Dr. Sanjiv Agarwal, FCA, FCS
The first financial year of GST regime is coming to an end next week on 31.03.2018. This is also the year of transition or migration of old indirect tax regime (VAT, Service Tax, Central Excise and other taxes) into goods and services tax regime (GST).
Accordingly, the current financial year 2017-18 is crucial for transitional events as well as carry forward of balances including input tax credit and various compliances which may have ramifications and monetary impact in future for tax payers.
Here are few events which ought to be verified, documented and suitable action taken:
- Since financial year is coming to an end and new one starts, assessees, wherever applicable, will have to decide and opt for composition scheme or continuing with it or else withdrawing from the scheme.
- Re-check all due dates and compliances as dates for payment, filing etc were extended more than once.
- Check compliances on account of temporary exemptions, withdrawal, etc in implementation of various provisions such as TDS, TCS payment under reverse charge, tax on advances for goods etc.
- Rates of GST have been changed several times. Ascertain application of correct GST rate on items of goods and services based on effective date of such rate change. The same may be followed for levy of compensation cess.
- All invoices required to be raised must be done within the year.
- Due tax payments to be made before 31.03.2018, if not paid so far.
- Pending or due returns to be filed now, if not done till now
- Ensure that invoices may be raised and debit or credit notes issued as may be required. Defective invoices be rectified before year end. This is more important in case of Government contracts and continuous supply cases.
- The correctness of input tax credit and transitional credit may be ascertained by way of an independent or internal supervisory due diligence. If required, credit reversal may be done.
- Any adjustments in accounts, invoices etc can be done now before 31st March, 2018 so that all balances are correctly carried forward and books of accounts are clean of any past error / adjustment w.e.f. 1.4.2018.
- Proper inter-account / ledger reconciliations may be done.
- Verification and valuation of closing stock as on 31.03.2018 ought to be done
- Taxpayers should also ensure compliance with anti-profiteering law to avoid possible penal action, once books are closed.
Apart from the aforementioned activities or checklist, it will be imperative upon the assessees to ensure that documents are complete, legally pursuable and invoices etc match with the books of accounts and work orders / contracts etc. All ledger accounts should be reconciled and adjusted, debit or credit notes, as the case may be, issued and duly accounted for. Taking transitional Cenvat Credit (Input Tax Credit in GST) requires TRAN -2 return to be filed before 31st March, 2018 for availing July, 2017 opening stock credit. Thus, filing of TRAN-1 alone would not be sufficient. The purchases should also be matched on GSTN portal before 31st March, 2018. Assessees must also ensure that they claim either depreciation or input tax credit on the tax component in case of capital goods. In case of capital goods other than buildings, depreciation can not be charged on input tax credit component and it should be taken care of. It may also be ensured that e-way bills are generated from 1st April, 2018 and all preparations for the same must be in place.
On input tax credit, it is important to undertake age analysis of payment of tax invoices as unpaid tax invoices should not be more than 180 days old. Actually, all invoices issued prior to 1st October, 2017 ought to be paid to avail input tax credit (as on 31st March, 2018). Input service distributors are required to file GSTR-6 return for July, 2017 – February, 2018 by 31 March, 2018.
In case of exports, letter of undertaking will have to be obtained for this year and next year if exports are to be made without payment of IGST.
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