GST Year-End Review FY 2025-26: 12 Critical Checks Before October 2026 Return

Summary: The October 2026 GST return cycle is an important opportunity to review FY 2025-26 compliance before time-bound corrections and eligible input tax credit claims become unavailable. Taxpayers should reconcile their purchase register, GSTR-2B and GSTR-3B; identify unclaimed or duplicated ITC; review pending sales credit notes; and reconcile outward supplies reported in GSTR-1, GSTR-3B and financial statements. The review should separately address supplier non-filing under Rule 37A, the 180-day supplier-payment condition, annual common-credit reversals under Rules 42 and 43, reverse-charge liabilities, self-invoicing, mandatory ISD compliance and cross-charges between distinct registrations. Inventory write-offs, free samples, capital-asset disposals, e-invoice and e-way bill mismatches, supplier credit notes in IMS, rate changes and export documentation also require attention. Different provisions carry different timelines: the November cut-off should not be assumed to govern every adjustment, particularly annual Rule 42 finalisation and ongoing payment-related reversals. QRMP taxpayers must also consider that their October–December quarterly GSTR-3B is ordinarily filed after the November window. A GST closure tracker assigning responsibility for each reconciliation and corrective action can help finance teams prioritise potential credit losses, additional liabilities and documentation gaps before final sign-off.

Introduction

With the closure of tax audit for FY 2025-26, most Taxpayers already have finalized books of accounts for FY 2025-26. However, when it comes to GST, a few important matters may still warrant taxpayer’s attention and subsequent action.

October 2026 is particularly important because any corrections relating to FY 2025-26 required to be carried out through GST returns are permitted only up to 30 November 2026 or the date of furnishing the relevant annual return, whichever is earlier.

For taxpayers who are filing monthly returns, the October 2026 GSTR-1 and GSTR-3B, ordinarily filed in November 2026, represent the last regular return cycle available before this statutory cut-off.

A missed ITC, an incorrect GSTIN in an invoice, a pending credit note or an unreconciled outward supply may appear to be a small issue today. However, if left unresolved, it can result in permanent ITC loss, additional tax liability or unnecessary litigation.

More importantly, not all GST compliance activities carry the same deadline. Some have an earlier cut-off, while others require corrective action regardless of the November timeline.

Let us look at the key areas that Taxpayers and finance professionals should review before finalising the October 2026 GST returns.

1. Reconcile purchase register with GSTR-2B – Don’t leave eligible ITC unclaimed

One of the most important activities for GST taxpayers is to ensure that eligible ITC relating to FY 2025-26 has been appropriately claimed in the GSTR-3B returns.

As per Section 16(4), ITC relating to an invoice or debit note pertaining to FY 2025-26 cannot ordinarily be availed after GSTR-3B of October 2026 filed upto 30 November 2026 or the date of furnishing the relevant annual return, whichever is earlier.

Taxpayers should undertake invoice-level reconciliation of the purchase register with GSTR-2B and ITC already claimed through GSTR-3B to create a 3-way comparison between books vis-à-vis GSTR-2B vis-à-vis GSTR-3B.

Key checks:

• Identify invoices appearing in GSTR-2B where eligible ITC has not been claimed.
• Identify purchase invoices recorded in the books but missing from GSTR-2B.
• Follow up with suppliers for pending or incorrect invoice reporting.
• Check whether ITC has been claimed more than once or under an incorrect GSTIN.
• Verify whether credits previously reversed on account of temporary conditions are eligible for re-availment.
• Review import IGST, ISD credits and other eligible credit categories separately.

Practical takeaway: Merely appearing in GSTR-2B does not make ITC eligible. Conditions relating to receipt of supply, documentation, Taxpayers use, blocked credits and other statutory requirements must also be satisfied.

Eligible ITC should be claimed within the prescribed timeline rather than leaving it for the annual return, which is not a mechanism for fresh ITC availment.

2. Review pending sales credit notes relating to FY 2025-26

Relevant provisions: Sections 15(3) and 34 of the CGST Act

Credit notes are another area where companies may lose the benefit of reducing their GST liability due to delayed action.

Taxpayers should review their data of sales returns, post-supply discounts, rate differences, quality claims and commercial settlements relating to invoices issued during FY 2025-26. As per the provisions of Section 34(2), the relevant statutory reporting cut-off for tax credit note is GSR-3B of October 2026 to be filed on or before 30 November 2026 or the due date of furnishing of the annual return, whichever is earlier.

