Tag: GST Adjustments september

March 2025 GST Closing Checklist

Here is a comprehensive GST Closing Checklist for March 2025, keeping in mind that the Financial Year 2024-25 is ending:

I. Reconciliations:

  • Outward Supplies:
    • Reconcile the turnover reported in GSTR-1 with GSTR-3B for each month of FY 2024-25. Identify any under or over-reporting of taxable supplies.
    • Reconcile the turnover reported in GSTR-1 and GSTR-3B with your books of accounts (sales register). Ensure all outward supplies are correctly reported.
    • Reconcile e-way bill data with outward supplies declared in GSTR-1.
    • Reconcile e-invoice data with the sales register and GSTR-1 (ensure e-invoices were generated where applicable). If any e-invoices were missed, generate them now and pay applicable GST to avoid penalties.1
    • Make necessary amendments in GSTR-1 for any discrepancies. Pay any differential tax liability through Form DRC-03, if applicable, along with interest for late payment.
    • Check and report other incomes such as sales of fixed assets and miscellaneous income in the relevant GST returns.
    • Reconcile tax paid on advances received for services.
    • Ensure realization of export proceeds within one year from the date of invoice for export of services. For goods, ensure export is done within 3 months from the invoice date.
    • Verify compliance for supplies to merchant exporters at a concessional rate of 0.1%.
  • Input Tax Credit (ITC):
    • Match ITC claimed in GSTR-3B with GSTR-2B and your purchase register for FY 2024-25. Identify any mismatches.
    • Reconcile your ITC register (as per books) with the Electronic Credit Ledger on the GST portal.
    • Review expense ledgers to identify any eligible ITC that might have been missed. For example, GST on bank charges.
    • Reverse any ineligible ITC that was claimed, including ITC on exempt supplies, goods/services for personal use, and blocked credits as per Section 17(5) of the CGST Act. Ensure these reversals are done in the GSTR-3B for March 2025 to avoid interest implications.
    • Check for any ITC that was not claimed due to supplier non-compliance (suppliers not filing their GSTR-1 or GSTR-3B). Follow up with vendors for any missing invoices or incorrect details that are blocking ITC claims.
    • Reverse ITC if payment has not been made to the supplier within 180 days from the date of the invoice.
    • Verify ITC for capital goods and ensure proper accounting of depreciation including the GST component.
    • Reconcile import-related ITC by comparing Bills of Entry (BOE) from ICEGATE with import invoices and GSTR-3B/GSTR-2B.
  • Reverse Charge Mechanism (RCM):
    • Identify all transactions where RCM is applicable during FY 2024-25.
    • Ensure GST was paid under RCM, and the corresponding ITC (if eligible) was claimed in GSTR-3B.
    • Reconcile RCM invoices with GSTR-2B where applicable.
    • Cross-check payment dates, tax amounts, and the timing of ITC claims for RCM transactions.
  • Electronic Cash Ledger:
    • Reconcile the cash balance as per your books of accounts with the balance in the electronic cash ledger on the GST portal.
  • GST Payments:
    • Verify that all GST liabilities for FY 2024-25 have been fully paid before the due dates, including payments for RCM.
    • Ensure any pending interest or late fees (if applicable) are paid.
    • Reconcile GST payments made throughout the year to verify that all taxes due have been paid correctly.
  • Credit and Debit Notes:
    • Ensure all credit and debit notes issued during FY 2024-25 have been correctly accounted for in your GST returns (GSTR-1 and consequently in GSTR-3B). Credit notes for the previous financial year should ideally be issued and reported before the due date of filing the annual return (though it’s good practice to finalize this by March).
  • Stock:
  • TDS/TCS Credit:
    • Reconcile any GST TDS and TCS credit availed during the financial year with the corresponding details available on the GST portal.

