GST Return for September of a year is the last return period during which taxpayers can rectify any missing inputs or errors in the returns already filed during the previous financial year. These corrections are crucial for the correct closure of that particular financial year. It also forms an important checkpoint during the GST audit. So September 2020 return is very significant and crucial.
Here is an important checklist for all the taxpayers to consider before filing their September 2020 GST Returns:
- Avail pending ITC
It is the last chance for availing the pending ITC for the financial year 2019-20 as the taxpayers file GSTR-3B for the Sep’20 return period in October 2020. The entire reconciliation process for the year 2019-20, matching the invoices between GSTR-2A and your purchase book must be completed in order to save a lot of your hard-earned money.
- ITC claim on earlier reversal
If GST credit has been reversed during the year on account of payment not made to suppliers within 180 days. The taxpayer can again claim the ITC after payment to the supplier which has been already reversed on non-payment. It is important to check the books of accounts for any such entry on which ITC can be claimed.
- Checking credit for Reverse Charge
It is important to cross-check your books of account to confirm if you have paid GST under RCM for proper transactions at the appropriate rate and claimed the ITC for the same in the Financial Year 2019-20.
- Cross-checking purchase bills with GSTR-2A
During the course of the year, there are multiple missed purchases or no invoice purchases, lost invoices etc. It is important to cross-check the purchases with the available GSTR 2A in order to get the audit right.
- Sale reversed after GST Paid
If the goods are rejected after a few days of the sale and the taxpayer has already paid the GST due on the sale, such differences also need to be pointed out. Reconciliation of GSTR-2A with the taxpayer’s books of accounts is necessary to claim ITC on the basis of Debit Note issued by the party.
- Collect ITC on Bank charges
Bank charges like processing fees and unit inspection charges also need to be claimed timely. Cash Credit accounts with banks have to pay ‘processing charges’ for renewal of C/C limits and also have to pay unit inspection charges which are directly debited to their C/C accounts by banks. Taxpayers can collect ITC on such transactions.
- ITC on Job-work charges
If a taxpayer has taken any job work done via out-sourcing it to small vendors and they have provided GST invoices, then the taxpayer must claim the relevant ITC. Such small entries get missed in the due course of the year. Now is the time to check the books of account and get all such entries together for the ITC claim before filing the September 2020 GST Returns.
- Claim ITC on small expenses like internet, telephone bills etc.
If the bills are on the name of your business and have the business address mentioned then you can claim ITC on the same. People tend to leave such small transactions; however, you can check such entries with GSTR-2A for the complete year and enjoy the benefit by claiming ITC after rightly filing the September 2020 GST Returns.
- ITC on Payment for Parcel/Postage/ Courier Charges
As mentioned in the above point, small transactions get ignored throughout the course of the year. But all these small transactions when seen together can save you a lot of money so do not miss taking them into account. Small expenses are not calculated accurately and are often ignored. You can check your GSTR 2A and carry out a proper reconciliation process.
Here is a list of ITC Claims a taxpayer may miss out on considering it a small or petty transaction. However, all these expenses if made for office purposes and are registered on the business name then their ITC claim is possible. Check out the list:
- ITC claim on Insurance of company vehicles
- Purchase of Office Furniture
- Purchase of electronic appliances for office such as Air Conditioner, Television etc.
- Drinking water made available to employees – water is not a beverage and is eligible for ITC Claim. According to the CGST Amendment Act 2018 section 17(5)(b) an employer is entitled to claim ITC on goods/ services which it is statutorily obligated to provide to its employees.
- Printing and Stationery Expenses made
- Office Rent Paid – a GST invoice is needed for the same. Only rent agreement and documents may not work in this regard.
- Business travel expenses of employees. A proper GST invoice needs to be acquired to claim ITC.
- Bills such as electricity and water to the respective boards.
These entries and transactions are crucial to address for an accurate closure of the financial year.
CGST Rule 36(4)
For FY 2019-20, taxpayers have some more complexities to face. For ITC reconciliation, they have to take care of the inclusion of CGST Rule 36(4). This rule has added a few restrictions and changes in how ITC was being claimed.
- Between 1st April 2019 to 8th October 2019, taxpayers could claim ITC in their GSTR-3B on a provisional basis without restricting the upper limit.
- From 9th October 2019 to 31st December 2019 – a 20% restriction was levied on provisional credits every month based on eligible ITC in GSTR-2A.
- It was reduced to 10% from 1st January 2020 onwards.
- Due to the pandemic, the restriction was deferred for the period of February 2020 to August 2020. However, taxpayers must claim ITC as per GSTR-2A from February to August from September 2020 onwards.
Also, the taxpayers must check up on all the changes introduced in the new GST Return – GSTR 2B also. Thus there are a lot of things to take care of before filing September 2020 GST returns.
GSTR-1 filing of September also plays a very important role. This is because of the following:
- Uploading missing invoices: As per validations 18 months older invoice can be uploaded in GSTR-1. But if the invoice belonging to current financial year is not uploaded till September filing of subsequent financial year then the buyer may not be able to take ITC. So while filing GSTR-1 of September it is important to check if there is any invoice of previous financial year which is not yet uploaded.
- Issuance of Credit/Debit note: There are some cases where the supplier may have to issue a credit/debit note for an invoice issued in the current year. In such case if the supplier wants that the date of credit/debit note should belong to the current year then he need to issue such credit/debit note before he files the GSTR-1 of September of subsequent financial year. If the supplier fails to do so then the buyer will lose the additional ITC which he might have claimed due to issuance of debit note.
- Amendment of invoices: If the supplier want to amend any invoice belonging to current year then this need to be done before he file the GSTR-1 of September of subsequent financial year. If this amendment results in increase of tax amount and the supplier do not amend the invoice in or before GSTR-1 of September then the buyer may lose such additional ITC.
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