Why GST Compliance Matters for Start-Ups
Starting a business in India is an exciting journey, but it comes with a critical responsibility — Goods and Services Tax (GST) compliance. For start-ups, missing a GST deadline is not just a compliance lapse; it can lead to heavy penalties, blocked Input Tax Credit (ITC), disrupted cash flows, and even legal notices from the GST authorities.
India’s GST regime, introduced on 1st July 2017, has undergone significant refinements. In 2025-26, the GST Council has further streamlined return filing, strengthened e-invoicing mandates, and introduced stricter ITC matching rules. For a start-up founder juggling product development, fundraising, and team building, keeping track of GST deadlines can be overwhelming — but it is non-negotiable.
This blog is your ultimate GST Compliance Calendar for Start-Ups — a detailed, month-by-month guide that covers every return, every deadline, every penalty clause, and every best practice you need to run your start-up without falling foul of Indian tax law in FY 2025-26.
SECTION 1: GST BASICS FOR START-UPS
What is GST and Who Needs to Register?
Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax that replaced multiple Central and State taxes in India. Under GST, tax is collected at every stage of the supply chain, but credit of taxes paid at the previous stage is available, making it effectively a tax only on value addition.
Mandatory GST Registration Thresholds (2025-26)
Category
Annual Turnover Threshold
Type of Registration
Goods Supplier (General States)
Above ₹40 Lakhs
Mandatory
Goods Supplier (Special Category States)
Above ₹20 Lakhs
Mandatory
Service Provider (General States)
Above ₹20 Lakhs
Mandatory
Service Provider (Special Category States)
Above ₹10 Lakhs
Mandatory
E-Commerce Operator / Seller
No Threshold Limit
Mandatory (Regardless of Turnover)
Inter-State Supplier
No Threshold Limit
Mandatory (Regardless of Turnover)
Casual Taxable Person
No Threshold Limit
Mandatory (Temporary Registration)
Non-Resident Taxable Person
No Threshold Limit
Mandatory
Voluntary GST Registration — Should Your Start-Up Consider It?
Even if your start-up’s turnover is below the mandatory threshold, voluntary GST registration offers significant advantages:
- Claim Input Tax Credit (ITC) on purchases and operational costs
- Appear more credible to B2B clients, investors, and large corporates
- Enable inter-state supply of goods and services
- Participate in government tenders that require GST registration
- Facilitate seamless onboarding on e-commerce platforms like Amazon, Flipkart, Meesho
Types of GST Applicable to Start-Ups
GST Type
Full Form
Applicable On
Revenue Goes To
CGST
Central Goods and Services Tax
Intra-State Supply
Central Government
SGST
State Goods and Services Tax
Intra-State Supply
State Government
IGST
Integrated Goods and Services Tax
Inter-State Supply / Imports
Central Government (Shared)
UTGST
Union Territory GST
Supplies in UTs without legislature
Union Territory
GST Rate Structure — Know Where Your Products or Services Fall
GST Rate Slab
Examples Relevant to Start-Ups
0% (Exempt)
Fresh fruits, milk, books, newspapers, educational services
5%
IT services (certain), branded food items, transport services
12%
Software on media, mobile phones, processed food
18%
Most IT & software services, restaurants (with AC), advertising
28%
Luxury goods, aerated drinks, online gaming (real money)
💡 Start-Up Pro Tip:
Most SaaS, IT services, consulting, and digital marketing start-ups fall under the 18% GST slab.
Always confirm the correct HSN/SAC code for your product or service using the GST Council’s official HSN lookup tool at www.gst.gov.in to avoid misclassification penalties.
SECTION 2: COMPLETE GST RETURN FILING GUIDE FOR START-UPS
Understanding All GST Returns — Form by Form
The GST return ecosystem in India consists of multiple forms, each serving a distinct compliance purpose. As a start-up, knowing which returns apply to you is the first step in building a robust compliance calendar.
GSTR-1: Outward Supplies Statement
GSTR-1 is the return for reporting all outward supplies (sales) made by a registered taxpayer. It includes details of B2B invoices, B2C sales, credit/debit notes, and export invoices.
