For the month of March’18, GSTR 3B needs to be filed by 20th April’18. Considering the fact that this is the first closing year in GST, assessee should take care of the following points before GST returns are filed for Mar’18. Further, this is also important from the perspective of GST Annual Returns and GST Audit (Reconciliation) to be carried out FY 17-18 on or before 31st December, 2018.
1. Transition Credit:
For the GST transition credit availed on the closing balance of ST, VAT and stock assessee needs to make sure required entries are passed in the financial records. In case of Closing balance of Service tax Credit carried forward, CGST Ledger should be debited whereas in case of VAT credit carried forward, SGST Ledger needs to be debited. Further, excise credit availed on stock for which invoice is available should be debited to CGST Account and credited to Inventory.
The Assessee needs to make sure that consolidated turnover for the period July’17 to Mar’18 matches with GSTR 3B and GSTR 1. In case of any differences or instances where turnover was not disclosed earlier, then the same should be disclosed in Mar’18. For the delay in payment of tax, assessee may opt for payment of interest.
3. GST Liability appearing as on 31st Mar’18
GST liability appearing in books as on 31st Mar’18 should be matched to GST liability paid or to be paid in Apr’18. The liability of CGST, SGST and IGST should be individually tallied and not on consolidated basis. Difference if any needs to be reconciled. Further, break up of GST liability i.e., CGST, SGST and IGST should be shown separately in the financials. In case assessee is having registration in more than one state then the GST liability needs to be grouped State wise at the time of preparing consolidated financial statements.
4. Credit Balance as per Electronic Credit Ledger:
In case if input tax credit is more than tax payable for the month of Mar’18 then the same should be shown as recoverable in the books and should be matched with the balance appearing in the Electronic Credit Ledger as per the GST Portal. Closing balance of Input tax credit should form part of the financials under Current Assets.
5. Cash Balance as per Electronic Cash Ledger:
Amount available in Electronic Cash Ledger, if any should be first utilized for payment of tax for Mar’18. In case if the same cannot be utilized then it should be carried forward to FY 18-19. This balance should also appear in the financials under Current Assets.
6. Excess Tax Paid:
In case if any tax is paid inadvertently then the same can be adjusted against actual tax liability. However, in case if tax is collected wrongly from the customer then it needs to be completely remitted to the Govt. and cannot be adjusted against other liability.
7. Unavailed Input Tax Credit:
On detailed review of financials it can be observed that there is a very possibility that certain credits are missed out esp. in cases where the vendor would not have issued tax invoice immediately. Generally assessee’s miss out availing credit on Bank Charges, Loan Processing charges, Insurance (other than employees), expenses debited directly to prepared expenses, capital goods, credit card commission, courier charges etc. It is suggested to carry out a detailed review of all expenses and purchases to identify such instances. Any instances of unavailed credit needs to be accounted only in Mar’18 as GST returns for earlier periods would have already been filed. Further, GST law provides an option to claim unavailed credit in the following period upto September following the financial year.
8. Late filing fees and Interest:
Considering the present GSTR 3B system which automatically populates payment challan including late filing fees, there is high possibility that such payments may have been debited directly to GST liability account instead of debiting it to rates and taxes.
9. GST Credit of tax paid under RCM.
Unlike the erstwhile ST law where credit of ST paid under RCM was available only at the time of payment, under GST there is no such restriction as the same can be availed immediately. Accordingly, credit for GST paid for Mar’18 should be availed in March itself. Detailed verification of RCM payments upto Mar’18 and corresponding credit of it needs to be carried out.
10. GSTR 2A:
Although the Govt. has temporarily suspended matching of credit and filing of GSTR 2, assessee will be still required to download GSTR 2A and consolidated upto Mar’18 to check:
a. Whether all vendors have uploaded their invoices
b. Whether credit of other locations or third party is appearing
c. Identify instances where vendor has uploaded its invoice, however assessee has missed availing credit of it.
With the limited time available for filing GSTR 3B for Mar’18, assessee may opt for paying approximate tax liability by 20th Apr’18 however GST returns may be filed after carrying out the above check points. Although there may be late filing fee of Rs. 50 per day, the above exercise will be helpful to avoid any major issues to crop up during the audit and assessments.
Author of this article is a Practicing Chartered Accountant from Bangalore and can be reached at firstname.lastname@example.org