Summary: As FY 2024-25 concludes, taxpayers must complete key GST-related activities to ensure compliance and a smooth transition to FY 2025-26. Key areas include outward supplies, Input Tax Credit (ITC), Reverse Charge Mechanism (RCM), and other regulatory obligations. Businesses should check E-invoice applicability based on turnover, renew their Letter of Undertaking (LUT) for zero-rated supplies, and implement a fresh document series for GST records. Reconciliation of outward supplies with GSTR-1, GSTR-3B, E-way bills, and books of accounts is crucial, along with credit note issuance before October 30. ITC reconciliation must ensure claims align with GSTR-2B, and reversals must be completed per GST rules. Businesses must review ITC on imports, common ITC reversals, and expenses subject to reverse charge. Other key tasks include ISD registration, vendor declarations for E-invoicing, and GTA compliance for forward charge. Businesses should verify GST TDS/TCS credit, track job work material returns, and ensure compliance with goods sent on approval basis. Composition scheme and QRMP scheme options should be exercised before deadlines. Exporters must meet Rule 96A conditions, and refund claims must be filed within two years. Proper execution of these activities will help businesses start FY 2025-26 with accurate records and compliance.
Introduction: As FY 2024-25 is approaching an end, there are certain tasks that the taxpayers need to undertake during the end of the financial year in order to have a smooth transition to the new financial year. I have listed certain important activities that need to be completed/make ensure to be completed at the earliest to make sure that the year is closed properly in terms of all the compliances and the new Financial Year starts with prior planning.
In this reference, we can bifurcate our course of actions in below categories: –
- Outward Supplies
- Input Tax Credit (ITC) And Reverse Charge (RCM)
- Other Compliances
It may be noted that most of the activities as listed below are performed on regular and/ or requirement basis as per the GST law and thus, here our purpose is not to repeat the actions already taken during the year but to ensure that anything missed or not complied accurately can be complied with/ corrected within prescribed time period. And also the new financial year can be started with actions well planned in advance.
OUTWARD SUPPLIES
1. Check applicability of E invoice- Any entity on which E invoice was not applicable in the ending FY, shall check if it is liable to generate E invoice in new Financial Year based on its turnover crossing the prescribed threshold limit of Rs. 5 Crore in any of the FY starting from Jul 2017.
2. Filling of Application of Letter of Undertaking: As per Circular No. 8/8/2017-GST, it has been clarified that the validity of LUT is for the whole financial year in which it is tendered.
Hence, the registered person is required to renew the LUT in case it is engaged in ‘zero rated supply’ of goods/ and or services without payment of tax.
Zero rated supply covers ‘export’ of goods or services or both; or supply of goods or services or both for authorised operations to a ‘Special Economic Zone developer or a Special Economic Zone unit’.
3. Fresh document series: As per the CGST Rules, 2017, every GST related document issued by the registered person should be serially numbered, in one or multiple series and be unique for every financial year. Hence, it is required to maintain unique series number for the financial year in respect of all documents issued as per GST law.
This shall be applied to any of the below documents: –
- For outward supplies– such as tax invoice, bill of supply, debit/credit note, refund voucher, advance voucher etc.
- For RCM compliances- such as Self invoice and payment vouchers.
- For Delivery challans.
4. Reconciliation of outward supplies as per GSTR 1 and GSTR 3B and Books of accounts: Reconciliation of income reported along with taxes in GSTR 1, GSTR 3B and Books of accounts shall be done and in case of any correction such as below: –
- Interchange of the SGST /CGST paid as IGST and vice versa,
- POS wrongly reported,
- GSTIN wrongly mentioned for any other party,
- Value wrongly punched for any invoice/ debit note/ credit note/ bill of supply etc.
Any correction for mistake/ omission, shall be done in the GST return to be filed for subsequent month maximum up to Oct month filed by 30th Nov of subsequent financial year or filing of annual return whichever is earlier.
5. Reconciliation of outward supplies as per books of accounts with E Invoice and E waybill generated: Reconciliation of the supply as per books shall also be reconciled with E-invoice and E-way bill generated during the period as per the applicability.
6. Reconciliation of E-Ledgers (returns related and other than returns related) as per GST Portal with the Books of Accounts: On GST portal, there are two GL in respect of liability i.e., return related and other than return related.
Return related GLs are checked based on the above reconciliations of outward supplies in GSTR 1, 3B and Books but, other than returns liability ledgers shall be checked to ensure no liability is generated by the department which might be missed.
7. Issue of Credit Note for outward taxable supply- Any credit note in respect to ending FY shall be issued upto 30th Oct of subsequent FY and reported upto 30th November following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and accordingly, the tax liability shall be adjusted within the prescribed period.
INPUT TAX CREDIT (ITC) AND REVERSE CHARGE (RCM)
8. Reconciliation of Input Tax Credit (ITC) as per Books and GSTR 3B: – We are filing GSTR 3B in terms of Circular 170 and thus, claiming ITC which is accounted in books and matching with GSTR 2B, still we shall once check if there is any gap such as: –
- ITC accounted in books as well as matched with GSTR 2B but missed to claim in GSTR-3B,
- ITC reversed in 4(B)(2) instead of 4(B)(1),
- RCM ITC wrongly reported in normal ITC,
- Interchange claims of SGST /CGST as IGST and vice versa, etc.