Filing Frequency
Applicable To
Due Date
Key Data to Report
Monthly
Taxpayers with turnover > ₹5 Crore
11th of next month
B2B invoices, B2C large invoices, exports, CDNs
Quarterly (QRMP)
Taxpayers with turnover ≤ ₹5 Crore
13th of month after quarter
Consolidated quarterly supply details
GSTR-3B: Monthly Summary Return
GSTR-3B is a monthly self-declaration summary return where a taxpayer reports the summary of outward supplies, ITC claimed, and net tax payable. Tax payment must accompany this return. For QRMP filers, GSTR-3B is filed quarterly but tax must be paid monthly via PMT-06.
Taxpayer Category
Due Date
Tax Payment Deadline
Turnover > ₹5 Crore (Monthly filers)
20th of next month
20th of next month
Turnover ≤ ₹5 Crore – Category A States
22nd of next month after quarter
Monthly via PMT-06 by 25th
Turnover ≤ ₹5 Crore – Category B States
24th of next month after quarter
Monthly via PMT-06 by 25th
📌 Category A States (22nd Due Date):
Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu, Dadra & Nagar Haveli, Pondicherry, Andaman & Nicobar Islands, Lakshadweep
📌 Category B States (24th Due Date):
Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, J&K, Ladakh, Chandigarh, Delhi
GSTR-2B: Auto-Drafted ITC Statement
GSTR-2B is an auto-generated, static statement that reflects the Input Tax Credit (ITC) available to a recipient based on the GSTR-1 filed by their suppliers. It is generated on the 14th of each month and is now the primary document for ITC reconciliation. Start-ups must diligently reconcile GSTR-2B with their purchase records before claiming ITC in GSTR-3B.
GSTR-9: Annual Return
GSTR-9 is the annual GST return consolidating all monthly/quarterly returns filed during the financial year. It is mandatory for taxpayers with an annual aggregate turnover exceeding ₹2 Crore. For start-ups below ₹2 Crore turnover, filing is optional but recommended for transparency.
Form
For Whom
Due Date (FY 2024-25)
Mandatory Threshold
GSTR-9
Regular taxpayers
31st December 2025
Turnover > ₹2 Crore
GSTR-9C
Reconciliation Statement + Self-Certification
31st December 2025
Turnover > ₹5 Crore
GSTR-9A
Composition Scheme taxpayers
31st December 2025
All Composition dealers
Other Important GST Forms for Start-Ups
Form
Purpose
Who Files
Frequency
GSTR-4
Annual return for Composition dealers
Composition taxpayers
Annual (by 30th April)
GSTR-5
Return for Non-Resident Taxable Person
NR taxpayers
Monthly (13th of next month)
GSTR-6
Return for Input Service Distributors
ISDs
Monthly (13th of next month)
GSTR-7
TDS deducted under GST
TDS deductors
Monthly (10th of next month)
GSTR-8
TCS collected by e-commerce operators
E-com operators
Monthly (10th of next month)
GSTR-10
Final Return on cancellation of registration
Cancelled GST registrants
Within 3 months of cancellation
GSTR-11
Inward supplies for UIN holders
UIN holders (embassies etc.)
Monthly (28th of next month)
CMP-08
Quarterly challan for composition dealers
Composition taxpayers
Quarterly (18th of next month after quarter)
PMT-06
Monthly tax payment challan (QRMP)
QRMP scheme taxpayers
Monthly (25th of each month)
SECTION 3: MONTH-BY-MONTH GST COMPLIANCE CALENDAR FY 2025-26
Note: FY 2025-26 runs from 1st April 2025 to 31st March 2026. All due dates are as per current GST law and CBIC notifications. Always check the GST portal for any extensions announced by the GST Council.
