GST Year-End Checklist is the most important document for a GST taxpayer, as comes March!
March is nearing its end and the new financial year is almost here!

There are certain tasks that taxpayers need to carry out before April 1, 2023, and some mandates start from 1st April 2023. Likewise, there are some that need to be done every year when the Financial Year starts, yet some others were historically introduced on 1st April, the start of the financial year. And like every year, this year again we have brought you a GST Year-End checklist of all the activities that you need to complete before the financial year ends.

GST Year-End Checklist for 2022-23:

1. 6 Digit HSN Mandatory for E-invoicing

As per the GST Notification No.78/2020 – Central Tax dated 15th October, 2020,  it is mandatory for the taxpayers to mention 6-digit HSN Codes for their outward supplies having AATO more than Rs 5 Crores.

In the upcoming weeks, there will be a significant modification to the e-invoice system under Goods and Services Tax (GST). The CBIC officially announced that 4 digit HSN (Harmonic Nomenclature System HSN) will no longer be accepted; only 6-digit HSN Codes will be accepted on the e-invoice gateway. Date to be announced soon.

2. Payment of tax under the forward charge mechanism by a Goods Transport Agency (GTA)

In compliance of Notification No. 03/2022-Central Tax (Rate), dated 13th July, 2022, an option is being provided on the portal to all the existing taxpayers providing Goods Transport Agencies Services, desirous of opting to pay tax under the forward charge mechanism to exercise their option. They can navigate Services > User Services > Opting Forward Charge Payment by GTA (Annexure V), after login, to submit their option on the portal.

Option in Annexure V FORM is required to be submitted on the portal by the Goods Transport Agencies every year before the commencement of the Financial Year. The Option once filed cannot be withdrawn during the year and the cut-off date for filing the Annexure V FORM is 15th March of the preceding financial year.

Annexure V has been made available on the portal for GTA’s to exercise their option for the Financial Year 2023-24, which would be available till 15th March, 2023.

3. LUT – Exports / Supply to SEZ

In terms of rule 96A of CGST Rule-2017 notified by GST Notification No. 16/2017 dated 07-07-2017, any registered person availing the option to supply goods or services for export without payment of IGST needs to furnish, a bond or a LUT (Letter of Undertaking) in Form GST RFD-11.

In simple terms, all registered taxpayers who export goods will have to furnish LUT in GST RFD-11 form in order to make exports without the payment of IGST. It is crucial to note that LUT application is required to be completed before March 31, 2023, or before supply for Exports and SEZ.

Note: The previous LUT is valid up to March 31, 2023, only.

4. Opt-in or out of GST Schemes

A) Composition Scheme under GST: If you wish to opt for the Composition Scheme for the financial year 2023-24, the last date to opt-in or opt-out from the Composition Scheme is 31st March 2023. Form CMP-02 must be used to opt into the composition scheme (both supplier of goods and service provider).

Composition Scheme under GST is an alternative method of tax levy designed for small taxpayers. As per GST Notification 14/2019, the threshold turnover limit to qualify as a small taxpayer was revised to Rs. 1.5 Crores from previous Rs. 1 Crore under notified circumstances.

B) 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, with effect from January 01, 2021, i.e. from the last quarter of FY 2020-21.

Taxpayers must note that the last date to opt-in or opt-out from the QRMP Scheme is 30th April 2023 for the financial year 2023-24.

5. GST Refund

A streamlined GST process allows taxpayers to get a GST refund when they pay more tax than they owe in certain circumstances. If taxpayers want to receive their GST refund on time, they must apply for it by correctly completing out the necessary papers. The refund will be credited to their respective bank accounts in accordance with the GST refund procedure.

Note: 31st March 2023 is the last date to apply for a GST refund.

Refund can be applied in the following cases:

• ITC Refund for Inverted Duty Structure
• ITC in case of Export under LUT
• Deemed Export Supplies
• Supplies to SEZ units and developers
• Finalization of Provisional Assessment
• Refund of Pre-Deposit
• Excess payment due to mistake
• Refund of CGST & SGST paid by treating the supply as Intra- State
• Supply which is subsequently held as Inter-State supply

Read the Step by step guide to claim GST Refund. And, if you have made the application and want to track it, read – Steps to track GST Refund Application.

6. Start fresh invoice number series

With the start of the new financial year, GST taxpayers should start a new invoice series, unique for the financial year as per the GST advisory released in 2019. A similar provision is there in Rule 49 of the CGST Rules 2017, in respect of the issue of Bill of Supply by registered taxpayers availing Composition Scheme or supplying exempted goods or services or both.

If the provisions of Rule 46 or Rule 49 are not adhered to, apart from being a compliance issue, taxpayers may face problems while generating E-Way Bill on the E-way bill system or furnishing their Form GSTR 1 or applying for a GST refund.

