What GST mistakes delay businesses in India
Most GST delays are not a paperwork problem. They are a sequencing problem — and a few specific decisions cause most of the pain.
Indian founders ask about GST as if it were a single decision. It is not. GST is a sequence of decisions over a year: registration, monthly returns, annual return, refunds, restructuring when the business grows. Most of the delays we see happen because one decision early in the sequence locks in problems that compound later.
Mistake 1: registering too early — or too late
The aggregate-turnover threshold for GST registration is ₹20 lakh for services (₹10 lakh in special-category states) and ₹40 lakh for goods. Some founders register on day one as a credibility signal, then spend 18 months filing nil returns. Others wait too long and miss the registration window after crossing the threshold, picking up late-registration penalty and interest.
The right answer depends on whether you have ITC (input tax credit) to claim. If you have material vendor GST inputs, register early — you cannot claim ITC without GSTIN. If you do not, wait until you are within striking distance of the threshold.
Mistake 2: misclassifying the place of supply
GST is destination-based. The place of supply determines whether the transaction is intra-state (CGST + SGST) or inter-state (IGST). For services especially, the rules are not obvious — and getting them wrong creates a notice cascade that takes months to clear.
The most common error: a service provider in Karnataka billing a client registered in Maharashtra applies CGST + SGST instead of IGST. The client cannot claim ITC on the mismatched tax type. The provider has to file a credit note, refund, and re-bill correctly. Avoid by checking place-of-supply rules at the moment of invoicing, not after.
Mistake 3: not filing LUT for export of services
Indian businesses billing foreign clients can export services without paying IGST on the invoice — but only if a Letter of Undertaking (LUT) is on file with the GST department for the relevant fiscal year. Without LUT, every export invoice pays IGST upfront, which then has to be claimed back via refund. The refund cycle takes months.
LUT is filed annually, usually in March or April for the upcoming fiscal year. The form is simple. Most businesses that miss filing do so because no one was tracking the renewal date.
Mistake 4: GSTR-3B and GSTR-1 mismatches
GSTR-1 is the monthly outward-supply return. GSTR-3B is the monthly summary return. Both have to match — the IGST/CGST/SGST you report in GSTR-3B has to reconcile to the GSTR-1 invoice-level data. Mismatches trigger department scrutiny.
The fix is process discipline: GSTR-1 first, GSTR-3B second, reconciled against the books, every month, by the 11th and the 20th respectively. Companies that file under deadline pressure miss the reconciliation step and accumulate notice risk.
Mistake 5: trying to handle GST without a CA
Founder-led GST compliance works at the very early stage when activity is low. It stops working as soon as the business has multi-state presence, export activity, ITC accumulation, or refund cycles. Most of the delays we untangle for new clients started as 'we'll handle GST ourselves for now' decisions that ran longer than they should have.
What clean GST operation looks like
- 1Register at the right time — not too early, not too late.
- 2Place-of-supply checked at every invoice.
- 3LUT filed annually for any business billing foreign clients.
- 4GSTR-1 and GSTR-3B filed on time, reconciled to books, every month.
- 5Annual return (GSTR-9) filed by December following the fiscal year.
- 6ITC refund cycle, if applicable, kept current — FIRC submission, refund application, follow-up.