April 2025 — Year-Opening Compliance Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Apr 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File TDS/TCS returns for March 2025
11 Apr 2025
GSTR-1
Monthly filers (TO > ₹5 Cr)
Upload all March 2025 outward supply invoices
13 Apr 2025
GSTR-1 (QRMP)
Quarterly filers
Upload Jan-Mar 2025 quarterly outward supplies
13 Apr 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File March 2025 returns
14 Apr 2025
GSTR-2B
All regular taxpayers
Auto-generated ITC statement available — reconcile immediately
18 Apr 2025
CMP-08
Composition dealers
Pay quarterly tax for Jan-Mar 2025
20 Apr 2025
GSTR-3B
Monthly filers (TO > ₹5 Cr)
File summary return & pay net tax for March 2025
22 Apr 2025
GSTR-3B
QRMP – Category A States
File quarterly return for Jan-Mar 2025
24 Apr 2025
GSTR-3B
QRMP – Category B States
File quarterly return for Jan-Mar 2025
25 Apr 2025
PMT-06
QRMP taxpayers
Pay March 2025 monthly tax installment
30 Apr 2025
GSTR-4
Composition taxpayers
File Annual Return for FY 2024-25
30 Apr 2025
ITC-04
Job-work principals
File half-yearly ITC-04 for Oct 2024 – Mar 2025
⚠️ April Special Note:
April is the first month of the new financial year. Ensure your GST registration details, bank account information, authorized signatory details, and business address are updated on the GST portal if there are any changes from last year. New e-invoicing thresholds, if any announced by CBIC, take effect from April.
May 2025 — Regular Compliance Month
Date
Return / Activity
Taxpayer Category
Action Required
10 May 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File April 2025 TDS/TCS returns
11 May 2025
GSTR-1
Monthly filers
Upload April 2025 outward supply details
13 May 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File April 2025 returns
14 May 2025
GSTR-2B
All taxpayers
Reconcile auto-drafted ITC for April 2025
20 May 2025
GSTR-3B
Monthly filers
File April 2025 summary & pay tax
25 May 2025
PMT-06
QRMP taxpayers
Pay April 2025 monthly tax installment
June 2025 — Quarter-End Preparation Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Jun 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File May 2025 TDS/TCS returns
11 Jun 2025
GSTR-1
Monthly filers
Upload May 2025 outward supplies
13 Jun 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File May 2025 returns
14 Jun 2025
GSTR-2B
All taxpayers
Reconcile May 2025 ITC
20 Jun 2025
GSTR-3B
Monthly filers
File May 2025 summary return & pay tax
25 Jun 2025
PMT-06
QRMP taxpayers
Pay May 2025 monthly tax installment
💡 Q1 Quarter-End Tips:
Start reconciling your April–June 2025 data for QRMP filing in July. Identify all pending vendor GSTR-1 uploads to avoid ITC loss. Cross-verify all export invoices with ICEGATE data if claiming GST refunds on exports.
July 2025 — Q1 Quarterly Return Filing Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Jul 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File June 2025 returns
11 Jul 2025
GSTR-1
Monthly filers
Upload June 2025 invoices
13 Jul 2025
GSTR-1 (QRMP)
Quarterly filers
Upload Apr-Jun 2025 quarterly outward supplies
13 Jul 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File June 2025 returns
14 Jul 2025
GSTR-2B
All taxpayers
Reconcile June 2025 ITC
18 Jul 2025
CMP-08
Composition dealers
Pay Q1 (Apr-Jun 2025) tax
20 Jul 2025
GSTR-3B
Monthly filers
File June 2025 summary & pay tax
22 Jul 2025
GSTR-3B
QRMP – Category A States
File Apr-Jun 2025 quarterly return
24 Jul 2025
GSTR-3B
QRMP – Category B States
File Apr-Jun 2025 quarterly return
25 Jul 2025
PMT-06
QRMP taxpayers
Pay June 2025 monthly tax
August 2025 — Regular Compliance Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Aug 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File July 2025 returns
11 Aug 2025
GSTR-1
Monthly filers
Upload July 2025 outward supplies
13 Aug 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File July 2025 returns
14 Aug 2025
GSTR-2B
All taxpayers
Reconcile July 2025 ITC
20 Aug 2025
GSTR-3B
Monthly filers
File July 2025 summary & pay tax
25 Aug 2025
PMT-06
QRMP taxpayers
Pay July 2025 monthly tax
September 2025 — Critical ITC Reconciliation Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Sep 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File August 2025 returns
11 Sep 2025
GSTR-1
Monthly filers
Upload August 2025 invoices
13 Sep 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File August 2025 returns
14 Sep 2025
GSTR-2B
All taxpayers
Reconcile August 2025 ITC
20 Sep 2025
GSTR-3B
Monthly filers
File August 2025 summary & pay tax
25 Sep 2025
PMT-06
QRMP taxpayers
Pay August 2025 monthly tax
⚠️ September Critical Note:
30th September 2025 is the LAST DATE to claim or correct ITC for FY 2024-25 in GSTR-3B. Any missed ITC or amendments to invoices of FY 2024-25 MUST be done before the September 2025 return filing. This is a strict statutory deadline under Section 16(4) of the CGST Act.
