puri vendor has surpassed the GST Turnover limit of the state, but has not yet registered himself according to the GST laws.
The news was later fact checked by India Today, and it turns out that the report was doctored. The notice was actually sent to a hotel vendor, and not to the pani-puri wala.
However, you might be surprised to know that the evidence they have collected was done by tracking the UPI Transactions incurred by the vendor through Phonepay & Razorpay. Yes, you heard that right.
FYI, the GST department has all the powers to access your bank accounts and your UPI Statements, even without your specific permissions or knowledge.
By this you must understand one thing that the key to a successful startup is its backbone, i.e, the Compliance Wing.
Is there any solution to these problems? Can a Startup follow some thumb rules to avoid these future litigation and hassles?
Definitely, YES !
Table of Contents
Thumb Rules To Follow GST Compliance
Below mentioned are a few thumb rules, if followed by you, shall be largely effective for avoiding hassles of compliance in your business:
1. Have a Track of Your Receipts / Income / Inflow
Tracking your receipts/income/inflows in your business is very crucial for a sustainable continuous growth graph of your business. Also keeping a track helps you identify the thresholds for compliance of your business.
2. Be Aware of GST Registrations Limit in Your State
You should always be aware of the turnover threshold limits in your State/Union Territory. Generic common limit in most Indian states are around ₹20 Lakh.
3. Do Not Park Your Receipts in You Personal Savings Account
Many of the GST registered businesses have been seen transferring the business receipts into their personal savings accounts. Most people assume that the business receipts they receive in their personal savings account is not a part of their business revenue. This is actually a violation of the GST law, as it is a non-disclosure of the correct revenue. In case of litigation, the Department can also call for your personal savings accounts to collect the necessary information.
4. Choose HSN Codes For Your Businesses Wisely
Choosing the Correct HSN Code for your business is very vital for your business, because when the stakes are high and you are dealing in a specific product, even a small error in choosing HSN can create a big revenue leakage for you. Also sometimes the product you might be dealing with could actually be in the exempt category, and choosing a wrong HSN can create a revenue leakage for you.
5. Never Forget to Take Paperwork From Your Professional Advisor
Most of the business owners do not take proper returns and challan documents from their professional advisors. This practice of not taking the proper documents can even lead to cancellation of your GST registration, because if you do not take care of your returns being filed regularly, the same can lead to Suo-moto cancellation of GST registration by the department.
GST Compliance Better For Your Business
The recent highlights of the GST Notice going viral serves as a wake up call for businesses of all sizes. In today’s digital age, even small penny transactions can be tracked, due to which there is an urgent need for proper record keeping and transparency from your side.
Follow these simple rules so that your business can avoid unnecessary complications long term.
- Monitor your income
- Understand the GST limits
- Keep your Business and Personal finances separate
- Choose the right HSN codes
- Maintain proper documentation
At first the compliance may seem to be too tedious, but it will surely act as a foundation for your successful startup, enabling you to build the next startup unicorn, meanwhile avoiding any legal blunders.
Focus on building your startup, and make a habit of following all GST compliance to avoid getting penalized due to tax blunders. Hope these above points help clear your doubts as a Desi Founder. Check out more insights about Startups here.