Key checks:

• Identify pending customer claims and sales returns.
• Review credit notes issued in the books but not reported in GST returns.
• Verify the original invoice references and applicable tax rates.
• Ensure applicable conditions for reducing output tax liability are satisfied.
• Reconcile the corresponding ITC reversal by recipients, wherever relevant.
• Distinguish GST credit notes from purely commercial or financial credit notes.

For post-supply discounts, the conditions prescribed under Section 15(3)(b), as applicable during the relevant period, should be examined carefully.

Practical takeaway: A credit note may still be issued commercially after the statutory deadline, but the supplier may no longer be entitled to reduce the original GST liability through such a note.

3. Reconcile GSTR-1, GSTR-3B and books of accounts

Relevant provisions: Sections 37 and 39 of the CGST Act

A mismatch between turnover recorded in the books and turnover disclosed in GST returns is among the common issues identified during departmental scrutiny.

Companies should prepare a consolidated reconciliation for April 2025 to March 2026 between financial statements, GSTR-1 and GSTR-3B.

Key checks:

• Identify sales invoices inadvertently omitted from GSTR-1.
• Verify incorrect GSTINs, invoice numbers and taxable values.
• Review classification between B2B, B2C, exports and SEZ supplies.
• Identify differences in tax rates or tax heads.
• Reconcile debit notes, credit notes and amendments.
• Check whether any tax liability was reported in GSTR-1 but not discharged in GSTR-3B.
• Reconcile advances and other time-of-supply adjustments, wherever applicable.

Corrections permitted under Sections 37 and 39 should be completed within their respective statutory timelines.

It is important to remember that GSTR-3B cannot simply be revised after filing. Errors must be addressed through legally permissible subsequent-return adjustments or other appropriate mechanisms.

Practical takeaway: Every reconciliation difference should have a documented reason. Differences should not be carried into GSTR-9 merely because the annual return is yet to be filed.

4. Check supplier GSTR-3B filing status – Rule 37A

Relevant provision: Rule 37A of the CGST Rules, 2017

This is an important but frequently overlooked compliance requirement.

Where ITC was availed in FY 2025-26 on invoices or debit notes reported by suppliers in GSTR-1, GSTR-1A or IFF, as applicable, but the corresponding supplier GSTR-3B was not furnished by 30 September 2026, Rule 37A may require the recipient to reverse such ITC.

The reversal must be made in a GSTR-3B furnished on or before 30 November 2026. Failure to comply can attract interest consequences.

Key checks:

• Prepare supplier-wise details of ITC availed during FY 2025-26.
• Identify suppliers who had not filed the corresponding GSTR-3B by 30 September 2026.
• Determine the amount of ITC covered by Rule 37A.
• Reverse the applicable ITC within the prescribed timeline.
• Track subsequent supplier compliance for eligible re-availment.

The trigger under Rule 37A is linked to the financial year in which ITC was availed, which may not necessarily be the year of the underlying invoice.

Practical takeaway: An invoice appearing in GSTR-2B does not eliminate the need to examine supplier return-filing compliance.

5. Examine outstanding creditors and the 180-day payment condition

Relevant provisions: Second proviso to Section 16(2) and Rule 37

Taxpayers should undertake an ageing analysis of trade creditors to identify invoices against which payment has remained outstanding for more than 180 days from the invoice date.

Where the prescribed conditions apply, ITC attributable to the unpaid amount is required to be reversed, along with applicable interest consequences.

Key checks:

• Generate invoice-wise creditor ageing.
• Identify outstanding invoices exceeding 180 days.
• Verify whether the invoice value, including GST, has been paid wholly or partly.
• Examine applicable exceptions, including reverse-charge supplies.
• Identify ITC that requires reversal.
• Track payments subsequently made for eligible re-availment.

Practical takeaway: A credit appearing in GSTR-2B and already claimed in GSTR-3B may still require reversal where the supplier-payment condition has not been satisfied.

This is an ongoing statutory requirement and should not be treated as an adjustment that can always be deferred until November.

6. Complete annual ITC reversal under Rules 42 and 43

Relevant provisions: Section 17(1), Section 17(2), Rules 42 and 43

Taxpayers engaged in both taxable and exempt supplies should review the ITC attributable to common inputs, input services and capital goods.

For common inputs and input services, Rule 42 requires a final annual computation and comparison with reversals made during the year.

Key checks:

• Reconcile monthly ITC reversals with the annual computation.
• Verify the classification of taxable, exempt and zero-rated supplies.
• Identify additional reversals or excess reversals.
• Separately review capital goods covered by Rule 43.
• Evaluate applicable interest consequences.

