Thread by @accountd_hq

It is difficult for new startup founders to understand GST system.

We have simplified it below:
#startups

GST (Goods and Services Tax) is a tax system in India that requires businesses to file their tax returns electronically.

There are different types of GST returns, including GSTR-1, GSTR-2B, and GSTR-3B. Here's a brief explanation of how each one works:
#GSTsimplified

GSTR-1: This return is filed by businesses to report their outward supplies of goods or services.

In simple terms, it means the sales made by the business.

The return needs to be filed monthly or quarterly, depending on the turnover of the business.
#founders

GSTR-2B: This return is auto-generated and provides a summary of the input tax credit (ITC) available to the business.

ITC is the tax paid by a business on its purchases, which can be used to offset the tax liability on its sales.
#taxation

GSTR-3B: This return is a summary of the business's tax liability for a particular period. It includes details of the sales made, ITC availed, and the tax payable on the net sales after deducting the ITC. The tax liability needs to be paid before filing this return, not GSTR-1.

Important points:
GSTR-2B provides information on the ITC available based on the purchases made by the business, as reported by its suppliers in their GSTR-1 returns.

By comparing the GSTR-2B with their own purchase records, businesses can ensure the their supplier has upload all the invoice relating to you in their GSTR-1 and no invoice is missed by them.

This is important as you can claim ITC only for the invoices appearing in GSTR2B.

Example:

ITC in purchase invoice = Rs 100.
ITC appearing in 2B = Rs 80.

You claim ITC for Rs 80 only and you have to pay Rs 20 from your pocket while paying your own GST.