Any such correction/ claim shall be made upto Oct month return filed by 30th Nov of the subsequent Financial Year or filing of annual return whichever is earlier.
9. Reconciliation of ITC as per GSTR 2B vs Books- We are already doing the same as per the requirement of circular 170, however, we shall that any invoice (including DN and CN) which is in Books but not in GSTR 2B and vice versa i.e., in GSTR 2B but not in books shall be either booked in accounts or ensure that reflects in GSTR 2B.
Any such correction/ claim shall be made upto Oct month return filed by 30th Nov of the subsequent Financial Year or filing of annual return whichever is earlier.
10. Import of Goods made during the FY.
This includes reconciliation of Bill of Entry with the Import of Goods booked in accounts and reflected in GSTR-2B. Also, once monitor Custom Duty Paid GLs to identify if any IGST accounted in Custom GL and reclassification of the same to IGST GL and Claiming of the ITC.
11. Common ITC Reversal at the yearend: As per Rule 42 and 43 of the CGST Rules, 2017, every registered person is required to reverse ITC claimed against inputs and input services which are used for purposes other than business and, which are used for effecting exempted supplies, in the prescribed manner.
The said ITC reversal is to be made at the end of every tax period, followed by ITC reversal calculated for the entire financial year and differences, if any, is required to be reversed in GSTR 3B along with interest (Interest is applicable from 01st day of April of subsequent year) or to be claimed the additional ITC in GSTR 3B, as the case maybe, before the due date of furnishing of the return for the month of September following the end of the financial year.
12. ITC reversal on goods lost, stolen, destroyed etc.- Ensure if any ITC reversal with respect to goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples is required to be made.
13. Reconciliation of Electronic credit/cash/ reclaimable ITC Ledgers- A reconciliation between the electronic credit and cash ledger as per GST portal and the books of accounts, as on year-end shall be done.
Further, a reconciliation of reclaimable ITC statement as per GST Portal and ITC pending to be claimed as per GSTR 2B working shall also be performed.
14. Expense reconciliation which attracts tax payment under reverse charge as per books and taxes paid in GSTR 3B (domestic as well as foreign payments)– The reconciliation shall be done for the expense on which reverse charge is payable as per amount reported in GSTR 3B and accounted in books.
Any expense on which RCM is liable to be paid shall be paid and ITC (if eligible) shall be claimed in GSTR 3B up to 30th Nov of the subsequent financial year or filing of annual return whichever is earlier.
OTHER COMPLIANCES
15. Check requirement to register as Input Service Distributor (ISD)-
Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under reverse charge, for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor and shall distribute the input tax credit in respect of such invoices.
As this section is effective from 01 April 2025, we shall identify such entities and apply for ISD registration.
16. Ensuring declarations from the vendors for E invoice- The vendor who are already providing E- Invoice, they will continue with E invoice. However, the vendors, who were not earlier providing the E invoice may cross the threshold and thus covered under E invoice. Thus, a declaration in this reference may be seeked with the vendors.
17. Declaration from the Goods Transport Agency (GTA) Vendors- Any GTA who intends to opt to pay GST under forward charge is required to exercise such option before the beginning of the Financial Year by intimating to the department. Thus, if such an option is not exercised, the recipient must pay tax under reverse charge. In this reference, we can seek such declaration from our GTA vendor.
18. GST TDS/TCS credit- We shall check for any GST TDS/TCS credit available on our GST Portal and claim the same after checking its authenticity from the books of accounts.
19. Material sent for Job work– We shall check whether the material sent for job work has been returned within the prescribed time limit (i.e. for Inputs – 1 year and for Capital goods – 3 years) and whether the same has been duly reported in ITC 04.
This shall be checked on invoice basis during the period and we shall once check the same at end of the year also.
20. Goods sent on Approval Basis- In case any goods are sent on approval basis, the same has to be either returned within 6 months or sold on issuance of tax invoice or not. We shall check the compliance of the same.
This shall be checked on invoice basis during the period and we shall once check the same at end of the year also.
21. Composition Scheme under GST:
Any person, who wish to opt for the Composition Scheme for the financial year 2025-26 in case of any small unit or company, the same should be opted for by filing Form CMP-02 by 31st March 2025.
22. Opt-in or out of QRMP Scheme under GST- Registered persons having aggregate turnover up to Rs 5 Cr. are allowed to furnish their GST returns on a quarterly basis along with monthly payment of tax under Quarterly Return Monthly Payment or QRMP scheme under GST. The same should be timely opted in order to avoid any confusion later.
23. Compliance of Rule 96A of CGST rules’ 2017 – In case of export of goods or services under bond or Letter of Undertaking, we must comply with the below condition, else such supply will be treated as domestic supply.
- For export of goods, the export shall be done within 3 months from the date of issue of the invoice for export.
- For export of services, payment of such services shall be received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India within one year from the date of issue of the invoice for export.
It may be noted that such conditions shall be reviewed on each invoice on a regular basis. However, as the FY is ending, we should revisit and make sure that there is no default.
24. Refund Timeline– Any person claiming a refund of any tax and interest (if any), paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date.
It may be noted that it is a regular activity to ensure that the refund is claimed periodically. However, we shall check the same at the end of FY to plug any gap and apply for refund without any default.
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comprehensive checklist !