Important deadline distinction: The annual finalisation under Rule 42 is linked to the return for September following the relevant financial year. For FY 2025-26, Taxpayers should therefore address this during the September 2026 return cycle, ordinarily filed in October 2026.

It would be incorrect to assume that all Rule 42 adjustments enjoy the 30 November 2026 cut-off.

Practical takeaway: Companies dealing in exempt and taxable supplies should prioritise this computation immediately rather than waiting for the October 2026 return.

7. Review RCM transactions

Relevant provisions: Sections 9(3), 9(4), 13 and 31 of the CGST Act, as applicable

RCM liabilities can remain unidentified when transactions are booked under general expense heads without a separate GST classification.

Taxpayers should review FY 2025-26 expenses to identify transactions liable to GST under reverse charge.

Areas requiring attention include:

• Legal services from advocates, where notified conditions apply.
• Goods transport agency services, where applicable.
• Director-related services subject to RCM.
• Specified transactions with unregistered suppliers.
• Import of services.
• Services received from foreign related persons, including transactions without consideration where covered by GST provisions.

Taxpayers should verify whether the corresponding tax was discharged through the electronic cash ledger, along with the applicable ITC treatment.

Further, Section 31(3)(f), read with Rule 47A, prescribes self-invoicing requirements for applicable RCM supplies received from unregistered suppliers, including a 30-day invoicing timeline.

One important distinction is that CBIC Circular No. 211/5/2024-GST clarifies the relevant financial year for Section 16(4) in specified RCM self-invoicing cases.

Accordingly, a delayed RCM payment should not automatically be treated as permanent ITC loss merely because the underlying supply relates to FY 2025-26.

Practical takeaway: RCM reviews should cover tax payment, time of supply, self-invoicing, documentation and ITC eligibility together.

8. Review ISD compliance and cross-charge between GST registrations

Relevant provisions: Sections 20 and 25 of the CGST Act, Schedule I and applicable rules

This review is particularly important for companies operating through multiple GST registrations.

The mandatory ISD framework applicable from 1 April 2025 requires eligible common input service credits received for or on behalf of distinct offices to be distributed through the prescribed ISD mechanism.

Taxpayers should review common input services, such as professional fees, software subscriptions, audit fees and other centrally procured services.

Separately, internally generated services supplied between distinct registrations may require examination under Schedule I and the applicable valuation rules.

Key checks:

• Identify common input services received centrally for multiple registrations.
• Review ISD registration and distribution compliance.
• Reconcile ISD invoices, GSTR-6 and recipient credits.
• Identify internally generated services requiring GST analysis.
• Review valuation and supporting documentation for cross-charges.

The ISD mechanism and cross-charge should not be treated as interchangeable arrangements for every transaction.

Practical takeaway: A multi-State Taxpayers should conduct this exercise GSTIN-wise rather than relying solely on consolidated financial statements.

9. Examine inventory write-offs, free samples and capital assets

Relevant provisions: Sections 17(5)(h) and 18(6)

Inventory adjustments in the books may have GST implications that are not captured through the ordinary purchase and sales reconciliation process.

Taxpayers should examine stock write-offs, goods destroyed, free samples and disposal of capital assets.

Key checks:

• Identify goods lost, stolen, destroyed or written off.
• Review ITC relating to free samples and gifts.
• Evaluate the tax treatment of expired or obsolete inventory.
• Verify GST on sales of used capital goods.
• Examine the special calculation under Section 18(6), wherever applicable.

Care should be taken not to treat every inventory provision or accounting impairment as automatically equivalent to a physical write-off or disposal.

Practical takeaway: Finance and stores teams should jointly review inventory movements, rather than limiting the exercise to GST return data.

10. Reconcile e-invoices, e-way bills and turnover

Taxpayers covered by e-invoicing should reconcile invoices reported in the accounts with invoices for which Invoice Reference Numbers (IRNs) were generated.

The reconciliation should also consider e-way bill data, keeping in mind that an e-way bill may relate to a movement that is not an independent taxable sale.

Key checks:

• Identify sales invoices without valid IRNs, wherever e-invoicing is applicable.
• Reconcile e-invoice values with GSTR-1 and the sales register.
• Identify cancelled invoices and corresponding book entries.
• Review applicable credit-note and debit-note reporting.
• Examine e-way bill differences and their reasons.

From 1 April 2025, the 30-day e-invoice reporting restriction applies to taxpayers with aggregate annual turnover of ₹10 crore or more, as specified by the GSTN system advisory.

