GST Compliance Guide: Registration, Filing, and ITC for Indian SMEs

Registration is only the starting line

Getting a GSTIN takes a few days. Staying compliant takes effort every month. Once you are registered, you must file returns for every period, even when there are no sales, and you must pay tax on time from your own reconciled books.

This guide focuses on that ongoing work: which returns to file, how to protect your input tax credit, and what the GST portal now checks automatically. If you have not registered yet, read our separate checklist on GST registration for startups first.

One point is worth knowing early. Returns cannot be filed once three years have passed from their original due date, and the portal now enforces this. An old gap in your filings can become permanent, so clear pending returns as soon as you find them.

Know your returns and due dates

Most small businesses deal with two regular returns. GSTR-1 reports your sales invoice by invoice. GSTR-3B is the summary return where you declare tax, claim input tax credit and pay the balance. GSTR-1 must be filed before GSTR-3B for the same period.

If your aggregate turnover is up to ₹5 crore, you can choose the QRMP scheme and file both returns quarterly while paying tax every month. Larger businesses file monthly.

• Monthly GSTR-1: 11th of the following month
• Monthly GSTR-3B: 20th of the following month
• QRMP: optional IFF for B2B invoices by the 13th for the first two months of the quarter
• QRMP: monthly tax payment in PMT-06 by the 25th for the first two months
• QRMP: quarterly GSTR-1 by the 13th and GSTR-3B by the 22nd or 24th, depending on your state (22nd for Kerala)

Protect your input tax credit

You can claim input tax credit only on invoices that your supplier has reported and that appear in your GSTR-2B. The GSTR-2B is generated on the 14th of each month from what suppliers have filed. Match it against your purchase register before you file GSTR-3B, and follow up with suppliers whose invoices are missing.

The Invoice Management System (IMS), live since October 2024, lets you accept, reject or keep pending each inward invoice before it flows into GSTR-2B. If you take no action, the invoice is treated as accepted. So review IMS every month and reject invoices that are wrong or not yours.

A few rules catch businesses out. If you do not pay a supplier within 180 days of the invoice date, the credit must be reversed until you pay. Credit for a year must be claimed by 30 November of the following year or the date you file the annual return, whichever is earlier. If a supplier does not file their GSTR-3B by 30 November, the related credit has to be reversed until they do.

Fix errors before GSTR-3B, not after

The tax liability in GSTR-3B is auto-filled from your GSTR-1. From the July 2025 tax period, this auto-filled liability can no longer be edited in GSTR-3B. If your GSTR-1 had a mistake, you must correct it through GSTR-1A, or through a later GSTR-1 or IFF, before you file GSTR-3B.

This makes accurate sales reporting more important than ever. A wrong invoice value or GSTIN in GSTR-1 now flows straight into your tax payment. A short monthly routine prevents most problems.

• Reconcile sales in your books with the GSTR-1 draft before filing
• Check customer GSTINs, place of supply and tax rates on B2B invoices
• Review the auto-filled GSTR-3B after GSTR-1 is filed
• Use GSTR-1A for corrections found before GSTR-3B is filed
• Keep a note of every correction and why it was made

E-invoicing and the annual return

E-invoicing applies to businesses whose aggregate turnover in any financial year since 2017-18 has exceeded ₹5 crore. These businesses must report B2B tax invoices, credit notes and debit notes to the Invoice Registration Portal and get an IRN before issuing them. From 1 April 2025, businesses with turnover of ₹10 crore or more must report invoices within 30 days of the invoice date. Late invoices are not accepted by the portal.

The annual return, GSTR-9, is due by 31 December after the financial year ends. It is mandatory where aggregate turnover exceeds ₹2 crore. Businesses with turnover above ₹5 crore must also file GSTR-9C, a reconciliation statement between the annual return and the audited accounts. Treat GSTR-9 as a year-end review of every monthly figure, not a copy-paste exercise.

Late fees, interest and notices

Late GSTR-1 and GSTR-3B filings attract a late fee of ₹50 a day (₹20 a day for nil returns), subject to caps based on turnover. Tax paid late carries interest at 18% a year, generally on the portion paid in cash. Input tax credit that was wrongly claimed and used must be reversed, also with interest at 18% a year.

The portal also runs automatic checks. If the liability in GSTR-3B is lower than GSTR-1 beyond a set limit, or ITC claimed is higher than GSTR-2B beyond a set limit, you receive an intimation and must pay the difference or explain it before filing the next GSTR-1. Officers also issue scrutiny notices based on return mismatches.

Never ignore a notice. Most have a response window, and an unanswered notice can lead to a demand order. Reply on the portal, attach reconciliations, and keep proof of submission.

A simple monthly compliance routine

Good GST compliance is mostly about habit. Businesses that close their books monthly rarely face large surprises at year end.

If you want a second pair of eyes on your returns, reconciliations or a notice, FBS Advisory's GST team can review your current process and point out the gaps.

• Record all sales and purchases in your accounting software by the 5th
• Review IMS and match GSTR-2B with your purchase register
• File GSTR-1 on time and check the auto-filled GSTR-3B
• Pay tax and file GSTR-3B before the due date
• Check the portal for notices and intimations every week
• Track suppliers who file late or have unpaid invoices near 180 days