Arjuna (Fictional Character): Krishna, this week marks the end of the financial year 2024-25. The taxpayers are curious as to what shall be done before this year end to better prepare for the new financial year 2025-26. How should a taxpayer prepare himself for this year’s march ending?
Krishna (Fictional Character): Arjuna, as new year comes with new opportunities, we should make sure that previous year is ending with positive note. In our Country, the Financial Year from April to March is applicable for all Tax Laws. That’s why the month of March is very important for all Taxpayers.
Arjuna (Fictional Character): Krishna, what are the points on which the taxpayers need to pay attention at the end of financial year for GST?
Krishna (Fictional Character): Arjuna, following are the things to keep in mind –
1. Billing Series and E-invoicing: New billing series for FY 25-26 w.e.f. 1st April 2025 should be started. Businesses with an annual aggregate turnover exceeding more than Rs. 5 crores in the preceding financial year must begin generating e-invoices from 1st April 2025.
2. Letter of Undertaking (LUT): All exporters, including those supplying goods or services to SEZ without payment of GST, should apply for LUT in form GST RFD 11 for FY 2025-26.
3. Quarterly Return Monthly Payment (QRMP) Scheme and Composition Scheme: Taxpayers having Turnover below Rs 5 Crores shall have an option to select the frequency of GST return i.e., QRMP Scheme filing for FY 2025-26 till 30th April 2025. Further, Small taxpayers having turnover less than 1.5 crore should calculate tax liability under composition scheme and normal option and accordingly may opt for the option which is beneficial to them considering all the conditions.
4. Reconciliation of turnover and Outward Tax liability between GSTR1 and GSTR 3B and books: Prepare and reconcile the turnover and tax liability as reported in GSTR 1/GSTR 3B with books of accounts for FY 2024-25 and pay the tax along with interest if there is any shortfall vide filing DRC 03 to avoid future litigation and penalty.
5. Reconciliation of ITC between books and GSTR 3B and GSTR 2B: Prepare the yearly reconciliation of ITC accounted in books and ITC availed in GSTR 3B with GSTR 2B during the FY 2024-25. If transactions are not populated in GSTR 2B, the taxpayer should follow up with suppliers to furnish/report transactions in their GSTR 1 with payment of taxes in GSTR 3B. Further if ITC has been availed and the transactions not reflected in GSTR 2B then ITC should be reversed.
6. Reversal of ITC: Identify the ineligible ITC u/r 42,43 or section 17(5) etc. (Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2024-25 and reverse/pay the same along with interest. Additionally, if payment to suppliers is pending beyond 180 days from the date of issuance of supplier’s invoice ITC should be reversed u/s 16(2). Further, note that no interest leviable on reversal of wrongly availed credit but not utilized.
7. Payment of RCM: Taxpayer should check and rework RCM liability as per books of accounts with RCM paid in GSTR 3B. Further, RCM as per GSTR 2B should also be checked.
8. GST Amnesty Scheme: This scheme aimed at waiving interest and penalties for certain tax demands raised under Section 73 (pertaining to non-fraudulent cases) for the financial years 2017-18 to 2019-20. To benefit from this scheme, taxpayers must pay the full amount of tax demanded in notice or order by 31/03/2025 and submit the appropriate application in FORM GST SPL-01 or GST SPL-02 within 3 months from this payment deadline, i.e. by 30/06/2025. It’s important to note that this scheme does not apply to cases involving fraudulent activities under Section 74. Further any interest or penalties already paid will not be refunded.
9. Multi-Factor Authentication (MFA) for E-Way Bills: As per the advisory issued on 17th December 2024, users will be required to log in using a username, password, and OTP for E-way bill generation. To enhance login security GSTIN has announced this change. It is mandatory for all taxpayers from 1st April 2025. Compliance with this MFA requirement is necessary to access the E-Way Bill portal from the mentioned effective date.
Arjuna (Fictional Character): Krishna, what one should learn from this?
Krishna (Fictional Character): Arjuna, the taxpayers should take precautions at the right time i.e., March ending, so that they can save themselves from litigations under GST. The benefit of taking precautions at the March end will help taxpayers to overcome all the offences in upcoming new year.
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