Real mistakes that small businesses in India make every day — and how to fix them before you get a notice.
Most GST notices sent to MSMEs are caused by 5 recurring mistakes. Fix these, and you're 80% safer from audits and penalties.
What happens: Many small business owners skip filing GSTR-1 or GSTR-3B returns because they forget or think it's optional. It's not.
Why it's a problem: Late filing attracts a penalty of ₹500/day per return (₹1,000 for IGST). Miss 6 consecutive returns and your GST registration gets suspended.
Set a calendar reminder on the 10th of every month. GSTR-1 is due by the 11th, GSTR-3B by the 20th. Takes 15-30 minutes if your invoices are organized.
What happens: Business owners put incorrect HSN codes on invoices, or skip them altogether thinking it's unimportant.
Why it's a problem: HSN codes determine your tax rate. A wrong code means you're charging the wrong GST rate — leading to tax shortfall notices and audits.
Look up your product's correct HSN code on gst.gov.in. Google "[your product] HSN code India" also works. Write it down and use it on every invoice.
What happens: After GST registration, many business owners forget to upload bank account details on the portal within 30 days.
Why it's a problem: Rule 10A states that if bank details are not updated, your GST registration can be automatically suspended. No warning, no grace period.
Log in to gst.gov.in → My Profile → Bank Account Details → Add your current bank account with IFSC code. Do this within 30 days of registration.
What happens: Business owners claim Input Tax Credit (ITC) on purchases for personal use — like a car, personal phone, or home renovation.
Why it's a problem: ITC is only allowed on purchases made strictly for business purposes. Claiming personal expenses = tax fraud in the eyes of the department.
Keep business and personal expenses completely separate. Use a dedicated business bank account. Before claiming ITC, ask: "Is this purchase directly used to earn revenue?" If not, don't claim it.
What happens: Small sellers on Amazon, Flipkart, or Meesho think the platform handles all their GST. They don't register or file returns themselves.
Why it's a problem: E-commerce sellers must have their own GST registration regardless of turnover. The platform collects tax, but YOU must file returns and stay compliant.
If you sell anything on any e-commerce platform, register for GST immediately. File returns monthly. Keep all platform payment receipts as proof.
| Mistake | Penalty Risk | Severity |
|---|---|---|
| Late / missed returns | ₹500-1,000/day | ⚠️ High |
| Wrong HSN codes | ₹10,000+ fine | ⚠️ High |
| Bank details not updated | Registration suspended | 🚨 Critical |
| Personal ITC claims | 100% reversal + interest | 🚨 Critical |
| E-commerce non-compliance | ₹10,000+ back taxes | ⚠️ High |
If you're unsure about anything GST-related, consult a CA before acting. A 30-minute consultation (₹500-1,000) is always cheaper than a penalty notice.
Our GST Risk Auditor scans your compliance status in under 60 seconds — including the Rule 10A bank detail check.
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