Read more: Reset Invoice Number Series

7. Pending ITC

It is important to avail all your pending input tax credit for the year. It’s the financial year-end and it is time for you to complete the GST reconciliation of GSTR 2B with all your Purchase Invoices. This indeed is a significant step to collect all your pending ITC. Reconcile Credit Availed during the year available in 2B; Both Missing credit (vendor follow up) and Additional credits(Expenses Accounting).

Also read vendor compliance for ITC maximization

8. GSTR 3B/GSTR 1 entry VS Accounting entries and Sales in Financial Statements VS E-Way Bills

There are five places where our sales are captured; one is GSTR-1, the second is GSTR-3B, the third is accounting entries, the fourth is Financial Statements, and the fifth is E-Way bills. It is important that the details of all five places should be the same.

Variance in the value at any place may lead to the payment of interest or penalty or negative marking in GST audits. Basis GSTR 3B post journal from Input and output ledgers to Electronic Credit and Liability ledger. Offset the liability ledger along with cash payment.

9. Amendments /Rectification:

It is good to amend and rectify any mistakes or omissions made in GSTR-1 or GSTR 3B returns for the previous financial year in the March 2023 returns. For the same, the taxpayer should reconcile their books of accounts (Ledgers) with the uploaded returns. And adjust the differences (if any) in form GSTR 3B. Also for any mistakes made in GSTR-1, for instance, uploading wrong GSTIN, submitting B2C invoices instead of B2B invoices, omitted invoices, etc. that should be amended, can be amended now.

10. Physical Stock Checking

To get prepared for income tax and GST departmental audit it is important that there should be no difference in physical stock with you and the entry of the same in the books. You should also have a look at ITC reversals while checking the physical stock. If any difference is found in both then do check if any sales are missed while in books.

11. Reversal of Blocked Credit

If you write-off any inventory at the end of the year. Then as per Section 17(5) of the CGST Act 2017, it is important to reverse the ITC of the same.

12. Reconcile GST TDS/TCS credit reconciliation with e-Cash Ledger on GST portal and books of accounts for FY 2022-23

GST TDS/TCS credit gets transferred to the E-Cash ledger at the year-end. Hence, it is important to check whether this amount matches with your books.

Read more about TDS and TCS here.

13. Payment to vendors within 180 days

It is crucial that all outstanding debts be paid on time because the fiscal year is coming to a conclusion. That will guarantee that we don’t carry any backlogs into the upcoming fiscal year. It is important that all outstanding invoices are paid if the vendor payment is not made. It will be simpler to carry out reconciliation and claim ITC without any difficulty after the payment has been made timely.

*****

GST Year-End Checklist for 2021-22:

1. Are you ready for the E-invoicing mandate for companies with Rs 20 Cr. and more?

As per the latest GST Notification 1/2022 released on 24th February 2022, e-invoicing has been made mandatory from 1st April 2022 for all the entities with an aggregate annual turnover of Rs. 20 Cr. or more in any financial year from 2017-18 onwards. So, all the companies who have crossed the threshold need to prepare their systems and start e-invoicing i.e. generate IRN.

Earlier, the mandate was made applicable to Rs. 50 Cr. AATO companies from April 1, 2021. And prior to that, the e-invoicing mandate was made applicable to Rs. 500 crore+ turnover companies in October 2020 and later it was also made mandatory for Rs. 100 crore+ turnover companies from January 1, 2021.

Additionally, if you were already covered under e-invoicing, this mandate also implies that a wider network of your vendors will get covered under the mandate. Hence, you can expect more vendors to share e-invoices with you instead of the normal invoice. As per Section 16, it is critical that you claim ITC for e-invoice only (for those vendors that fall under the mandate) to avoid future legalities. So, any non-compliance of the mandate by any of the vendors can deeply affect your ITC.

So, it becomes imperative that you inform your vendors about the mandate and help them onboard on e-invoicing asap.

The government is trying to bring in the smaller companies under the mandate as with e-invoicing, tax leakage and frauds using fake invoices are expected to reduce considerably due to the authorization of every invoice from the government portal. It does not require heavy investment to start e-invoicing or it is not necessary for your company to have a huge IT department to handle it. IRIS IRP can help you to start your e-invoicing journey seamlessly.

Read: how an e-invoicing software can simplify your e-invoicing.

2. Opt-in or out of composition scheme

Composition Scheme under GST is an alternative method of tax levy designed for small taxpayers. As per GST Notification 14/2019, the threshold turnover limit to qualify as a small taxpayer was revised to Rs. 1.5 Crores from previous Rs. 1 Crore under notified circumstances. If you wish to opt for the Composition Scheme for the financial year 2022-23, the last date to opt-in or opt-out from the Composition Scheme is 31st March 2022. Form CMP-02 must be used to opt into the composition scheme (both supplier of goods and service provider).

