GST Defaulting Suppliers - A threat to your business
GST defaulting suppliers can be a major roadblock for businesses and may badly affect their working capital.
Cash flow of the businesses gets affected wen your suppliers show irregularities in their GSTR-1 filings.
Statistics from the previous years suggests that losses due to defaulting suppliers could be as much as 7% of the working capital of large companies having sales of over ₹500 Cr. This figure could be much worse for mid-level and small-scale companies.
That is the reason why identifying bogus or defaulting suppliers becomes necessary for the businesses.
This can be achieved by simple online GST verification on the GST portal.
Businesses must verify their suppliers before getting into any deals or transactions.
How do I verify the Supplier
There are 2 ways to verify your supplier:
1. Using GSTIN information of the supplier
2. GST verification by PAN card details of the business or supplier
Risks of dealing with a GST defaulting supplier
It's essential for the businesses to identify bogus suppliers and genuine suppliers so that they do not have to face any negative implications in the future.
Dealing with a defaulting supplier can invite a GST audit by department and your working capital can also take a heavy blow.
Hence, businesses are advised to take all the precautionary measures to prevent dealing with a defaulting or a bogus supplier.
Stay updated; stay ahead!
Until the next time....