Article covers key points that are essential for filing monthly GST returns and reconciling accounts, offering a comprehensive guide on how to ensure GST compliance and effectively finalize books of accounts on a monthly basis from a GST perspective.
Essential Tips for Filing Monthly GST Returns and Reconciling Accounts: A Comprehensive Guide
How to Ensure GST Compliance: Key Points for Filing Monthly GST Returns and Finalizing Books of Accounts from a GST Perspective
- Credit in Trail Balance: Review any income recorded on the credit side of the Trail Balance to determine if it should be included in outward supply, such as scrap sales or rental income.
- Turnover Reconciliation: Reconcile turnover as per GSTR 1, GSTR 3B, and the Books of Accounts. Investigate any discrepancies by examining invoice details.
- LUT for Export: Ensure a Letter of Undertaking (LUT) is furnished for the financial year if exporting without payment of tax.
- Purchase Reconciliation: Compare purchases recorded in GSTR 2A and 2B with the Books of Accounts. Investigate any differences by checking invoice details.
- Reverse Charge Mechanism (RCM): Verify if RCM has been properly recorded and paid in cash for services like GTA, legal fees, and remuneration to directors. For services capitalized as part of an asset’s cost, ensure GST is discharged on a reverse charge basis if rendered by foreign entities.
- Advances for Future Services: Recognize GST liability on any advance received for future services on the date of receipt. Check whether the same has been accounted for in GSTR 1 and 3B.
- Reversal of ITC: Ensure ITC reversal for payments not made within 180 days, blocked credits (e.g., Motor Vehicles, Insurance), invoices not received, goods/services not received, Return not filed by the supplier, place of supply rules, time limitations (by 30th Nov), and invoices not related to us.
- Unbilled Revenue: Adjust unbilled revenue for services rendered in March according to AS-9 and the time of supply rule in GSTR 9C. If the invoice is issued within 30 days, the supply is considered in April but recorded as unbilled revenue in March.
- Goods in Transit: Verify that input tax credit is claimed only when goods are received by the business entity, as required by section 16.
- Taxable and Exempt Supply: For suppliers providing both exempt and taxable supplies, apply the provisions of Rules 42 and 43. Banking companies can opt to avail 50% of the eligible ITC.
- Forward Charge: For Goods Transport Agencies paying GST under FCM, ensure Annexure V is filed before the due date.
- Disposal of Assets: Whether the registered person has paid an amount equal to the input tax credit availed on disposed capital goods or plant and machinery, reduced as prescribed or tax based on transaction value under section 15, whichever is higher.
- Trade Receivables: Verify export of services criteria for receivables in foreign currency and ensure they are received within the stipulated period.
- Trade Payables: For foreign creditors, especially service vendors, verify the impact of import services and ensure RCM is properly discharged. Reverse ITC if payment is not made within 180 days from the invoice date and provide necessary interest. Reclaim reversed ITC once payment is made.
- Disclosure of GST Liability/Asset: Disclose excess input credit over output payable as part of other current assets, and excess output liability over input credits as other current liabilities. Separate disclosures are required for CGST input credit and SGST payable, as they cannot be set off under GST laws.
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