How to Mitigate GST Loss and Boost Your Company’s Profit
Does your company suffer from GST leakage? Many business owners believe their GST is perfectly managed, but the reality is often different. Almost every company faces some level of GST loss. The difference between a high-profit firm and a struggling one often comes down to how intelligently the CFO manages these gaps.
Why GST Losses Happen
GST loss usually occurs when there is a disconnect between your accounts and the government portal. If you aren’t tracking your input tax credits (ITC) aggressively, you are essentially leaving money on the table.
1. Vendor Non-Compliance
One of the most common causes of GST loss is a vendor who fails to file their returns. If your vendor doesn’t file or files late, you cannot claim the credit. Therefore, your purchase department must stay in constant communication with accounts to track these “risky” vendors.
2. The IceGate Mismatch
For companies involved in imports, GST is paid alongside customs duties. However, errors often occur during the data transfer to the GST portal. Consequently, the tax you paid doesn’t show up in your electronic credit ledger. Regular follow-ups on the IceGate portal are essential to prevent this.
Practical Steps to Reduce GST Leakage
To protect your bottom line, you need a proactive “Action Point” system. Here is how you can start today:
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Monthly Reconciliations: Compare your books against the GSTR-2B statement every month.
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Implement CAPA: Use Corrective and Preventive Actions (CAPA) to identify why a loss happened and ensure it doesn’t repeat.
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Department Synergy: Your purchase team should help accounts by chasing vendors for missing GST filings.
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Set Thresholds: You might not reach “zero” loss immediately. However, you can aim to bring losses down from 1 Lakh to 10,000, and eventually lower.
Conclusion
Mitigating GST loss is not just an accounting task; it is a management priority. By tightening your follow-up mechanisms and ensuring vendor compliance, you can turn hidden losses back into company profits.