WorkIndex/Diagnostic Center GST Compliance Guide
GST compliance

Diagnostic Center GST Compliance Guide
GST compliance guide

Expert brief on Diagnostic Center GST Compliance Guide for businesses, promoters, and individuals. Reconcile with latest notifications before filing.

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Last fact-checked: 2026-06-20
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India specific
GST compliance

What this page helps you decide

  • Determine if your aggregate turnover exceeds the registration threshold (₹20 lakh/₹40 lakh for goods, ₹10 lakh/₹20 lakh for services).
  • Decide if you qualify for the GST Composition Scheme under Section 10 to pay tax at a lower rate without claiming input tax credit.
  • Confirm the correct HSN/SAC code and corresponding tax rate (5%, 12%, 18%, or 28%) applicable to your supplies.
  • Identify the blockages in your Input Tax Credit (ITC) under Section 17(5) before claiming it in GSTR-3B.
Fact check

Accuracy notes before you act

  • HSN code requirements: 6-digit HSN codes are mandatory for all taxpayers with aggregate turnover > ₹5 crore from February 1, 2025.
  • Input Tax Credit (ITC) can only be claimed if it is reflected in GSTR-2B and satisfies the conditions of Section 16(2) of the CGST Act.
  • An E-way bill is mandatory for the movement of goods of consignment value exceeding ₹50,000 (limit varies by state for intra-state movement).
  • Late fee for delayed GSTR-1 or GSTR-3B is ₹50 per day (₹20 per day for NIL returns) up to a maximum cap based on turnover.
  • GST interest at 18% per annum is payable on net tax liability if paid after the due date, under Section 50(1).
Documents

Documents and facts to keep ready

  • GSTIN (GST Identification Number) and GST portal login details.
  • Tax invoices, bill of supply, debit/credit notes, and delivery challans.
  • Purchase register and sales register for monthly reconciliation.
  • GSTR-2B statement showing ITC auto-populated from suppliers' GSTR-1 filings.
  • E-way bills, transport receipts, and vehicle details where applicable.
Care points

Common mistakes to avoid

  • Claiming Input Tax Credit (ITC) based on purchase invoices without reconciling with GSTR-2B, leading to tax demand notices.
  • Delaying the filing of GST returns, which blocks the filing of subsequent periods and triggers cancellations.
  • Misclassifying supplies as zero-rated vs exempt, leading to illegal ITC claims or blocked refund payouts.
  • Failing to generate an e-way bill for movement of goods, leading to detention, seizure, and a 200% penalty under Section 129.
  • Omitting GSTR-9 annual return and GSTR-9C reconciliation statements for eligible turnover thresholds.
Questions People Ask

Frequently Asked Questions

1. What are the threshold limits for GST registration in India?

The aggregate turnover threshold for GST registration is ₹40 lakh for businesses selling goods (₹20 lakh for special category states), and ₹20 lakh for service providers (₹10 lakh for special category states).

2. Who is eligible for the GST Composition Scheme?

Taxpayers with aggregate turnover up to ₹1.5 crore (₹75 lakh for special category states) can opt for the Composition Scheme under Section 10 to pay a flat tax rate (1% to 6%) and file quarterly returns, but they cannot claim ITC or issue tax invoices.

3. What is the mandate for HSN codes on invoices from 2025?

Taxpayers with an aggregate turnover exceeding ₹5 crore in the preceding financial year must report 6-digit HSN codes on all B2B and B2C tax invoices. Those with turnover up to ₹5 crore must report at least 4-digit HSN codes on B2B invoices.

4. What are the conditions to claim Input Tax Credit (ITC) under Section 16?

To claim ITC: (1) You must have a valid tax invoice/debit note. (2) You must have received the goods/services. (3) The supplier must have paid the tax to the government. (4) The supplier must have filed their GSTR-1 and the invoice must appear in your GSTR-2B.

5. What constitutes blocked credit under Section 17(5) of the CGST Act?

Blocked credit includes ITC on motor vehicles (with exceptions), food and beverages, outdoor catering, beauty treatment, health services, life insurance, membership of clubs, travel benefits to employees, and goods lost, stolen, destroyed, or written off.

6. When is an E-way bill mandatory for transporting goods?

An E-way bill is mandatory for movement of goods of consignment value exceeding ₹50,000. It applies to both inter-state and intra-state movement (states can increase the threshold for intra-state movement).

7. What is the interest rate for late payment of GST?

Under Section 50(1), interest at 18% per annum is charged on net tax liability if paid after the due date. If ITC is wrongly availed and utilized, the interest rate is 24% per annum.

8. What is the penalty for filing GST returns late?

Late fee for GSTR-1 and GSTR-3B is ₹50 per day (₹25 CGST + ₹25 SGST) of delay, capped at ₹500 for NIL returns and ₹2,000 to ₹10,000 for regular returns based on turnover.

9. How do GSTR-1 and GSTR-3B reconcile on the portal?

GSTR-1 is the return of outward supplies (sales), and GSTR-3B is the summary return of tax liability and ITC payment. The sales details in GSTR-1 must match GSTR-3B to prevent demand notices for underreported tax.

10. What is GSTR-2B and how does it determine my ITC claim?

GSTR-2B is an auto-drafted, static ITC statement generated on the 14th of every month. It reflects all ITC available based on GSTR-1/IFF filings by your suppliers. Taxpayers can only claim ITC that is reflected in GSTR-2B.

11. Is it mandatory to file GSTR-9 (Annual Return)?

Filing GSTR-9 is mandatory for taxpayers with an aggregate turnover exceeding ₹2 crore in the financial year. Taxpayers with turnover up to ₹2 crore are exempt from filing, though they can file voluntarily.

12. What is the penalty for moving goods without an E-way bill?

Under Section 129 of the CGST Act, moving taxable goods without a valid E-way bill attracts a penalty equal to 200% of the tax payable on the goods. If the owner does not come forward, the penalty is 50% of the value of the goods.

13. What is the difference between zero-rated and exempt supplies?

Zero-rated supplies (exports and SEZ supplies) are taxable but at 0% rate, and ITC is fully claimable. Exempt supplies are not subject to GST, and any ITC associated with exempt supplies must be reversed.

14. Can I claim a refund for accumulated Input Tax Credit?

Yes, you can claim a refund under Section 54(3) for accumulated ITC under two scenarios: (1) Zero-rated supplies made without payment of tax. (2) Inverted duty structure (where tax rate on inputs is higher than tax rate on outward supplies).

15. What is the GST treatment for services exported from India?

Export of services is treated as an inter-state supply and qualifies as zero-rated. It is exempt from GST if made under a Letter of Undertaking (LUT), allowing the exporter to claim a refund of accumulated ITC.