Essential GST & Income Tax Compliances to Fulfil By 31st March 2024

Essential Compliances to Fulfil By 31st March 2024

HERE ARE SOME THINGS YOU MUST KNOW….

As the Financial year end approaches, the rush to complete tax obligations before the 31st of March is palpable among individuals and businessmen alike. It’s a crucial time when ensuring all tax compliances are met becomes a top priority.

We have diligently outlined the necessary tasks that must be accomplished before this deadline to safeguard your business’s future. Failing to address these tasks before the end of the financial year could potentially lead to significant losses. Therefore, it’s imperative to act swiftly and ensure all necessary actions are taken in a timely manner.

In this article, there are some of the compliances which shall be kept in mind by the taxpayers from 2 perspectives: –

Compliances under Income Tax Act, 1961: 

A. Advance Tax Payment Deadline – Income Tax: – According to Sections 207-208 of the Income Tax Act, any taxpayer with a tax liability exceeding ₹10,000 in a financial year is required to pay advance tax. If the taxpayers have not paid advance tax before due dates, they can pay the same before 31^st March 2024 so as to reduce the interest liability. 31^st March 2024 is also the due date for the payment of the whole amount of advance tax for the year 2024-25 for the taxpayers covered under the section 44AD/ADA.

B. Section 43B(h), introduced in the Finance Act 2023, becomes effective on April 1, 2024: –

It mandates timely payments to micro and small enterprises, stipulating payment within 15 or 45 days, depending on the agreement. Failure to comply will result in disallowance of expenditure for FY 2023-24. Taxpayers are urged to reconcile payments to such enterprises promptly to avoid potential losses.

C. Tentative Financials: –

Taxpayers must draft their provisional annual profit and loss statements and balance sheets before March 31st annually. These should then be compared with the previous year’s data and the budgeted figures for the current year to facilitate effective planning.

D. Review of AIS/26AS: –

Ensure meticulous reconciliation of TDS by thoroughly examining the 26AS in the Annual Information System. Follow up with parties who deducted TDS but may have overlooked reporting it in their returns. Additionally, confirm whether transactions such as purchases or sales of immovable property exceeding Rs 30 Lakhs are correctly reflected in the AIS’s Statement of Financial Transactions.

E. Investments for deductions: –

This applies to individuals who choose the old tax regime under income tax. March 31, 2024, marks the deadline for making all tax-saving investments, including LIC premium, Public Provident Fund, ELSS, National Pension Scheme, and donations, to claim deductions under sections 80C, 80D, 80G, 80GGB, etc., for the financial year 2023-24.

F. Linking PAN with AADHAR: –

Linking your PAN with Aadhaar is mandatory under Indian Income Tax Department regulations. Failure to do so can have serious consequences. It may prevent you from filing Income Tax Returns, leading to potential penalties, late fees, and legal action. Moreover, not linking PAN with Aadhaar could render your PAN invalid, causing complications in financial transactions such as opening bank accounts, applying for loans, or buying/selling property.

G. Updated ITR Filing: –

Taxpayers are granted an extension until March 31, 2024, to submit amended income tax returns for the fiscal year 2020-2021 (Assessment Year 2021-2022). This deadline allows individuals who failed to file their returns for the fiscal year 2020-2021 or need to correct any inaccuracies.

H. Long term Capital Gain Taxes tax-planning: –

In case the taxpayers have any unrealised Long term capital gains before 31^st March 2024, the taxpayers may sell their investments (Listed shares) in such a way that their capital gains are up to the limit of Rs 1,00,000.

To simplify the concept, if the taxpayer has Rs 2,00,000 of unrealised gains from listed shares, he may opt to defer such gains by dividing the amount such that in the current year the gains are only up to Rs 1,00,000. The balance amount in the coming month of April can be booked, such that the overall tax impact shall be reduced. 

Compliances under GST/Indirect Tax perspective 

A. Books Annual Reconciliation: – 

We should do reconciliation of our books with the GST return/TDS Returns. So that if any mistake remains, we can correct it within the stipulated time and a huge loss can be avoided. All tax payers must reconcile their boxes and if there is any mistake, correct it as soon as possible. Through some of these reconciliations you will come to know whether you have made any mistake or not.

Taxpayers are urged to promptly reconcile their books, correcting any mistakes discovered. Key reconciliations include comparing GSTR-1 with GSTR-3B, GSTR-1 with E-way Bill, and ITC of Books with various GST returns. These checks ensure the accuracy of filed GST returns and help prevent potential errors.

B. GST LUT Filling for 2023-24: – 

According to the GST law, registered taxpayers who export or supply to Special Economic Zone (SEZ) Units must submit a Letter of Undertaking (LUT) by March 31, 2024, which will be valid from April 1, 2024, to March 31, 2025. This LUT should be filed using Form RFD-11 on the common portal before the specified deadline. By doing so, taxpayers can avail themselves of this provision’s benefits when engaging in future exports.

C. Composition Scheme option (CMP-02) for FY 2024-25: – 

There exists a provision in the GST law allowing taxpayers to opt for the Composition Scheme, thereby avoiding monthly returns and various compliance requirements. These taxpayers, known as Composition Taxpayers, can switch from the regular scheme by submitting the CMP 02 form before March 31, 2024. By doing so, they can benefit from the Composition Scheme starting April 1, 2024. However, certain conditions apply: their turnover must not exceed Rs. 1.5 crore, they cannot collect tax from recipients, and they forfeit the input tax credit. Additionally, they must pay tax out of pocket at a specified rate and file quarterly returns, with a one percent tax for the Composition Scheme. The deadline for filing the CMP 02 form for those interested in opting for this scheme is March 31, 2024.

D. E-Invoicing: –

Under the GST laws, If the total turnover exceeds Rs. 5 Crore during the Financial year 23-24, then its mandatory to generate E-invoice from 1^st April 2024.

Conclusion:

In summary, as the deadline of March 31, 2024, looms, Indian taxpayers are faced with a series of crucial compliances to ensure their financial affairs are in order. From reconciling books with GST and TDS returns to filing declarations for schemes like the Composition Scheme and transporter declarations, there’s a range of tasks demanding attention. Additionally, linking PAN with Aadhaar remains mandatory. Failing to meet these obligations could result in penalties or disruptions in financial transactions. Hence, it’s paramount for taxpayers to act promptly and diligently address these tasks before the deadline, safeguarding their financial well-being and compliance with tax regulations.

Authors:

Kinjal Shah | Associate Consultant  |  Email: [email protected]

Vaibhav Chordia | Associate Consultant  |  Email: [email protected]