GST is a transaction driven tax. If invoicing is wrong, returns will be wrong. If vendor compliance is weak, input tax credit will be blocked. For growing businesses and foreign subsidiaries in India, GST compliance needs a repeatable monthly process that links operations, finance, and tax.
This guide explains the GST compliance workflow from registration to invoicing to returns and reconciliations, along with a practical checklist to reduce notices and credit loss.
Step 1 GST Registration Basics
When registration is required
Registration is generally required when turnover crosses prescribed thresholds or when specific conditions apply such as inter state supply, e commerce participation, or certain notified categories.
Key registration inputs
Maintain clean documentation for:
- PAN and constitution of business
- Principal place of business proof
- Bank account details
- Authorized signatory details
- Business activity and HSN SAC mapping
Practical tip: Map your business model correctly at registration stage to avoid future amendments.
Step 2 Build a Compliant Invoicing Process
Tax classification and master data
Accurate GST starts with master data:
- HSN for goods and SAC for services
- Tax rate mapping and exemptions
- Place of supply logic for services
- Customer GSTIN validation and address capture
Tax invoice rules
Ensure invoices include mandatory particulars such as:
- Supplier and recipient details
- GSTINs where applicable
- Invoice number and date
- HSN SAC and description
- Taxable value and tax breakup
- Place of supply and whether reverse charge applies
Credit notes and debit notes
Set controls for issuing credit notes and debit notes with proper approvals and linkage to original invoices.
E invoicing where applicable
If e invoicing applies, ensure:
- IRN generation and QR code on invoice
- Integration between ERP and IRP
- Cancellation and amendment controls
Step 3 Understand Input Tax Credit ITC Discipline
ITC is available only when conditions are met. Build controls around:
- Vendor onboarding and GSTIN validation
- Purchase invoice capture with correct tax details
- Matching with GSTR 2B
- Tracking blocked credits and reversals
- Payment within prescribed timelines where required
Practical tip: Treat GSTR 2B as the base document for ITC eligibility and build a monthly reconciliation routine.
Step 4 Monthly GST Return Workflow
A practical monthly workflow includes:
1 Close sales register and validate invoice series 2 Validate B2B invoices and customer GSTINs 3 Prepare and file GSTR 1 with correct reporting 4 Close purchase register and validate vendor invoices 5 Reconcile ITC with GSTR 2B and identify missing credits 6 Prepare and file GSTR 3B with tax payment 7 Track interest and late fees if any 8 Maintain working papers and evidence
Common GST Compliance Errors
- Wrong HSN SAC leading to incorrect tax rate
- Place of supply errors for services
- Missing e invoicing compliance where applicable
- Claiming ITC not appearing in GSTR 2B
- Not reversing ITC for blocked credits or non payment cases
- Incorrect treatment of reverse charge
- Mismatch between GSTR 1 and GSTR 3B
- Poor credit note controls leading to reporting errors
Practical GST Compliance Checklist
Setup and master controls
1 Maintain HSN SAC and tax rate master 2 Validate customer and vendor GSTINs 3 Define invoice series controls and approval matrix 4 Configure e invoicing and e way bill processes where applicable
Monthly execution
1 Close sales register and validate tax classification 2 Prepare GSTR 1 and reconcile with sales ledger 3 Close purchase register and reconcile with GSTR 2B 4 Identify missing vendor invoices and follow up 5 Compute reverse charge liabilities and pay where required 6 Prepare GSTR 3B and reconcile with GSTR 1 7 Pay GST and maintain challan details
Governance and audit readiness
1 Maintain reconciliation workings and exception tracker 2 Maintain documentation for exports LUT and zero rated supplies 3 Track notices and respond with reconciled evidence 4 Review GST position quarterly for rate and classification changes
How Perfect Accounting Can Help
Perfect Accounting and Shared Services supports end to end GST compliance:
- GST registration and amendments
- GST invoicing process review and master setup
- Monthly return preparation and filing
- GSTR 2B based ITC reconciliation and follow ups
- E invoicing and e way bill process advisory
- GST audit readiness and notice response support