Guide to GST Compliance for Accounting Firms in India

Accounting firms providing taxable services must register under GST if their aggregate turnover exceeds the threshold limit. For service providers, the threshold is ₹20 lakh in most states (₹10 lakh for special category states). Registration is mandatory regardless of turnover if the firm makes inter-state supplies or is required to pay tax under reverse charge.

The registration process is online through the GST portal (www.gst.gov.in). Firms need a valid PAN, Aadhaar, business address proof, and bank account details. After submitting Form GST REG-01, the application is verified, and a GSTIN (GST Identification Number) is issued within 7 working days. Firms providing services exclusively to SEZ units or developers may also need separate registration.

Accounting firms must ensure all partners or proprietors have valid PANs linked to Aadhaar. If the firm has multiple branches in different states, separate GST registrations are required for each state. Failure to register when required can result in a penalty of ₹10,000 or the tax amount, whichever is higher.

Accounting firms must file GSTR-1 (outward supplies) and GSTR-3B (summary return) regularly. For firms with turnover up to ₹5 crore, quarterly filing of GSTR-1 is optional; otherwise, monthly filing applies. GSTR-3B must be filed monthly by the 20th of the following month. The annual return GSTR-9 is due by 31st December of the following financial year.

For firms opting for the composition scheme (turnover up to ₹1.5 crore for services), CMP-08 is filed quarterly by the 18th of the month following the quarter, and GSTR-4 annually by 30th April. However, accounting firms providing services may not benefit from the composition scheme as it restricts input tax credit.

Late filing attracts interest at 18% per annum (9% for net tax liability) and a late fee of ₹50 per day (₹25 each for CGST and SGST). For nil returns, the late fee is ₹20 per day (₹10 each). Firms should maintain a return calendar and reconcile GSTR-2B (auto-drafted purchase data) with their purchase register to claim correct input tax credit.

Accounting firms must maintain records of all supplies, purchases, and input tax credit for at least 8 years from the last date of filing the annual return. Invoices must contain GSTIN, invoice number, date, description of services, HSN/SAC code, taxable value, GST rate, and amount. For services, SAC code 9983 applies to accounting and auditing services.

E-invoicing is mandatory for firms with aggregate turnover exceeding ₹5 crore in any preceding financial year from 2017-18 onwards. E-invoicing requires generating an Invoice Reference Number (IRN) from the GST portal or through an approved GSP. The e-invoice must be reported within 7 days of issuance. Firms below the threshold can continue with manual invoices but must ensure compliance.

Records must include: (a) production or manufacture of goods (if applicable), (b) inward and outward supply of services, (c) stock of goods, (d) input tax credit availed, (e) output tax payable and paid, and (f) other prescribed particulars. Digital records are acceptable if they are accessible and printable. Failure to maintain proper records can lead to a penalty of up to ₹25,000.

Accounting firms can claim ITC on GST paid for goods and services used in the course of business. Common eligible inputs include office supplies, software subscriptions, rent, professional fees, and capital goods like computers and furniture. ITC cannot be claimed for goods or services used for personal purposes or for supplies that are exempt or nil-rated.

To claim ITC, the firm must: (a) possess a valid tax invoice or debit note, (b) have received the goods or services, (c) have the supplier file GSTR-1 and the invoice appear in GSTR-2B, and (d) pay the supplier within 180 days from invoice date. ITC must be claimed in the return for September of the following financial year or the annual return, whichever is earlier.

ITC is subject to reversal if the firm opts for the composition scheme, makes exempt supplies, or if the supplier fails to pay tax. The reversal is calculated using Rule 42 or 43 of CGST Rules. Firms must maintain an ITC register and reconcile it monthly with GSTR-2B. Incorrect ITC claims can result in demand notices with interest and penalty.

Accounting firms with turnover exceeding ₹2 crore in a financial year must get their accounts audited by a Chartered Accountant or Cost Accountant. The audit report (Form GSTR-9C) must be filed along with the annual return GSTR-9 by 31st December. The audit verifies the correctness of turnover, ITC claimed, tax paid, and compliance with GST laws.

The GST officer may also conduct a scrutiny assessment (Section 61) or a special audit (Section 66) if discrepancies are found. During scrutiny, the officer compares returns with available information and may issue a notice for explanation. The firm must respond within 30 days. Non-compliance can lead to best judgment assessment under Section 62.

Firms should maintain a compliance calendar and conduct internal audits quarterly. Common issues found during audits include mismatch between GSTR-1 and GSTR-3B, incorrect HSN/SAC codes, delayed filing, and improper ITC claims. Proactive compliance reduces the risk of notices and penalties. The penalty for non-filing of audit report is ₹100 per day under Section 47.

If your accounting firm needs assistance with GST registration, return filing, or audit compliance, consult a qualified Chartered Accountant or GST practitioner. They can help you set up proper systems, avoid penalties, and manage notices from the GST department.

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This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.