II. Filings and Other Compliance:

  • Letter of Undertaking (LUT): If you are involved in zero-rated supplies (exports or supplies to SEZs) without paying IGST, file a Letter of Undertaking (LUT) in Form RFD-11 for FY 2025-26 before March 31, 2025. Failure to do so may require you to pay IGST on such supplies and then claim a refund.
  • Opting for Composition Scheme: If your aggregate turnover in FY 2024-25 is within the prescribed limit and you wish to opt for the Composition Scheme for FY 2025-26, file an intimation in FORM GST CMP-02 on the GST portal before March 31, 2025.
  • Quarterly Return Monthly Payment (QRMP) Scheme: Taxpayers with an aggregate turnover of up to ₹5 crore can opt in or out of the QRMP scheme for FY 2025-26. The selection for the first quarter (April-June 2025) can be done between February 1, 2025, and April 30, 2025. However, it’s good to decide and take action in March itself.
  • Goods Transport Agency (GTA) Declaration: If you are a GTA and wish to opt for the Forward Charge Mechanism (FCM) instead of the Reverse Charge Mechanism (RCM) for FY 2025-26, you need to file a declaration (Annexure V) on the GST portal by March 31, 2025. Recipients of GTA services should also collect declarations from GTAs opting for FCM.
  • GST Amnesty Scheme: If you have any pending GST dues related to demand orders under Section 73 for FY 2017-18, 2018-19, and 2019-20, the last date to pay the full tax demanded to avail the waiver of interest and penalty under the Amnesty Scheme is March 31, 2025. The application in FORM GST SPL-01 or SPL-02 needs to be filed by June 30, 2025.
  • Input Service Distributor (ISD) Registration: If you have common input services and need to distribute the ITC to your distinct units, ensure you have the mandatory ISD registration before April 1, 2025, as it becomes mandatory from this date. If already registered, ensure ITC is correctly distributed.
  • Reset Invoice Series: Ensure that you start a new and unique invoice series for all your invoices, credit notes, debit notes, and bills of supply from April 1, 2025. The invoice series should ideally have a maximum of 16 alphanumeric characters.
  • E-invoicing Applicability: Re-assess your aggregate turnover for FY 2024-25 to determine if e-invoicing will be applicable to you from April 1, 2025. If your turnover exceeds ₹5 crore in FY 2024-25, e-invoicing will be mandatory. Ensure your systems are ready for e-invoice generation. Also, note the advisory regarding generating e-invoices within 30 days for taxpayers with a turnover of ₹10 crore or above in the previous financial year.
  • E-way Bill Applicability: Review your transactions to ensure compliance with e-way bill requirements for the transportation of goods valued above ₹50,000.
  • Pending GST Notices and Replies: Address any pending GST notices, show-cause notices, or demand orders received from the GST department before the financial year ends.
  • GST Refunds: Review any potential GST refund claims for excess ITC, exports, or inverted duty structure and ensure that they are filed within the stipulated time (generally two years from the relevant date). Verify export documentation and LUT status for refund claims related to exports.
  • GST Rate Changes and Amendments: Ensure you are aware of any GST rate changes or amendments that were effective during FY 2024-25 and that they have been correctly implemented in your transactions and returns.
  • Books of Accounts and Record Keeping: Ensure all GST-related records (invoices, debit/credit notes, payment vouchers, refund vouchers, returns filed, etc.) are maintained as per the GST law. These records must be preserved for at least six years from the due date of filing the annual return for the relevant financial year.
  • Physical Verification of Inventory: Conduct a physical stock count as of March 31, 2025, and reconcile it with your books of accounts.
  • Payment to MSMEs: While not strictly GST-related, review outstanding payments to Micro and Small Enterprises (MSEs) registered under UDYAM and ensure timely payments as per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
  • RoDTEP Returns: If applicable, file the annual Return of Duties and Taxes on Exported Products (RoDTEP) for FY 2023-24 by March 31, 2025 (or by June 30, 2025, with a late fee of ₹10,000).
  • Update IEC: Update your Importer-Exporter Code (IEC) on the Directorate General of Foreign Trade (DGFT) portal between April and June 2025.
  • Multi-Factor Authentication for e-way bill/E-invoice: Be aware that Multi-Factor Authentication (MFA) will be mandatory for logging into the e-way bill and e-invoice systems from April 1, 2025. Ensure you are prepared to use OTP via SMS, the ‘NIC-GST-Shield’ app, or the ‘Sandes’ app for login.

III. Annual Return and Reconciliation Statement:

By diligently following this checklist, you can ensure a smooth and compliant closure of GST for March 2025 and the financial year 2024-25. Remember to keep all supporting documents properly organized for future reference and audits.

Key Points to consider before filing GST Returns for the month of September 2021

FY 2020-21 was completed and all the organization are occupied in preparation and submission of Annual filings for the year with various Statutory Authorities.

Due dates of the Annual filings for 20-21 are as follows:

Annual filing as per Companies Act, 2013 –

Annual Return (AOC 4) – December 29,2021

Form MGT -7                 – January 29,2022

Annual Filing as per Income Tax Act,1961 –

Form 3CD                        – 15th January,2022

ITR Filing                         – 15th February,2022      

Annual Filing as per GST Act, 2017  –

GSTR 9   (If Aggregate Turnover >2Cr)   – 31st December,2021

GSTR 9C (If Aggregate Turnover >5Cr)  – 31st December,2021  (Self Certified)

  • However for the purpose of GST, the due date of 31stDecember cannot be taken as deadline for all adjustments for the FY 20-21. There are several cases in GST where the last date is prescribed as due date of filing of September month of the succeeding year.

