Why GST SOPs Matter for Tech Companies

If you’re running an IT services company or software business in India, chances are you’re juggling client deadlines, export invoices, and foreign SaaS subscriptions — all while trying to stay GST compliant. Sound familiar?

Here's the thing: missing even one step in your GST compliance (like filing a Letter of Undertaking on time or accounting for import services under Reverse Charge) can invite penalties, notices, and ITC rejections.

This is where a clear, practical GST Standard Operating Procedure (SOP) becomes your secret weapon.

In this blog, we’ll walk you through sector-specific GST SOPs for IT and software companies — written in plain English, with real-world relevance.

Who Is This For?

This guide is perfect for:

• IT Services Providers

• Software Development Firms

• Tech Startups & SaaS Companies

• Businesses with exports and foreign subscriptions

Whether you're a freelancer scaling up or a mid-size tech LLP, these SOPs will help streamline your GST game.

1. GST SOP for Invoicing & E-Invoicing

Why it matters: Wrong invoice formats or late e-invoice generation can delay ITC for clients and attract notices.

Step-by-Step:

• Raise invoices with correct SAC (e.g., 998313 for Software Dev).

• For B2B, generate e-invoices with IRN and Ack No. using the NIC portal or your ERP.

• For exports, mark the invoice “Under LUT without payment of IGST”.

• Maintain a proper e-invoice register (Date, GSTIN, IRN, Export flag).

Pro Tip: Reconcile your e-invoice data with GSTR-1 every month to avoid mismatches.

2. SOP for Export of Services & LUT Compliance

Why it matters: Forgetting to file LUT = You pay GST on exports and claim refund later. Not ideal.

What to Do:

• File LUT before March 31 every year on the GST Portal.

• Add attachments: Previous LUT, Authorization Letter, DSC.

• Mention LUT details on export invoices.

• Keep FIRC/BRC as proof of foreign exchange received.

Pro Tip: Set a calendar reminder in March to avoid missing your LUT renewal.

3. SOP for Input Tax Credit (ITC) – Tools, Subscriptions & Expenses

Why it matters: ITC is your money. Claiming it right = saving lakhs over time.

Your ITC Checklist:

• Ensure vendors upload invoices correctly (watch out for mismatches in GSTR-2B).

• Classify purchases:

  • Eligible ITC: Laptops, rent, cloud subscriptions

  • Blocked ITC: Food, gifts, employee travel (per Sec 17(5))

• Maintain a clean RCM ledger for imported services.

• Review ITC monthly and reconcile with GSTR-2B.

Pro Tip: Use tools like Tally, Zoho Books, or ClearTax for auto-matching ITC.

4. SOP for Reverse Charge Mechanism (RCM) – Imported Services

Why it matters: IT companies often miss GST on foreign tools (like AWS, Zoom, or Adobe). This triggers audit issues.

Stay Compliant:

• Maintain an Import Register with:

  • Vendor, Invoice No., Value (in INR), Service Type

• Use RBI exchange rate on invoice date.

• Calculate GST @18% and pay using PMT-06 Challan.

• Claim this GST back in the same GSTR-3B return.

Pro Tip: RCM applies even if the foreign vendor doesn’t charge GST — it’s your duty as the importer.

5. Monthly & Annual Return Filing SOP

Monthly:

• File GSTR-1 by 11th (outward supplies)

• File GSTR-3B by 20th (tax payment + ITC claim)

Annually:

• File GSTR-9 (Annual Return)

• If turnover > ₹5 Cr, file GSTR-9C (Audit Reconciliation)

Pro Tip: Don’t wait till December. Start annual reconciliations in October using a proper checklist.

Bonus: Free Templates You Can Use

At AuditorSaab, we provide downloadable WORK BOOK formats for:

• Export Invoice Format with LUT

• Monthly GST Reconciliation Sheet (Books vs GSTR-2B)

• RCM Payment Tracker

• GST Filing Calendar for IT Firms

Want access? Contact Us Here  to REGISTER and DOWNLOADE.