Therefore, an old invoice lacking an IRN may not be capable of being regularised merely by uploading it during the October 2026 review.

Practical takeaway: E-invoicing mismatches should be classified between reporting errors, document deficiencies and potential tax exposure, with corrective action considered separately for each category.

11. Reconcile supplier credit notes and invoice management system (IMS)

IMS has added an important layer to purchase-side GST compliance over the last 2 years. Taxpayers now, should not restrict their review to purchase invoices alone. Supplier-issued credit notes, debit notes and amendments appearing through IMS and GSTR-2B also require equal attention for attaining finality of the ITC to be claimed.

Key checks:

• Identify supplier credit notes not recorded in the purchase register.
• Verify whether the corresponding ITC was originally claimed.
• Check whether ITC has already been reversed.
• Review rejected or pending documents in IMS.
• Resolve incorrect credit notes with suppliers.
• Ensure ITC reversals are neither omitted nor duplicated.

The GSTN enhancements effective from the October 2025 tax period permit specified credit notes and amendments to be kept pending for a limited period and provide a facility for declaring the actual ITC reduction in eligible cases.

Practical takeaway: An incorrect credit note appearing in GSTR-2B can create both accounting and ITC reconciliation issues. Hence, such mismatches related to CN and DN should be resolved with the supplier before the applicable reporting window closes.

12. Review GST rate changes, exports and other year-end adjustments

The financial year 2025-26 witnessed significant GST rate rationalisation effective from September 2025 for various goods and services. Thus, Companies should review whether changes in GST rates were implemented correctly in their ERP, invoicing and return-filing systems.

Key checks:

• Examine the GST rates applied before and after the applicable effective dates.
• Review transactions affected by a change in rate, including the time-of-supply provisions.
• Verify HSN/SAC classification and tax-rate mapping.
• Reconcile export turnover with GSTR-1, GSTR-3B and export documentation.
• Check shipping bill details and relevant amendments.
• Review LUT compliance and refund-related records, where applicable.
• Identify inter-branch stock transfers or distinct-person transactions omitted from GST reporting.

Practical takeaway: A year-end review should not be restricted to ITC alone. Incorrect output tax classification or reporting may lead to a greater exposure than an unclaimed purchase credit.

Important GST deadlines to keep in mind

Note: The above are the ordinary timelines under the relevant provisions, subject to applicable extensions, filing categories and taxpayer-specific circumstances.

A special caution for QRMP taxpayers: The October–December 2026 quarterly GSTR-3B is ordinarily filed in January 2027. Therefore, QRMP taxpayers should not assume they can wait until that return to claim FY 2025-26 ITC or make time-bound reversals.

The July–September 2026 quarterly return is generally their last regular Section 39 return available before 30 November 2026 time window closes for all the requisite actions related to FY 2025-26.

What Should Finance Teams Do Immediately?

Rather than approaching this exercise merely as a return-filing activity, companies should prepare a GST closure tracker with the following minimum information:

Conclusion: November 30 is a deadline, not a compliance strategy

The purpose of October 2026 GST review should not be limited by taxpayers to mere filing of another set of GST returns. It is an opportunity for taxpayer to identify missed ITC, correct any reporting errors, settle the pending credit notes and address potential tax exposures before important statutory windows closes and errors become issues for scrutiny by GST authorities.

A useful approach can be to divide all identified issues into three categories:

1. Credits that may be permanently lost: Eligible ITC not claimed within the prescribed timeline.

2. Tax liabilities that may increase: Incorrect outward-supply reporting, unpaid RCM, delayed reversals and ineligible credits.

3. Compliance gaps that may create future disputes: Inadequate documentation, e-invoicing failures, unreconciled credit notes and inter-branch transactions.

These three categories help management prioritise issues based on financial exposure instead of simply counting the number of pending reconciliations.

The key message is simple: Companies should not wait for GSTR-9 to discover differences that could have been addressed through the October 2026 return cycle.

A few days spent on structured reconciliation today may save substantial tax costs, interest and avoidable disputes tomorrow.

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Disclaimer: This article is intended for general information and professional awareness and reflects the legal position reviewed up to the date of writing of this article. The discussion is not a substitute for a detailed examination of the CGST Act, applicable State GST legislation, notifications, circulars and facts of a particular transaction. Statutory timelines, portal functionality and legal interpretations may change. Readers are advised to verify the latest applicable provisions and obtain appropriate professional advice before undertaking any tax adjustment, ITC claim, reversal or return amendment. The author shall not be responsible for any loss or consequence arising from reliance on this article without independent verification.