Adjustments relating to Input Tax Credit –

Uninterrupted and seamless chain of input tax credit (hereinafter referred to as, “ITC”) is one of the key features of Goods and Services Tax. ITC is a mechanism to avoid cascading of taxes. There were significant amendments made related to ITC in the last 2 years. One such provision is Rule 36(4).

Rule 36(4) – 

Rule 36(4) of CGST Rules, 2017 inserted vide Notification No. 49/2019 dated 09th Oct, 2019 and it was made applicable w.e.f. 09th Oct, 2019 –

36 (4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”.

Later on the rule was amended  –

10% w.e.f. 01.01.2020 vide Notification No. 75/2019 Central Tax dated 26th December, 2019 and 5% w.e.f. 01.01.2021 vide Notification No. 94/2020-Central Tax dated 22nd December, 2020.

And for proper implementation of the above rule GSTR 2B was inserted. Due to insertion of Rule 36(4) the input tax credit as availed in books of accounts does not match with the books. Therefore every entity has unclaimed input for the Financial year 2020-21.( Input availed in books of a/c but not availed in GSTR 3B). Once has to note that the last date to avail such credit is due date for filing September month return. Failure of which would result in lapse of such credit. But question arises whether the same can be availed even though the supplier did not file his return and 5% criteria is already utilized. There is no straight forward answer for the above question. The best option available with Tax Payer is to avail such credit in the September month return so that the statutory time limit prescribed is satisfied and not utilize such credit so as to avoid any interest in future.

The provisions related to above are discussed hereunder –

Last chance to avail any pending ITC of FY 2020-21 –

Section 16(4) : A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Therefore last date for availing input pending for the FY 20-21 is due date of filing September return. If the input is not availed as on that date then it is deemed to be lapsed and to be shown as lapsed in GSTR 9.

Compliance with Section 16(4) -In order to avoid such lapse of credit all the taxpayers has to perform an annual reconciliation for the Year 2020-21 and determine the credit that is un-availed for the year. The same has to be availed in this month so that the above subsection is complied with.

Non compliance with Section 16 (2) and Rule 36(4) –  After performing the reconciliation if the credit is availed irrespective of the status of filing of Supplier, it would result in non compliance with Section 16(2) read with Rule 36(4).

Solution – Therefore in order to avoid any litigation in future it is advisable to avail the credit and not to utilise the same so that in future interest liability can be avoided (if any).

Reversal of common credit used for taxable as well as exempted supply of goods or services for FY 2020-21:

In terms of Rule 42 of the CGST Rules, 2017, amount of reversal of common ITC on inputs and input services used for making both taxable and exempted supplies, shall be calculated finally for the financial year before the due date for furnishing of the return for the month of September following the end of the financial year to which such credit relates.

The above rule is only applicable to person engaged in both supply of Exempt and Taxable supplies. Input reversed in the year as per the rule is based on turnover of that particular month.   And at the end of the year after considering the final turnover of the year, one has to calculated the revised amounts that are liable be reversed.

Excess Credit Reversed – Any amount of credit extra reversed can be claimed as ITC in the return (GSTR 3B) to be filed for the September 2021.

Less Credit Reversed – In case of short reversal made, the differential amount of ITC can be reversed now with interest @ 18% per annum for the period starting from April 01, 2021 till the date of payment. Reversal can be made either through Form GSTR-3B or through Form GST DRC-03.

Adjustments related to Output Tax Payable:

Issuance of credit note as per Section 34(2) –

In terms of Section 34(2) of the CGST Act, any credit note in respect of the supplies made in the previous FY shall be declared in the return for the month during which such credit note has been issued but not later than September 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 the tax liability shall be adjusted accordingly.

Therefore, Last date for issuing GST credit note for the FY 20-21 is up-to the month of September 2021. Post September Commercial Credit Note has to be issued (without GST). However the recipient has to reverse the Input as per Section 16 of the Act.  

Amendments / Rectification pertaining to outwards supplies details furnished in GSTR 1 during FY 2020-21 –

As per proviso to Section 37(3) of the CGST Act, any corrections in respect of the details already furnished in GSTR-1 shall be allowed  till furnishing return for the month of September following the end of FY to which such details pertain, or filing of relevant Annual Return, whichever is earlier.

Therefore ,for making amendment/ rectification in the details furnished in Form GSTR-1 of April 2020 to March 2021, the last date would be due date of filing September 2021 return.

Due date of September Return –

Taxpayers who have opted QRMP Scheme and whose principal place of business is in the state of Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh: 22nd October 2021

Taxpayers who have opted QRMP Scheme and whose principal place of business is in the state of Jammu and Kashmir, Laddakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha: 24th October 2021.

Taxpayers who are not in QRMP Scheme: 20th October 2021.

Therefore all the Tax Payers have to note the above points before filing GST Returns for the month of September.