Final Thoughts

GST compliance doesn't have to be a burden — especially when you’re armed with the right SOPs and checklists. For IT and software businesses, being proactive can help:

• Avoid tax notices

• Protect your Input Tax Credit

• Maintain clean books for investors & audits

• Need help with GST audits or want us to set up your entire SOP system?

• Reach out to our expert team at AuditorSaab.com – your tax guide in the digital age.

Introduction

GST filing can be overwhelming for small business owners due to complex regulations, multiple return types, and frequent policy changes. Many entrepreneurs struggle with invoice mismatches, ITC claims, and deadline tracking, leading to unnecessary penalties.

At AuditorSaab, we specialize in simplifying GST compliance so that small businesses can focus on growth rather than tax worries. In this guide, you’ll learn everything about GST filing, from return types to common mistakes and expert strategies to stay compliant and penalty-free.

Why GST Compliance is Critical for Small Businesses

✅ Avoid Hefty Fines – Late GST filings can result in penalties starting at ₹50 per day.
✅ Ensure ITC Eligibility – Proper GST filing ensures your Input Tax Credit (ITC) is not rejected.
✅ Boost Business Credibility – Vendors and customers prefer dealing with GST-compliant businesses.
✅ Stay Audit-Ready – A well-maintained GST record protects your business from compliance scrutiny.

Step-by-Step Guide to Filing GST Returns

Step 1: Register & Access GST Portal

• Visit the GST portal (www.gst.gov.in) and log in with your GSTIN credentials.
• Ensure that your business is registered correctly under the appropriate tax regime (Regular/Composition).

Step 2: Organize Your Business Invoices

• Maintain a record of all sales and purchase invoices with correct GSTIN details, invoice numbers, and tax bifurcation.
• Ensure invoices are generated as per GST compliance rules to avoid mismatches.

Step 3: Identify the Right GST Return Type

Step 4: Reconcile Input Tax Credit (ITC)

• Match purchase invoices with GSTR-2B auto-populated data to ensure accurate ITC claims.
• Identify missing or mismatched invoices to avoid ITC rejection.

Step 5: File GST Returns Before Due Dates

• Set reminders for due dates to avoid late fees.
• Ensure tax liabilities are paid before submission to prevent notices from tax authorities.

Step 6: Maintain Digital Records for Audit Readiness

• Keep digital copies of invoices, ledgers, and tax returns for a minimum of 6 years.
• Regularly review GST transactions to identify discrepancies before audits.

Common GST Filing Mistakes Small Businesses Must Avoid

🚫 Incorrect GSTIN on invoices – Always verify customer & vendor GSTINs.
🚫 Late filing penalties – Track GSTR-1 & GSTR-3B deadlines to avoid unnecessary fines.
🚫 Mismatch between GSTR-1 & GSTR-3B – Ensure all sales are properly reported.
🚫 Claiming ITC on ineligible purchases – Only claim ITC on invoices uploaded by suppliers.
🚫 Ignoring GST notices – Respond to any tax department queries immediately.

How AuditorSaab Can Simplify Your GST Filing

💡 100% Error-Free GST Filing – Avoid common mistakes and file with confidence.
💡 Automated ITC Reconciliation – Match ITC claims seamlessly with supplier data.
💡 Timely GST Return Reminders – Never miss GST deadlines again.
💡 Expert-Led Compliance Review – Get personalized GST advice for your business.

📞 Need Help? Book a Free Consultation with our GST Experts at AuditorSaab.com today!

Conclusion

Filing error-free GST returns is easier when you follow a structured approach. By staying compliant, you avoid penalties, improve cash flow, and build trust with vendors and customers.

Let AuditorSaab take care of your GST compliance, so you can focus on growing your business with confidence! 🚀

📩 Talk to Our GST Experts Today! | Visit www.auditorsaab.com