As the financial year ends, businesses in India must ensure compliance with the latest GST regulations and updates. A thorough year-end review is crucial to assess GST obligations, make necessary adjustments, and plan for the new financial year.

The transition from one financial year to another is a crucial period for businesses to assess GST compliance, review schemes such as Composition and QRMP, and incorporate necessary adjustments based on recent regulatory changes.

This financial year-end checklist for 2025 provides a practical guide to help businesses streamline their tax compliance and navigate key GST requirements for a smooth fiscal year-end.

Annual Closure of Books & Compliance-Related Aspects

1. Recalculate FY 2024-25 Aggregate Turnover for Compliance Purposes

The aggregate turnover of a business determines its eligibility for various GST schemes, including the Composition Scheme, e-Invoicing, QRMP Scheme, and Rule 86B. It is essential to recalculate turnover for FY 2024-25 based on financial records to ensure compliance with applicable thresholds.

2. Year-End Reconciliation of Outward and Inward Supplies

Businesses must reconcile the following aspects to ensure accuracy:

• Turnover per books of accounts vs. turnover per GST returns.
• ITC closing balance per books vs. ITC per the GST portal.
• Pending mismatched ITC with GSTR-2B and its proper adjustment.
• Stock per books vs. physical stock.

Note: Ensure that RCM liability is paid if entries are marked as RCM in GSTR-2B by suppliers.

3. Annual ITC Reversal Calculation per Rule 42

Businesses must undertake annual ITC reversals due to exempted supplies as per Rule 42. Any excess or short reversal for FY 2024-25 should be reported in the March 2025 GST returns. Interest will be applicable for any delays in reporting additional reversals of common ITC from April 1, 2025, onward.

4. Zero-Rated Supplies LUT Filing and Renewal for FY 2025-26

Taxpayers exporting goods or services without IGST payment must renew their Letter of Undertaking (LUT) in Form GST RFD-11 for FY 2025-26 before April 1, 2025, to continue availing this benefit.

5. Opt-In/Opt-Out for QRMP Scheme (FY 2025-26)

Businesses with aggregate turnover up to Rs. 5 crore must decide whether to opt in or opt out of the QRMP scheme by April 30, 2025.

6. Opt-In for GST Composition Scheme (FY 2025-26)

The last date to file CMP-02 to opt for the Composition Scheme is March 31, 2025. Taxpayers switching to the Composition Scheme must reverse ITC on inputs, WIP, and finished goods as of March 31, 2025, by filing ITC-03 by May 30, 2025.

7. GTA Declaration for GST Payment under Forward Charge

Businesses must obtain and retain declarations filed by Goods Transport Agencies (GTA) opting to pay GST under the Forward Charge mechanism for FY 2025-26.

8. Reset Invoice Number Series

As per GST regulations, taxpayers must start a new and unique invoice series for the new financial year. This is mandatory to avoid compliance issues related to invoicing, e-Way Bills, and GST returns.

Compliance for Availing Correct ITC for FY 2024-25

• Reconcile the E-Credit Ledger with books of accounts.
• Verify tax calculations under RCM for imported services, GTA, director fees, security services, cab rentals, advocate fees, etc.
• Ensure suppliers have filed their GSTR-3B to avoid ITC mismatches in GSTR-2B.
• Compliance for Reporting Correct Outward Supplies for FY 2024-25
• Reconcile turnover reported in GSTR-1/GSTR-3B with books of accounts.
• Verify HSN/SAC codes and GST rates.
• Cross-check E-Way Bills with tax invoices reported in GSTR-1.
• Reconcile e-Invoices, including IRN and e-Way Bills, with GSTR-1.
• Ensure goods sent on an approval basis have either been returned within six months or invoiced.
• Adjust GST paid on advances received against supplies made or agreed upon.

Along with your regular yearly fiscal-year end checklist, also check out the tasks to be done particularly in this financial year:

Revised Time Limit for E-Invoice Reporting for Businesses with AATO of ₹10 Crores & Above

Effective April 1, 2025, businesses with an annual aggregate turnover (AATO) of ₹10 crores or more must report their e-invoices within 30 days from the invoice date. Previously, this requirement applied only to businesses with an AATO of ₹100 crores and above, but it has now been extended to a wider taxpayer base. For instance, an invoice issued on April 1, 2025, must be reported by April 30, 2025. The Invoice Registration Portal (IRP) will reject invoices older than 30 days, making timely reporting crucial for compliance.

ISD Mandatory Registration for Companies having Presence in Multiple States

Starting April 1, 2025, companies with branches across multiple states must register as Input Service Distributors (ISD) under GST law. This requirement, introduced in the Finance Bill 2024, ensures efficient distribution of input tax credit (ITC) and enhances transparency in operations.

Under GST rules, the mechanism for ITC distribution is defined, with common ITC generally allocated based on the turnover ratio of branches under the same PAN.

Impact of Buyer’s Rejection on Credit Notes in IMS

Starting from April 1st, a supplier can only reduce their tax liability if the buyer accepts the credit note. If the buyer rejects the credit note, the supplier must pay the equivalent amount in the following month. If a supplier reduces their liability without the buyer’s acceptance and the buyer later rejects the credit note, the supplier will be required to repay the amount in the next tax period.

Late Fee Waiver for Pending GSTR-9C Filings: Deadline March 31, 2025

Notification No. 08/2025 grants a late fee waiver under Section 47 of the CGST Act for annual returns (FORM GSTR-9) for the financial years 2017-18 to 2022-23. This relief applies to registered taxpayers who have not yet submitted the reconciliation statement (FORM GSTR-9C) along with their annual return. To avail of this waiver, the pending GSTR-9C must be filed on or before March 31, 2025.