As the financial year draws to a close, businesses operating in India are gearing up to ensure compliance with the latest regulations and tax requirements under the Goods and Services Tax (GST) regime. The GST system has undergone several amendments and updates since its inception, necessitating meticulous attention to detail for accurate reporting and filing.

Considering these developments, it becomes imperative for businesses to stay updated on the implications that could possibly affect their annual closure of books, conduct a comprehensive year-end review to assess their GST compliance status, make necessary adjustments and plan for the upcoming 2024-2025 financial year.

This checklist serves as a practical guide for businesses across various sectors to navigate the complexities of GST regulations and effectively manage their tax obligations as they prepare for the end of the fiscal year 2024.

Year-end GST Checklist for Compliance

The transition from one financial year to another one is an important time to assess GST compliance, opting for Composition Schemes and others through careful planning and preparing for the latest regulations.

To help businesses for an efficient financial planning and smooth GST compliance, here are some key aspects to consider:

Annual Closure of Books of Accounts Compliance Related Aspects

1. Recalculation FY 2023-2024 Aggregate Turnover for compliance related to FY 2024-2025

The aggregate turnover of businesses plays an important role while determining GST compliance per the threshold limit set for various schemes and rules like Composition Scheme, GST registration, E-Invoicing, QRMP Scheme, Rule 86B and more.

2. Outward and Inward Supplies Year-end Reconciliation 

Businesses must take care of the following year-end reconciliation:

• Turnover per books of accounts vs turnover per GST returns.
• ITC Closing balance per books of accounts vs closing per GST portal
• Reconciliation of pending mismatched ITC with GSTR 2B and transferring in a separate ledger.
• Stock per books of accounts vs physical stock.

Please Note: One must ensure RCM liability has been paid off incase entries are ticked as RCM in GSTR 2B by Suppliers.

3. Annual ITC Reversal Calculation per Rule 42 

For any ITC reversal due to exempted supplies as per Rule 42, businesses must calculate the annual reversal after undertaking monthly reversals. They should then account for any excess or short reversal in their GST returns for March 2024. From1st April 2024 onward there will be interest charged for any delays in reporting additional reversals of common ITC for FY 2023-24.

4. Zero-rated Supplies LUT Filing and Renewal for FY 2024-2025 

Under Rule 96A of the CGST Rule-2017, as specified in Notification No. 16/2017 dated 07-07-2017, taxpayers opting to supply goods or services for export without paying IGST must submit a bond or a Letter of Undertaking (LUT) in Form GST RFD-11 before the export takes place.

Since an LUT is valid for a financial year, a new LUT must be generated and recorded for all export sales and sales to SEZ (Special Economic Zone) units to ensure compliance with GST regulations. The new LUT for FY 2024-25 should be available before 1st of April for doing exports on or after 1st April 2024. Also, business involved in zero-rated supplies or planning to do so must fill the LUT by 31st March 2024 for FY 2024-25.

5. Opt-in/Opt-out for 2024-2024 QRMP 

The government introduced the Quarterly Return Monthly Payment (QRMP) scheme under GST to simplify compliance for taxpayers. Under this scheme, registered persons with an aggregate turnover of up to Rs 5 crore are permitted to present their GST returns quarterly, along with monthly tax payments. The deadline to opt in or opt out of the QRMP Scheme for FY 2024-25 is 30th April 2023.

6. Opt-in for GST 2024-2025 Composition Scheme 

The last date to file CMP-02 to opt for the Composition Scheme for FY 2024-25 is 31st March 2024, subject to meeting the criteria and conditions specified. Note, taxpayers switching from the Normal to Composition Scheme must reverse the ITC claimed on inputs lying in the form of Inputs, WIP, finished goods stock as on 31st March 2024, and capital goods (on a reduced percentage basis) by filing ITC-03 by 30th May 2024.

7. GTA Declaration for GST Payment under Forward Charge

Businesses should obtain and keep records of declarations filed by the Goods Transport Agency (GTA) for opting to pay GST under Forward Charge for FY 2024-25. These records serve as justification for non-payment of GST under RCM.

8. Reset Invoice Number Series  

GST taxpayers should initiate a new invoice series unique to the financial year at the beginning of the new financial year according to the GST advisory released in 2019.

A similar provision exists in Rule 49 of the CGST Rules 2017 regarding the issuance of Bill of Supply by registered taxpayers availing Composition Scheme or supplying exempted goods or services or both. Failure to adhere to the provisions of Rule 46 or Rule 49 may lead to compliance issues for taxpayers and could result in difficulties while generating E-Way Bill on the E-way bill system or furnishing their Form GSTR 1 or opting for a refund, among other issues.

Compliance for Availing the Correct ITC for FY 2023-2024

1. Reconcile E-Credit Ledger with books of accounts for FY 2023-24.
2. Verify the accuracy of tax calculation and payment under Reverse Charge Mechanism (RCM) for imported services, GTA, sitting fees paid to directors, security services, renting a cab, advocate fees, etc.
3. Review the compiled data of GSTR 2B to check the status of the filing dates of GSTR-1 and GSTR-3B by suppliers, ensuring they have filed GSTR-3B to avoid any queries from the Department.

Compliance for Reporting Correct Outward Supplies for FY 2023-2024

1. Reconcile turnover/tax reported in GSTR 1/GSTR 3B with books of accounts for FY 2023-24.
2. Review and ensure correct HSN/SAC codes and GST rates have been filed.
3. Reconcile E-way bills generated in FY 2023-24 with tax invoices reported in GSTR 1.
4. Reconcile e-Invoices with IRN, including e-way bills generated and reported in GSTR 1.
5. Check if goods sent on approval basis have either been returned within 6 months or sold on issuance of tax invoices.
6. Verify if GST paid on advances received in FY 2023-24 towards the supply of services made or agreed to be made has been properly adjusted in GSTR 1 and GSTR 3B.

By diligently following this year-end GST checklist for 2023-2024 and proactively addressing any discrepancies, businesses can navigate the complexities of GST effectively and pave the way for a successful and financially sound new year ahead.