3. Apply LUT – Exports

In terms of rule 96A of CGST Rule-2017 notified by GST Notification No. 16/2017 dated 07-07-2017, any registered person availing the option to supply goods or services for export without payment of IGST needs to furnish, a bond or a LUT (Letter of Undertaking) in Form GST RFD-11.

In simple terms, all registered taxpayers who export goods will have to furnish LUT in GST RFD-11 form in order to make exports without the payment of IGST. It is crucial to note that LUT application is required to be completed before March 31, 2022, or before supply for Exports and SEZ.

Note: The previous LUT is valid up to March 31, 2022, only.

4. Opt-in or out of QRMP

Quarterly Return Monthly Payment or QRMP scheme under GST is a scheme introduced by the Government in its initiative to simplify compliance for taxpayers. In this scheme, 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 QRMP Scheme, with effect from January 01, 2021, i.e. from the last quarter of FY 2020-21.

Taxpayers must note that the last date to opt-in or opt-out from the QRMP Scheme is 30th April 2022 for the financial year 2022-23.

5. Apply for GST Refunds

When taxpayers pay excess GST in certain cases and the tax paid is more than the GST liability, the taxpayers can claim GST refund via a streamlined GST process. If taxpayers need to avail their GST refund timely then they must make an application for the same by filling out dedicated forms appropriately. There is a GST refund procedure that needs to be followed and thus the refund shall be credited to their bank accounts respectively.

Note: 31st March 2022 is the last date to apply for a GST refund for the financial years 20-21 & 21-22.

6. Pay GST on Reverse Charge

GST is normally charged by the Supplier of Goods/Services. Supplier is liable to collect tax from the recipient and pay the total tax amount to the Government. But in some cases, the Recipient of Goods/Services is liable to pay GST instead of Supplier. This is known as Reverse Charge under GST. Sometimes, taxpayers fail to identify activities in which Reverse Charge is paid by the recipient.

It is important to pay GST on Reverse Charge till 31st March 2022 in order to collect Input Tax Credit timely from the Government.

7. File ITC 04 – Job Work

Job-work constitutes a major industry in the Indian economy and hence needs special attention. It includes outsourced activities that may or may not culminate into the manufacture and can be simply stated as the processing of goods supplied by the principal to a job worker. It is important to reconcile and file ITC-04 for collecting appropriate ITC.

Note: The due date to file ITC-04 for the period of Oct 2021 to Mar 2022 is 25th April 2022.

8. Collect Pending ITC

It’s the financial year-end and it is time for you to complete the reconciliation of GSTR 2B with all your Purchase Invoices. This indeed is a significant step to collect all your pending ITC. Reconcile Credit Availed during the year V. available in 2B; Both Missing credit (vendor follow up) and Additional credits(Expenses Accounting)

There are specific new rules for claiming Input Tax Credit from 1st Jan 2022. So, you can hop on to this article – 10 Factors to Consider for Defining ITC Strategy for 2022, if you need help!

9. Reset Invoice Number Series

As per the GST advisory released in 2019, with the start of the new financial year, GST taxpayers should start a new invoice series, unique for the financial year.

A similar provision is there in Rule 49 of the CGST Rules 2017, in respect of the issue of Bill of Supply by registered taxpayers availing Composition Scheme or supplying exempted goods or services or both.

If the provisions of Rule 46 or Rule 49 are not adhered to, apart from being a compliance issue, taxpayers may face problems while generating E-Way Bill on the E-way bill system or furnishing their Form GSTR 1 or applying for a refund. Read more: Reset Invoice Number Series

10. GSTR 3B/GSTR 1 entry VS Accounting entries and Sales in Financial Statements VS E-Way Bills

There are five places where our sales are captured; one is GSTR-1, the second is GSTR-3B, the third is accounting entries, the fourth is Financial Statements, and the fifth is E-Way bills. It is important that the details of all five places should be the same. Variance in the value at any place may lead to the payment of interest or penalty or negative marking in audits. Basis GSTR 3B post journal from Input and output ledgers to Electronic Credit and Liability ledger. Offset the liability ledger along with cash payment.

11. Amendments /Rectification:

One should note that the return for March 2022 is the last chance to amend and rectify any mistakes or omissions made in GSTR-1 or GSTR 3B returns for the FY 2019-20. For the same, the taxpayer should reconcile their books of accounts (Ledgers) with the uploaded returns. And adjust the differences (if any) in form GSTR -3B. Also for any mistakes made in GSTR-1, for instance, uploading wrong GSTIN, submitting B2B instead of B2C, omitted invoices, etc. that should be amended, can be amended now.