October 2025 — Q2 Quarterly Filing & Festival Season Compliance
Date
Return / Activity
Taxpayer Category
Action Required
10 Oct 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File September 2025 returns
11 Oct 2025
GSTR-1
Monthly filers
Upload September 2025 invoices
13 Oct 2025
GSTR-1 (QRMP)
Quarterly filers
Upload Jul-Sep 2025 quarterly supplies
13 Oct 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File September 2025 returns
14 Oct 2025
GSTR-2B
All taxpayers
Reconcile September 2025 ITC
18 Oct 2025
CMP-08
Composition dealers
Pay Q2 (Jul-Sep 2025) tax
20 Oct 2025
GSTR-3B
Monthly filers
File September 2025 summary & pay tax
22 Oct 2025
GSTR-3B
QRMP – Category A States
File Jul-Sep 2025 quarterly return
24 Oct 2025
GSTR-3B
QRMP – Category B States
File Jul-Sep 2025 quarterly return
25 Oct 2025
PMT-06
QRMP taxpayers
Pay September 2025 monthly tax
🛒 Festival Season Alert:
October-November is the peak festival season (Navratri, Dussehra, Diwali). E-commerce start-ups see massive sales spikes. Ensure GST invoices are generated correctly for all orders, especially if selling across states (IGST applicable). E-commerce operators must pay TCS @ 1% on net taxable supplies and file GSTR-8.
November 2025 — Regular Compliance Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Nov 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File October 2025 returns
11 Nov 2025
GSTR-1
Monthly filers
Upload October 2025 outward supplies
13 Nov 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File October 2025 returns
14 Nov 2025
GSTR-2B
All taxpayers
Reconcile October 2025 ITC
20 Nov 2025
GSTR-3B
Monthly filers
File October 2025 summary & pay tax
25 Nov 2025
PMT-06
QRMP taxpayers
Pay October 2025 monthly tax
December 2025 — Annual Return Preparation & Year-End Compliance
Date
Return / Activity
Taxpayer Category
Action Required
10 Dec 2025
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File November 2025 returns
11 Dec 2025
GSTR-1
Monthly filers
Upload November 2025 invoices
13 Dec 2025
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File November 2025 returns
14 Dec 2025
GSTR-2B
All taxpayers
Reconcile November 2025 ITC
20 Dec 2025
GSTR-3B
Monthly filers
File November 2025 summary & pay tax
25 Dec 2025
PMT-06
QRMP taxpayers
Pay November 2025 monthly tax
31 Dec 2025
GSTR-9 & GSTR-9C
Annual return filers
File Annual Return for FY 2024-25 (Deadline — Do not miss!)
31 Dec 2025
GSTR-9A
Composition taxpayers
File Annual Return for FY 2024-25
📅 December Critical Deadlines:
31st December 2025 is the statutory due date for GSTR-9 and GSTR-9C for FY 2024-25. Start preparation by November 15th. Reconcile all monthly returns, ITC ledgers, and tax payment records. Penalty for late filing: ₹200/day (₹100 CGST + ₹100 SGST), capped at 0.25% of turnover.
