GST compliance is crucial for small businesses to avoid penalties and ensure smooth operations. One of the key requirements is timely registration under GST if the business turnover exceeds the threshold limit (Rs.40 lakh for goods and Rs.20 lakh for services in most states). Once registered, businesses must issue proper GST-compliant invoices, maintain accurate sales and purchase records, and file periodic GST returns such as GSTR-1, GSTR-3B, and GSTR-9. Failure to file returns on time results in penalties and interest charges, increasing the financial burden. Additionally, small businesses can benefit from the Composition Scheme, which allows them to pay GST at a lower fixed rate and simplifies compliance requirements.
Input Tax Credit (ITC) is another critical aspect of GST compliance, enabling businesses to reduce their tax liability by claiming credit on GST paid for purchases. However, businesses must ensure that their suppliers file returns correctly, as ITC is only available if the supplier’s invoices are reported in the GST portal. Proper record-keeping and reconciliation of financial statements with GST filings help prevent errors and audits. Utilizing accounting software or consulting a tax expert can further streamline compliance and ensure businesses take full advantage of available tax benefits while avoiding legal complications.