Understanding ITC and Vendor Dependence:

GST credit is the backbone of ITC under the GST system. It can enable businesses to credit the GST amount vide on the inputs made purchased for fulfilling one’s own output. This helps reduce your overall tax payments to the government efficiently within the given period. But, claiming ITC requires your vendors to meet GST obligations most of the time.

The Domino Effect of Vendor Non-Compliance:

To claim ITC, your vendor must be GST registered, provide a valid invoice, supply goods/services, pay GST, and file returns on time. Any lapse in these requirements by your vendor can create a domino effect:

• Ineligible ITC Claims: If your vendor hasn’t paid GST, the ITC they charge for your purchase becomes invalid. You cannot claim this credit, which result in a higher tax amount payable.
• GST Notices and Scrutiny: Discrepancies between your declared ITC and your vendor’s tax records may prompt GST department notices. This can create time-consuming inquiries with the tax authorities and even possible tax audits.
• Unnecessary Tax Liability and Penalties: If the tax department finds incorrect ITC claims due to vendor non-compliance, users may face penalties and additional tax obligations.

The Cost of Vendor Lapses Goes Beyond Money:

The consequences of vendor non-compliance are not merely the fines and penalties that have been discussed. Handling GST and potential audits can be stressful, diverting resources from your business.

Taking Control: Preventive Strategies to Mitigate Risk of Fraud in ITC Claims:

Fortunately, this is not the end of the world; you do not have to wait and be a helpless spectator to this situation.

Here’s what you can do to safeguard your business:

• Vendor Selection with GST Compliance in Mind: When choosing suppliers, prioritize those registered for GST. Request their GST registration copies and ensure they understand their GST responsibilities.
• Scrutinize Invoices and Tax Documents: To avoid ITC mishaps, meticulously review all invoices and tax documents from your vendors. Make sure they include such details such as the GST registration numbers, the tax charges, and the HSN codes.
• Regular Reconciliation: Regularly verify that the ITC claimed by your vendors matches the information in your books. This proactive approach can quickly identify any disparities.

Introducing BMA VLCR: Your Complete Resource for vendor loyalty and secure ITC claims

Book My Accountant (BMA) provides a very useful tool which is known as the Vendor Loyalty Check Report (VLCR). This comprehensive report enables you to evaluate your vendors’ GST compliance and protect your ITC claiming rights.

The Benefits of Partnering with BMA VLCR

• Peace of Mind: Having confidence in your vendors’ compliance status is beneficial as it allows your business to focus on growth without constant concern about tax issues.
• Accurate and Secure ITC Claims: Maximize your entitled ITC without fearing penalties due to vendors’ non-compliance.
• Improved Cash Flow: Thus, you avoid getting into a situation where the taxman comes knocking due to non-compliance by some of the vendors you deal with, by doing this you ensure that your business operation enjoys a healthy cash flow.

In conclusion, vendor non-compliance with GST is a stealthy danger that can hit your business’s financials and productivity hard. Henceforth, through proper selection of the vendors, invoice analysis, and using tools like BMA VLCR report, you can protect your ITC claims and be calm.

Call Book My Accountant today to find out more about BMA VLCR and how our team can assist you to deal with the issues of GST compliance without any problems.