January 2026 — Q3 Quarterly Filing Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Jan 2026
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File December 2025 returns
11 Jan 2026
GSTR-1
Monthly filers
Upload December 2025 invoices
13 Jan 2026
GSTR-1 (QRMP)
Quarterly filers
Upload Oct-Dec 2025 quarterly supplies
13 Jan 2026
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File December 2025 returns
14 Jan 2026
GSTR-2B
All taxpayers
Reconcile December 2025 ITC
18 Jan 2026
CMP-08
Composition dealers
Pay Q3 (Oct-Dec 2025) tax
20 Jan 2026
GSTR-3B
Monthly filers
File December 2025 summary & pay tax
22 Jan 2026
GSTR-3B
QRMP – Category A States
File Oct-Dec 2025 quarterly return
24 Jan 2026
GSTR-3B
QRMP – Category B States
File Oct-Dec 2025 quarterly return
25 Jan 2026
PMT-06
QRMP taxpayers
Pay December 2025 monthly tax
February 2026 — Union Budget Impact Review Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Feb 2026
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File January 2026 returns
11 Feb 2026
GSTR-1
Monthly filers
Upload January 2026 invoices
13 Feb 2026
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File January 2026 returns
14 Feb 2026
GSTR-2B
All taxpayers
Reconcile January 2026 ITC
20 Feb 2026
GSTR-3B
Monthly filers
File January 2026 summary & pay tax
25 Feb 2026
PMT-06
QRMP taxpayers
Pay January 2026 monthly tax
📢 Union Budget Alert:
The Union Budget is typically presented on 1st February. Any GST rate changes, new exemptions, or amendments announced in the budget will take effect as notified by CBIC. Monitor the CBIC website and GST Council press releases for any changes affecting your product/service category.
March 2026 — Year-End Critical Compliance Month
Date
Return / Activity
Taxpayer Category
Action Required
10 Mar 2026
GSTR-7 & GSTR-8
TDS/TCS deductors & e-com operators
File February 2026 returns
11 Mar 2026
GSTR-1
Monthly filers
Upload February 2026 invoices
13 Mar 2026
GSTR-5 & GSTR-6
NR Taxpayers & ISDs
File February 2026 returns
14 Mar 2026
GSTR-2B
All taxpayers
Reconcile February 2026 ITC
20 Mar 2026
GSTR-3B
Monthly filers
File February 2026 summary & pay tax
25 Mar 2026
PMT-06
QRMP taxpayers
Pay February 2026 monthly tax
31 Mar 2026
Year-End Compliance Checklist
All taxpayers
Complete ITC reconciliation, close books, verify all pending invoices
🗓️ March 31, 2026 — Year-End Checklist:
✔ Ensure all FY 2025-26 invoices are uploaded in GSTR-1
✔ Reconcile GSTR-2B with purchase register — claim all eligible ITC
✔ Pay any pending GST dues to avoid interest @ 18% p.a.
✔ File pending GSTR-1 amendments for FY 2025-26
✔ Check for any show-cause notices and respond before year-end
✔ Verify GST registration details and update if any changes
✔ Close e-way bill data reconciliation with goods movement records
SECTION 4: PENALTIES, INTEREST & CONSEQUENCES OF NON-COMPLIANCE
GST Late Filing Penalties — Know What You Risk
Violation
Penalty / Consequence
Rate / Amount
Late filing of GSTR-1
Late fee
₹50/day (₹25 CGST + ₹25 SGST); ₹20/day if nil return. Capped at ₹10,000 per return
Late filing of GSTR-3B
Late fee
₹50/day (₹25 CGST + ₹25 SGST); ₹20/day if nil. Capped at ₹10,000
Late payment of tax
Interest
18% per annum on outstanding tax amount
Late payment if detected by officer
Interest (fraudulent)
24% per annum
Late filing of GSTR-9 (Annual)
Late fee
₹200/day (₹100 CGST + ₹100 SGST); capped at 0.25% of state turnover
Non-filing leading to registration cancellation
Registration suspended/cancelled
Can be cancelled by GST officer under Rule 21A
Wrong ITC claim
Recovery + Penalty
100% of wrongly claimed ITC + interest @ 24%
Non-generation of e-invoice (if applicable)
Penalty
₹10,000 per invoice or 100% of tax, whichever is higher
Non-issuance of GST invoice
Penalty
₹10,000 or 100% of tax, whichever is higher
Fraudulent GST refund claim
Penalty
100% of refund amount + imprisonment up to 5 years
Interest Calculation on Late Payment — Practical Example for Start-Ups
Scenario: A start-up has GSTR-3B tax due of ₹1,50,000 for June 2025. They file and pay on 5th August 2025 instead of 20th July 2025.