12. Physical Stock Checking

To get prepared for income tax and GST audit it is important that there should be no difference in physical stock with you and the entry of the same in the books. You should also have a look at ITC reversals while checking the physical stock. If any difference is found in both then do check if any sales are missed while in books.

13. Reversal of Blocked Credit

If you write-off any inventory at the end of the year. Then as per Section 17(5) of the CGST Act 2017, it is important to reverse the ITC of the same.

14. Reconcile GST TDS/TCS credit reconciliation with e-Cash Ledger on GST portal and books of accounts for FY 2021-22

GST TDS/TCS credit gets transferred to the E-Cash ledger at the year-end. Hence, it is important to check whether this amount matches with your books.

******

GST Year-End Checklist for Financial Year 20-21

Apart from the rule changes and important tasks mentioned above that need to be completed before a financial year ends, below were the tasks specific to the end of Financial Year 20-21

1. HSN Code Mandatory

As per GST Notification 90/2020, taxpayers need to include the 8 digit HSN Code for specified products in their Tax Invoice.
Earlier, the 8 digit HSN code was mandatory to be included in GST Invoice only for taxpayers with turnover above RS. 5 crore. However, as per the above-mentioned notification, the 8 digit HSN code is mandatory for all tax invoices (specified products) irrespective of the turnover. Notification 90/2020 amends Notification 12/2017 and correspondingly Notification 78/2020. This is one of the most important GST rule changes.

2. HSN Code in GSTR 1

The government has notified that from 1st April 2020 onwards, it will become mandatory to report a minimum of 4 digits or 6 digits of the HSN (Harmonized System of Nomenclature) Code in Table-12 of GSTR-1 and in Tax Invoice. Also currently the taxpayers need to provide HSN-wise with the invoice value, taxable value and tax amounts in Table-12 of GSTR-1.

From 1st April 2021, the taxpayers need to provide HSN plus rate-wise taxable value and tax amounts in Table-12 of GSTR-1. All the tax invoices should consist of proper HSN Digits, a detailed explanation of the products and correct tax rates for better transparency and to escape future litigations. Under section 125 of GST, there is a fine for any mistakes related to GSTR-1. The no. of HSN Code to be reported will be on the basis of Aggregate Turnover on PAN in the preceding fiscal year. For companies with a turnover of Rs. 5 crores and above 6 digits HSN is mandatory while those below 5 cr need to have 4 digit HSN code.

3. Penalty for Non-compliance with QR Code on B2C transactions

As per the GST Notification 06/2021 released on 30-03-2021, penalty payable for non-compliance of QR Code on B2C transactions waived further till 30th June 2021, subject to compliance from 1st July 2021.

Along with E-invoicing for B2B and Exports, a self-generated dynamic QR Code for B2C transactions was scheduled to be applicable for taxpayers having turnover above Rs. 500 crores. But then it got postponed and a waiver was announced in GST Notification 89/2020. According to this notification, taxpayers are required to print self-generated QR Codes on B2C transactions from 1st April 2021, failure to do so will give rise to a penalty on invoices generated from 1st December 2020. This QR Code should enable the customers to make digital payments. Recently GST circular No 146/2021 is also issued on this which states that if payment is made prior to generation of invoice then instead of dynamic QR Code the cross-reference of payment will also do.

4. GSTR 9 filing last date on 31st March for FY 2019-20

The due date for filing GSTR 9 for the financial year 2019-20 was extended by the Central Board of Indirect Taxes and Customs via GST Notification 04/2021. CBIC has extended the due date of GSTR 9 & 9C for FY 2019-20 to 31st March 2021. Know the 8 FAQs around GST Annual Return here.

5. Anti-profiteering Measures

As per GST Notification 91/2020, the due date for compliances and actions by any authority in respect of anti-profiteering measures u/s 171 due from 20th March 2020 to 30th March 2021 is extended to 31 March 2021.

CBIC extended the due date by amending GST Notification 35/2020 and correspondingly notification 65/2020, for compliances and actions by any authority in respect of anti-profiteering measures u/s 171 due from 20.03.2020 to 30.03.2021 till 31.03.2021.

6. Additional GST Rule Changes – GST Year-End Checklist

List of other rule changes from 1st April 2021:

• From 1 April 2021, it would be mandatory to file Form GSTR-1 before Form GSTR-3B to ensure appropriate auto-population of ITC information and GST liability on Form GSTR-3B. To know more about the auto-population, you can read: Auto-population of GSTR 3B from GSTR 1 and GSTR 2B
• From 1 April 2021, GST refunds will be paid only through a validated bank account linked to the permanent account number (PAN) and Aadhaar number of the applicant.

*****