GST FY 2026–27 Compliance Checklist: 10 Key Actions for Businesses

GST FY 2026-27 Compliance Checklist: 10 Critical Actions Every Business Must Complete

The document outlines key GST compliance requirements for businesses entering FY 2026–27, emphasizing strict adherence to deadlines to avoid penalties, interest, and ITC disruptions. It highlights critical obligations such as filing LUT for zero-rated supplies, opting for the composition scheme, reversing ITC on scheme transition, and verifying GTA declarations. It also mandates starting a new invoice series, complying with e-invoicing rules based on turnover thresholds, and adhering to the 30-day IRP upload rule. Proper HSN code reporting, mandatory ISD registration for multi-GSTIN entities, and compliance with Rule 86B requiring partial cash tax payment are also stressed. The document underscores that non-compliance can result in blocked returns, denial of ITC, and legal consequences. Overall, it advises businesses to proactively review turnover thresholds, maintain accurate documentation, and implement strong internal controls to ensure seamless GST compliance in the new financial year.

Quick Reference: GST Compliance Checklist for FY 2026-27

The table below summarises all key compliance actions, relevant forms, due dates, and who they apply to.

1. File LUT (Form RFD-11) for Zero-Rated Supplies  Due: 31 March 2026

Exporters and businesses making supplies to SEZ units must file a Letter of Undertaking (LUT) in Form GST RFD-11 before starting zero-rated supplies in FY 2026-27. Without a valid LUT, you will have to pay IGST upfront on every export and then wait months to claim a refund  blocking your working capital.

1. LUT is valid for one financial year only it must be renewed annually.

2. File it online via the GST portal: Services → User Services → Furnish Letter of Undertaking.

3. It is completely free to file and takes just a few minutes.

4. Failure to renew on time means exports are treated as taxable supplies.

2. Opt for GST Composition Scheme (Form CMP-02)  Due: 31 March 2026

Small businesses with aggregate annual turnover up to ₹1.5 crore (₹75 lakh for service providers) can opt for the Composition Scheme for FY 2026-27 by filing Form CMP-02 on or before 31 March 2026. The scheme simplifies compliance by allowing a flat tax on turnover in place of regular GST rates.

Delayed filing will make you ineligible for the scheme for the entire FY 2026-27.

Once opted in, you cannot collect GST from customers and must issue a bill of supply.

3. ITC Reversal When Switching to Composition Scheme (Form ITC-03)  Due: 30 May 2026

If your business is switching from the regular GST scheme to the Composition Scheme, you must reverse the ITC already claimed on all inputs, work-in-progress, and finished goods lying in stock as on 31 March 2026. This reversal must be filed through Form ITC-03 by 30 May 2026.

ITC on capital goods must also be reversed proportionately based on remaining useful life.

Interest at 18% per annum applies if the reversal is delayed or missed.

4. GTA Annexure V/VI Verification  Before 1 April 2026

Goods Transport Agencies (GTAs) must choose between Forward Charge Mechanism (FCM) and Reverse Charge Mechanism (RCM) for FY 2026-27 before 1 April 2026 by submitting Annexure V or VI on the GST portal.

Under FCM, the GTA charges and pays GST  service recipients are not liable under RCM.

Under RCM, the recipient of service pays GST directly to the government.

Businesses hiring GTA services must verify their transporter’s declaration and retain it for audit purposes.

5. Start a Fresh Invoice Numbering Series  From 1 April 2026

Every GST-registered business must reset and start a new invoice series at the beginning of each financial year. According to GST advisory guidelines, using a sequential, unique invoice series from 1 April 2026 is mandatory and prevents reconciliation mismatches during audits or assessments.

Invoice numbers must be unique within a financial year for each GSTIN.

A consistent series simplifies GSTR-1 filing, e-invoice generation, and e-way bill issuance.

6. E-Invoicing Compliance (AATO > ₹5 Crore)  Ongoing from 1 April 2026

Businesses whose Aggregate Annual Turnover (AATO) exceeded ₹5 crore during FY 2025-26 for the first time must mandatorily generate e-invoices from 1 April 2026 onward. E-invoices are generated via the Invoice Registration Portal (IRP), which assigns a unique Invoice Reference Number (IRN) to each invoice.

Register on the IRP before 1 April 2026 if you are newly covered this year.

Failure to generate a valid e-invoice results in invalid tax invoices, and recipients can lose their ITC claim.

E-invoices auto-populate GSTR-1 and e-way bill data, reducing manual errors.

7. 30-Day IRP Upload Rule (AATO > ₹10 Crore)  Per Invoice

Businesses with AATO above ₹10 crore must upload invoices to the IRP within 30 days of the invoice date. Invoices older than 30 days will be rejected by the portal, resulting in invalid invoices and ITC denial for buyers.

This is an ongoing, per-invoice obligation  not a one-time compliance.

Build internal systems or use GST software to automate IRP uploads within the 30-day window.

8. HSN Code Compliance (4/6/8 Digit)  Ongoing

Correct HSN code reporting is mandatory in invoices and GST returns. The number of digits required depends on your annual turnover and whether the supply is B2B or B2C.

Incorrect or missing HSN codes can trigger departmental notices and impact the accuracy of GSTR-1 filings.

9. Input Service Distributor (ISD) Registration  Mandatory if Applicable

From 1 April 2025, ISD registration became mandatory for businesses with multiple GSTINs under the same PAN that receive common input service invoices. If applicable, such entities must register as ISDs and distribute ITC to their branches by filing Form GSTR-6 monthly.

ISD ensures compliant ITC distribution across multiple state registrations.

Non-compliance with ISD provisions can lead to ITC disallowance at branch level.

Review your existing cross-charge arrangements to check if ISD conversion is required.

10. Rule 86B  Mandatory 1% Cash Payment of GST Liability  Monthly

Rule 86B requires certain businesses to pay at least 1% of their total GST output tax liability in cash each month, rather than entirely through ITC. This rule applies to businesses where AATO exceeds ₹50 lakh and the value of taxable supplies (other than exempt and zero-rated) exceeds ₹50 lakh in a month.

The rule was introduced to prevent excess ITC utilisation without corresponding tax payments.

Exceptions apply if the taxpayer has paid income tax above ₹1 lakh in the previous 2 FYs, or if the ITC balance is from IGST paid on imports.

Non-compliance may block GSTR-3B submission and attract penal action.

Key Takeaways for FY 2026-27 GST Compliance

1. File LUT (RFD-11) and CMP-02 before 31 March 2026 – these cannot be done retroactively.

2. Reset your invoice series from 1 April 2026 to avoid audit mismatches.

3. If your AATO crossed ₹5 crore in FY 2025-26, e-invoicing is mandatory from 1 April 2026.

4. Check your HSN digit requirement based on FY 2025-26 turnover before issuing the first invoice of the year.

5. Reconcile GSTR-2B with GSTR-3B monthly to prevent ITC blocks and notices.

6. If your business operates across multiple states under the same PAN, verify ISD registration status.

Conclusion

Starting a new financial year on the right GST footing can save your business from costly penalties, ITC reversals, and compliance disruptions. The 10 items in this checklist  from renewing your LUT and resetting invoice series to e-invoicing compliance and Rule 86B cash payments  cover every major obligation as India enters FY 2026-27. Review your AATO, check applicable thresholds, set internal deadlines, and consult a GST professional if needed.