Item
Calculation
Amount
Tax Due
As per GSTR-3B
₹1,50,000
Delay
20 Jul 2025 to 5 Aug 2025
16 days
Interest Rate
18% per annum
18% ÷ 365 = 0.0493% per day
Interest = ₹1,50,000 × 0.0493% × 16
Daily interest applied
₹1,183
Late Fee (GSTR-3B)
₹50/day × 16 days
₹800
Total Extra Cost
Interest + Late Fee
₹1,983
SECTION 5: E-INVOICING & E-WAY BILL COMPLIANCE
E-Invoicing — Mandatory Requirements for Start-Ups in 2025-26
E-Invoicing (Electronic Invoicing) under GST mandates that B2B invoices, credit notes, and debit notes be reported to the Invoice Registration Portal (IRP) in real-time. The IRP generates a unique Invoice Reference Number (IRN) and a QR code, which must be printed on the invoice.
E-Invoicing Turnover Threshold (As of 2025-26)
Effective Date
Annual Turnover Threshold
Mandatory For
1st October 2020
₹500 Crore+
Large businesses
1st January 2021
₹100 Crore+
Mid-large businesses
1st April 2021
₹50 Crore+
Medium businesses
1st April 2022
₹20 Crore+
Growing businesses
1st October 2022
₹10 Crore+
SMEs
1st August 2023 (Current)
₹5 Crore+
All businesses including start-ups with ₹5 Cr+ turnover
⚠️ Start-Up Alert — E-Invoicing:
If your start-up has crossed ₹5 Crore aggregate turnover in any previous financial year, e-invoicing is MANDATORY from 1st April of the subsequent year. Failure to generate valid e-invoices means the buyer CANNOT claim ITC on those invoices — a critical deterrent in B2B relationships. Most B2B clients will reject non-e-invoiced bills.
E-Way Bill — Key Rules for Start-Ups Moving Goods
Rule
Threshold / Condition
Details
Inter-State Movement
Value > ₹50,000
E-Way Bill mandatory for all inter-state movements
Intra-State Movement
Value > ₹50,000 (State-specific)
Threshold may vary by state; check state GST notification
Validity
Up to 200 km: 1 day
Additional 1 day for every 200 km or part thereof
Extension
Within 8 hours of expiry
Can be extended on e-way bill portal by supplier, recipient, or transporter
Penalty for Non-Compliance
Goods detained
₹10,000 or 100% of tax, whichever is higher + vehicle detention
SECTION 6: INPUT TAX CREDIT — THE LIFELINE OF GST COMPLIANCE FOR START-UPS
Understanding Input Tax Credit (ITC) — Rules, Restrictions & Best Practices
Input Tax Credit is the mechanism by which a business can reduce its output GST liability by the GST already paid on its purchases (inputs). For start-ups, effective ITC management can significantly reduce cash outflow.
