Arjun (Fictional Character): Krishna, the financial year 2021-22 is about to end, and the new financial year is about to start. 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 month of March is very important for all Taxpayers.
Arjuna (Fictional Character): Krishna, what are points on which the taxpayers need to pay attention at the end of financial year for GST?
Krishna (Fictional Character): Arjun, following are the things to keep in mind –
1) All the exporters who make export of goods/services or supplies to SEZ without payment of GST should apply for Letter of Undertaking (LUT) in form GST RFD 11 for FY 2022-23.
2) The taxpayer must also workout whether he wants to convert to Composition scheme (Limit is Rs. 1.5 Cr. Now) for FY 22-23.
3) Prepare the yearly reconciliation of ITC accounted in books and ITC availed in GSTR 3B during the FY 2021-22 and availed in the subsequent month’s GSTR 3B till due date of filling GSTR 3B for September 2022 i.e.,20th October 2022 and reconcile the same with GSTR 2B and as well as of PY 20-21 claimed in FY 21-22.
4) 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.
5) Identify the ineligible ITC u/r 42,43, etc. (Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2021-22 and reverse/pay the same along with interest thereon to avoid the litigation and demand of interest & penalty in future. Further, note that no interest & penalty leviable on reversal of wrongly availed credit but not utilized.
6) Prepare and Review that any payment to suppliers is not pending beyond 180 days from the date of issuance of supplier’s invoice to avoid reversal of ITC u/s 16(2).
7) Check for the transactions covered under reverse charge mechanism (RCM) in GSTR 2B and make the payment of tax under RCM as per time of supply provisions and claim ITC if not done earlier.
8) Prepare and reconcile the turnover as reported in GSTR 1/GSTR 3B with books of accounts for FY 2021-22. Also, check that it has been classified under correct HSN/ SAC code and correct GST rate has been levied on the same. Further, any outward supplies of FY 2021-22 shown in a period of April to September 2022 should be captured properly for proper disclosure in GSTR 9 & GSTR 9C of FY 2021-22 and as well as of PY 20-21 in FY 21-22.
9) Compile and reconcile the amount of taxes paid in GSTR 1 and GSTR 3B filed during the FY 2021-22 with books of accounts and pay the tax if there is any shortfall vide filing DRC 03 to avoid the litigation and penalty.
10) Prepare the reconciliation of E-way bills generated during the FY 2021-22 with tax invoices reported in GSTR 1 and give prior intimation to the department in case of any deficiency.
11) Check whether the GST paid on advances received in FY 2021-22 towards the supply of services made or agreed to be made has been properly adjusted in GSTR 1 and GSTR 3B.
12) Check whether the goods sent on approval basis has been either returned within 6 months or sold on issuance of tax invoices.
13) Credit Notes/ Debit notes if any should be issued before 30th September 2022 or filing of annual return whichever is earlier in relation to invoices issued during the year 21-22.
14) Accept the TDS credit as reflected on GST portal on monthly basis.
15) New billing series for FY 22-23 w.e.f. 1st April 2022.
16) Businesses with an annual aggregate turnover of more than Rs.20 crore, as calculated in any preceding financial year from 2017-18 up to 2021-22, must begin generating e-invoices from 1st April 2022.
17) Taxpayers having Turnover below Rs 5 Crores shall have an option to select the frequency of GST return i.e., Quarterly return monthly payment (QRMP) Scheme filing for FY 2022-23 till 30th April 2022.
Arjun (Fictional Character): Krishna, what lesson should the taxpayer take 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.