Year End exercise – How to be GST Compliant

Steps to ensure that you avail correct Input Tax Credit for the FY 2023-24:

1. Annual reconciliation of ITC accounted for in books and ITC availed in GSTR 3B during the period FY 2023-24 and availed in the following month’s GSTR 3B till 30^th November 2024 (i.e., next year FY 2024-25) or date of filing Annual return for FY 2023-24, whichever is earlier and reconcile the same with the data available in GSTR 2B.

2. In case any invoices are not accounted for in the books, but the ITC is availed as per GSTR 2B, record the missing invoice in the books.

3. Further, if ITC was reversed in any of the earlier GSTR 3B, but now those invoices are being reflected in GSTR 2B but not recorded in Books, these ITC amounts needs to be claimed as these were reversed in the earlier tax period

4. In case any of your purchase invoices are not being reflected in GSTR 2B, follow up with your suppliers to furnish/report transactions in their GSTR 1 with payment of taxes in GSTR 3B, to avoid loss of ITC.

5. Ineligible ITC (in the nature of Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2023-24 needs to be identified and reversed.

6. Cases wherein any ITC has been wrongly availed and utilized, then reverse/pay the same along with the applicable interest on such ITC wrongly availed and utilized. No interest and penalty are payable on those ITCs which are being reversed on account of wrong availment but have not been utilised.

7. Any payment to suppliers should not be pending beyond 180 days from the date of supplier’s invoice. If any ITC is availed without making the payment within 180 days from the date of the invoice, then that ITC needs to be reversed along with applicable interest. These ITCs can be re-availed in subsequent months’ GSTR-3B after the payment has been made. No time limit is applicable for re-availing the ITCs which were reversed on these grounds.

8. If there are any exempt income undertaken during the financial year, ITC reversal needs to be calculated and considered in accordance with Rules 42 and 43 of CGST Rules at the end of year. Any further reversal required needs to be accounted for in GSTR-3B for the month of March 2024 or thereafter till November 2024 (extended period).

9. Alternatively, if excess ITC has been reversed in the GSTR 3B during the year, such excess ITC can be reclaimed in March 2024 GSTR 3B or thereafter till November 2024 (extended period).

10. Compile & reconcile ITC auto populated in GSTR 2B for the full FY 2023-24 and for the period April to October 2024 (relevant for FY 2023-24)
    
11. Need to ensure that the provision of reverse charge mechanism (RCM) is being adhered by you in case of transactions being done by your business. In case RCM provisions are applicable then make sure to pay the tax under RCM as per relevant provisions and claim ITC, if not done earlier. Further, raise and records the self-invoices and payment vouchers in accordance with the GST rules.

12. Need to ensure that if your supplier has crossed the e-invoice turnover limit (current limit being 5 crore) and is not generating e-invoice, then the invoices being raised by them are not considered as valid. Hence, ITC claimed on such invalid invoices, can be denied in the future by the department. Accordingly, you are mandated to communicate with those suppliers of yours who are not generating e-invoices but are under required by the law to do so.
    
13. Check physical stock and the entry of the same in the books. ITC need to be reversed on the stocks which are not found, stolen, sold as scrap or given as gift.

Steps to ensure that the turnover is correctly reported for the FY 2023-24:

1. The turnover as reported in GSTR 1/GSTR 3B with books of accounts for FY 2023-24. Also, check that it has been classified under the correct HSN/ SAC code and correct GST rate has been levied on the same.

2. Further, any outward supplies of FY 2023-24 shown in the period of April to October 2024 (FY 2024-25) should be recorded correctly for proper disclosure at the time of filing of GSTR 9 & GSTR 9C of FY 2023-24.

3. The amount of taxes paid in GSTR 1 and GSTR 3B filed during the FY 2023-24 needs to be reconciled with books and any shortfall should be paid by way of DRC 03 to avoid litigation.

4. In case your GST TDS is also being deducted, the turnover as reflected in the GST TDS Certificates needs to be reconciled with the turnover being reflected in GSTR 1 and/or GSTR 3B.

5. Reconcile the debit notes and credit notes as per books with GSTR-1 and GSTR-3B and differences, if any, shall be accounted for accordingly.

6. Data on the E-way bills portal needs to be ideally reconciled with the GSTR 1 and GSTR 3B, to ensure there are no discrepancy. If any found, department needs to be intimated by way of letter addressed to your corresponding jurisdictional officer.

7. Cross check and reconfirm that the e-invoices are being generated for all the B2B transactions. If not, then kindly report the same on the e-invoice portal and take the necessary action in the subsequent month’s GSTR 1. It has been made mandatory to generate e-invoice within 30 days from the date of the invoice by all those have turnovers of more than 5 crores.

8. Finally, the turnover should cross tally between GSTR 1, GSTR 3B, e-way bill portal, e-invoice portal and also the GST TDS certificates (if applicable). It is also advisable to cross check the receipts from the Form 26AS so as to ensure that all the applicable income being reflected in 26AS has been accounted for and turnover reconcile with those being reported in GSTR 1/GSTR 3B

9. In case of the export of goods, reconcile the shipping bill details with GSTR-1. This is necessary for claiming the refund of unutilized ITC / GST paid on export.

10. In case, any amendment is required like GSTIN, Invoice Number, Invoice Date, Taxable Value, taxes, B2C to B2B, etc., then the same must be done till 30th November 2024.

11. Other incomes including items like vouchers or coupons received, scrap of sales, etc., to be scrutinized to determine if any taxes are payable. If any, then the same should be paid in the month of March 2024 itself.

12. In case of material sent for job work, check whether the same has been returned within the time limit prescribed (Inputs – 1 year and Capital goods – 3 years) and the same has been duly reported in ITC 04.
    
13. Check whether the goods sent on an approval basis have been either returned within 6 months or sold on the issuance of tax invoices.