Conditions to Claim ITC (Section 16 of CGST Act)
- You must be a registered taxpayer under GST
- You must have received the goods or services
- The supplier must have filed their GSTR-1 and the invoice must appear in your GSTR-2B
- You must have a valid tax invoice or debit note
- Tax must have been paid by the supplier to the government
- ITC must be claimed within the earlier of: the due date for filing September return of next year OR date of filing annual return
ITC Restrictions — What Cannot Be Claimed
Item / Expense
ITC Eligibility
Exception
Motor vehicles (< 13 seat capacity)
❌ Blocked
If used for further supply, training, or transport of employees
Food, beverages, outdoor catering
❌ Blocked
If used as mandatory requirement as per statute
Club, health, fitness centre memberships
❌ Blocked
None
Life and health insurance (employees)
❌ Blocked
If obligatory under law (statutory requirement)
Works contract for immovable property
❌ Blocked (if capitalized)
If it is for further supply of works contract
Personal consumption goods/services
❌ Blocked
None
Free samples and gifts
❌ Blocked
None
Office rent, IT services, marketing
✅ Eligible
Must be used for business purposes
Capital goods (computers, machinery)
✅ Eligible
Must be used for business; ITC claimed over useful life if partly exempt
Travel, hotel (for business)
✅ Eligible
Business purpose documentation required
Rule 36(4) — ITC Claim Restriction on GSTR-2B
As per the current GST rules in 2025-26, ITC can be claimed ONLY to the extent it appears in GSTR-2B. Any ITC not appearing in GSTR-2B cannot be claimed, and any excess claimed is subject to reversal with interest. This makes supplier follow-up a critical monthly activity for start-ups.
💡 ITC Management Best Practice:
Download GSTR-2B by the 16th of every month.
Reconcile with your purchase register / accounting software.
For any missing ITC, immediately contact the vendor to file their GSTR-1.
Do not claim ITC beyond GSTR-2B limits — automate this check in your accounting software.
Reverse ITC within 180 days if payment is not made to the vendor (Rule 37).
SECTION 7: COMPOSITION SCHEME — IS IT RIGHT FOR YOUR START-UP?
GST Composition Scheme — Complete Overview
The Composition Scheme is a simplified GST compliance mechanism designed for small businesses. Under this scheme, eligible taxpayers pay GST at a fixed percentage of their turnover and have fewer compliance requirements compared to regular taxpayers.
Composition Scheme Eligibility & Tax Rates (2025-26)
Taxpayer Category
Turnover Limit
Tax Rate (Total GST)
Return to File
Manufacturer (Goods)
Up to ₹1.5 Crore
1% (0.5% CGST + 0.5% SGST)
CMP-08 (Quarterly) + GSTR-4 (Annual)
Trader (Goods)
Up to ₹1.5 Crore
1% (0.5% CGST + 0.5% SGST)
CMP-08 (Quarterly) + GSTR-4 (Annual)
Restaurant Services (not serving alcohol)
Up to ₹1.5 Crore
5% (2.5% CGST + 2.5% SGST)
CMP-08 (Quarterly) + GSTR-4 (Annual)
Service Providers (other than restaurant)
Up to ₹50 Lakhs
6% (3% CGST + 3% SGST)
CMP-08 (Quarterly) + GSTR-4 (Annual)
Composition Scheme: Pros & Cons for Start-Ups
Advantages
Disadvantages
Lower tax rate (1%-6% vs 5%-28%)
Cannot collect GST from customers (no GST on invoice)
Only quarterly return (CMP-08) + 1 annual return (GSTR-4)
Cannot claim Input Tax Credit
No e-invoicing requirement
Cannot make inter-state supplies
Simplified compliance — ideal for early-stage start-ups
Not suitable for B2B businesses where clients need ITC
Reduced accounting and compliance costs
Cannot supply exempt goods/services under composition
SECTION 8: GST REFUNDS FOR START-UPS — EXPORTS & INVERTED DUTY
GST Refund Claims — Types and Procedures
Refund on Account of Export of Goods or Services
Exports are zero-rated under GST. Start-ups exporting goods or services can either:
- Export under Bond/LUT (Letter of Undertaking) without paying IGST and claim refund of accumulated ITC, OR
- Export after paying IGST and claim refund of IGST paid
Refund Type
Application Form
Timeline for Processing
Documents Required
Refund of IGST on Exports
Auto-transmitted from GSTR-1 / ICEGATE
30-60 days (if no error)
Shipping bill, GSTR-1 data, Bank Realization Certificate for services
Refund of ITC on Zero-Rated (LUT)
RFD-01 on GST portal
60 days
GSTR-2B, Purchase invoices, Export invoices, LUT copy
Inverted Duty Structure Refund
RFD-01 on GST portal
60 days
GSTR-3B, GSTR-2B, Purchase invoices showing higher tax on inputs
Excess Tax Paid (Wrong IGST instead of CGST+SGST)
RFD-01
60 days
Corrected invoices, payment challans
📝 LUT Filing for Exporters:
If your start-up exports services or goods (zero-rated), file an annual Letter of Undertaking (LUT) on the GST portal under User Services → Furnish LUT by 1st April of each financial year. A valid LUT allows you to export without paying IGST — significantly helping your working capital position.
