GST Health Check for Small Businesses: Ensure 100% Compliance in 2025

Introduction

For small businesses in India, GST compliance isn’t just about filing returns on time—it’s about accuracy, transparency, and being audit-ready. As GST laws evolve each year, 2025 brings new thresholds, e-invoicing mandates, and stricter scrutiny from tax authorities. To stay ahead, conducting a GST health check for small businesses is no longer optional.

In this blog, the expert team at Makwana Sweta & Associates, a leading provider of Chartered Accountant Services in Mumbai, guides you through the essential steps to assess and improve your GST compliance.

Why GST Health Check Matters

GST laws are constantly evolving. New rules introduced in Union Budget 2025 include:

Mandatory e-invoicing for businesses with turnover above Rs. 5 crore
Stricter input tax credit (ITC) claims matching
Enhanced reporting on GSTR-9C

Even a minor mistake can lead to:

Penalties up to Rs. 25,000 for incorrect returns
Blocking of ITC under Rule 86A
Notices under Section 61 or 65

A timely GST health check helps small businesses avoid these issues and remain eligible for refunds and credits.

Step-by-Step GST Health Check for Small Businesses

1. Review GST Registration Details

Make sure:

PAN, business address, and principal place of business are updated
Email ID and mobile number are accessible
Correct nature of business is selected under HSN/SAC code

Update immediately on the GST portal if any changes are needed.

2. Verify Return Filing Status

Ensure timely filing of:

GSTR-1 (Outward Supplies)
GSTR-3B (Summary Return)
GSTR-9/9A (Annual Return)
GSTR-9C (Audit Reconciliation)

Use the GST dashboard to monitor any delays or non-filing issues.

3. Reconcile Input Tax Credit (ITC)

Match ITC in:

GSTR-2B vs. books of accounts
Purchase register vs. GSTR-3B
Debit notes and credit notes reconciliation

Rule 36(4) limits ITC to only the amount reflecting in GSTR-2B. Mismatches may lead to ITC reversal.

4. Check for E-Invoicing Compliance

As per the 2025 budget:

E-invoicing is mandatory for turnover above Rs. 5 crore
Non-compliance can lead to rejection of invoices

Use IRP (Invoice Registration Portal) to validate your e-invoice status.

5. Match GSTR-1 with Books

Mismatch between:

GSTR-1 and sales ledger
GSTR-3B and books

…can attract notices under Section 61. Ensure monthly reconciliation.

Common GST Errors to Fix

Error Type	Impact
Wrong HSN/SAC	Higher/lower tax rate applied
Non-reported B2C transactions	Under-reporting of turnover
Delayed GSTR-1 filing	Late fees and loss of buyer’s ITC
Wrong invoice sequence	Penal provisions under GST

Correcting these now avoids retrospective notices or audits.

How to Stay Audit-Ready

To be ready for GST audits or scrutiny notices:

Maintain invoice-wise trail for all transactions
Retain documents for 6 years under GST Act
Prepare monthly and annual reconciliations
Use automated tools for reporting accuracy

Consider conducting an internal GST audit every 6 months.

Benefits of a GST Health Check

Identify overpaid taxes or unclaimed ITC
Improve compliance score on GSTN portal
Build reputation with vendors and banks
Reduce risk of penalty or cancellation

Proactive compliance is cheaper than reactive penalties.

Role of a Chartered Accountant

Partnering with a qualified Chartered Accountant in Mumbai like CA Sweta Makwana ensures:

Expert review of filings
Compliance with state-specific rules
Error correction in GSTR-1/3B
Effective response to GST notices

We offer CA services in Mumbai and across India with strong experience in GST audits, refunds, and reconciliation.

Final Thoughts

Running a small business in India is already a big challenge—don’t let GST compliance be another. A regular GST health check for small businesses can help you stay on track, claim eligible credits, and avoid penalties.

Let Makwana Sweta & Associates, a trusted name in Chartered Accountant Services Mumbai, ensure your GST health is 100% compliant.

Useful Links

Inbound: GST Compliance Services
Outbound: Official GST Portal