Introduction
As the financial year 2023-24 draws to a close, businesses are required to undertake specific GST compliance activities to ensure a seamless transition into the next fiscal period. This guide is meticulously crafted to assist businesses in navigating through these essential year-end activities with an emphasis on optimizing processes and ensuring compliance.
Due Diligence in ITC Claiming and Reconciliation
1. Critical Analysis of ITC Accumulation: Investigate the cause of any ITC accumulation at the year’s end, evaluating the feasibility of utilizing the accumulated ITC or exploring GST refund options.
2. Reconciliation of ITC with Financial Records: Ensure that the ITC claimed in GSTR-3B is accurately reconciled with the company’s books to identify and rectify discrepancies promptly.
3. Verification of ITC on Goods Sent for Job Work: Confirm that goods sent to a job worker are returned within the prescribed timelines to avoid them being considered as deemed supplies, necessitating GST payment.
4. Evaluation of Blocked Credit: Reassess any ITC classified as blocked credit to capture any eligible credits previously overlooked, enhancing financial efficiency.
Strategic Invoice and Documentation Management
1. Implementation of a New Invoice Series: Initiate a unique invoice and bill of supply series for FY 2024-25 with a maximum of 16 alpha-numeric characters, ensuring distinct and traceable records.
2. Declaration of Credit Notes: Issue and report credit notes related to FY 2023-24 invoices by November 30, 2024, through GSTR-1 or at the time of the annual return filing, whichever comes first.
3. SEZ Endorsement Copies: Safeguard endorsed copies of invoices for zero-rated supplies made to SEZ units or developers, affirming compliance and facilitating audit processes.
Reconciliation and Compliance Verification Activities
1. Reconciliation of Revenue and Ledger Balances: Align the revenue reported in GSTR-1 and GSTR-3B with the financial statements, and reconcile electronic ledger balances with the accounting records to detect and correct variances.
2. GST TDS Receivable Reconciliation: Match credits available in GSTR 7A for FY 2023-24 with the company’s ledger to preclude and amend discrepancies, ensuring accurate receivable tracking.
3. Rectification of Errors/Omissions in Returns: Undertake necessary corrections for any inaccuracies in GSTR-1 and GSTR-3B filed for FY 2023-24 by the earlier of November 30, 2024, or the annual return filing date.
Optimizing Tax Credits and Ensuring Compliance
1. Timely Renewal of LUT for Exporters: Exporters aiming to ship goods or services without IGST must renew their LUT by March 31, 2024, for the FY 2024-25 to maintain their export privileges.
2. Appropriate Management of Inter-Branch Transactions: Analyze transactions between the company’s distinct entities to ascertain if they qualify as a supply, ensuring accurate GST charging on deemed supplies.
3. Reversal of ITC for Non-Payment: Verify payment to vendors within 180 days of invoice receipt for inward supplies during FY 2023-24. Non-compliance necessitates the reversal of claimed ITC along with interest.
4. Distribution of Credit for Third-Party Services: Distribute the credit for services procured on behalf of the company efficiently among the head office and branches, utilizing the ISD mechanism or cross-charge basis.
Regulatory Compliance and Financial Integrity
1. Tax Payment Under Reverse Charge Mechanism (RCM): Discharge GST under RCM for applicable services, including issuance of self-invoices for supplies from unregistered dealers, ensuring tax liability is correctly addressed.
2. Reconciliation for Non-Payment Impact: For supplies reported in FORM GSTR-1 but not in FORM GSTR-3B by suppliers, ensure the reversal and potential reclaiming of ITC in accordance with regulatory timelines.
3. Services Received Without Consideration: Identify services provided by related persons without consideration, discharging tax on such services if they qualify as a supply, bolstering compliance.
4. Export Realization Compliance: Adhere to stipulated timelines for export realization or seek extensions as per Rule 96A, mitigating tax liabilities associated with non-compliance.
5. Ensuring Eligibility and Apportionment of ITC: Conduct annual versus monthly ITC reversals comparison under CGST Rules, ensuring accuracy in ITC apportionment and maximizing credit utilization.
This detailed checklist serves as a vital tool for businesses aiming to align with GST compliance requirements as the financial year 2023-24 concludes. By addressing each area, companies can not only ensure compliance but also optimize their GST processes for the forthcoming fiscal year.
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