SECTION 9: GST COMPLIANCE BEST PRACTICES FOR START-UPS
15 GST Best Practices Every Start-Up Must Follow in 2025-26
1. Automate Invoice Generation
Use GST-compliant accounting software (Tally Prime, Zoho Books, ClearTax, Busy, or QuickBooks India) to auto-generate GST invoices with correct HSN/SAC codes, tax rates, and GSTIN. This eliminates manual errors that lead to ITC disputes and compliance notices.
2. Reconcile GSTR-2B Monthly — Never Skip
Make GSTR-2B reconciliation a non-negotiable monthly process. Set a calendar reminder for the 16th of every month. Any discrepancies between your purchase register and GSTR-2B must be resolved before filing GSTR-3B to avoid excess ITC claims.
3. File Returns on Time — Even Nil Returns
Even if you have zero sales or purchases in a month, file a NIL return. Non-filing triggers late fees and can lead to registration suspension. Nil GSTR-3B can be filed via a simple SMS using the format: NIL 3B [GSTIN] [Tax Period] to 14409.
4. Maintain Vendor GSTIN Database
Maintain an updated vendor master with verified GSTINs. A supplier with an incorrect GSTIN or a cancelled GST registration means you cannot claim ITC on their invoices. Use the GST portal’s GSTIN verification tool or integrate API verification in your procurement workflow.
5. Set Up a Digital Compliance Calendar with Alerts
Create a shared Google Calendar or use compliance management tools like ClearTax GST, Masters India, or Taxmann to set automated reminders for all GST due dates. Include buffer days (file 3-5 days before due dates) to account for portal downtime during peak filing periods.
6. Separate Business and Personal Accounts
Always maintain a dedicated business bank account and business credit card for all GST-related transactions. Mixing personal and business expenses creates confusion during ITC claims and GST audits, and can lead to disallowance of legitimate business expenses.
7. Understand Your E-Invoicing Obligation Early
Monitor your aggregate turnover every quarter. If you are approaching ₹5 Crore, begin preparing your e-invoicing integration immediately. E-invoicing requires IRP integration, which takes time to set up with your accounting software. Proactive preparation is key.
8. Keep Proper Records for 6 Years
Under Section 36 of the CGST Act, GST records must be maintained for 6 years from the due date of filing the annual return of the relevant financial year. Maintain both digital and physical records of all invoices, returns, e-way bills, and correspondence with the GST department.
9. Respond to GST Notices Promptly — Never Ignore
The GST department issues notices via ASMT, DRC, ADT series forms on the GST portal. Monitor your GST portal regularly (ideally weekly) for any notices. Ignoring a GST notice leads to ex-parte orders, which are much harder and more expensive to contest. Always respond within the stipulated time.
10. Choose the Right GST Return Scheme — QRMP vs Monthly
If your annual turnover is under ₹5 Crore, opt for the QRMP (Quarterly Return with Monthly Payment) scheme to reduce compliance burden. You file GSTR-1 and GSTR-3B only quarterly, while tax payment continues monthly via PMT-06. This reduces your annual filing count significantly.