GST Compliance: Year-End Checklists for FY 2023-24
GST Compliance: Year-End Checklists for FY 2023-24
With the end of the fiscal year approaching and the onset of a new one, it’s imperative for companies to engage in several activities related to the Goods and Services Tax (GST) to remain compliant and enhance efficiency. These activities, including registering, billing, filing GST returns, and keeping proper records, are crucial for the seamless operation of businesses. We will delve into the key actions required under GST as the year wraps up and a new fiscal period commences, ensuring adherence to legal standards and the improvement of business workflows.
IndiaFilings provides expert guidance to navigate GST compliance, making the business process straightforward.
Get Started!GST Composition Scheme
A registered or eligible taxpayer looking to adopt the Composition Scheme under GST can do so via the online common portal by submitting Form CMP-02 before March 31st for the upcoming financial year.
It’s also important to verify whether any new business locations have been added or existing ones have been closed and ensure these changes are reflected in the GST Registration Certificate. Should there be any discrepancies, promptly updating the GST registration certificate is crucial.
Invoice Guidelines
Ensure your invoices are updated and compliant with GST standards for smooth business operations.
New Invoice Series
Initiating a new and unique series or serial number for invoices for the upcoming financial year is necessary to prevent duplication or repetition of the previous year’s invoices.
If a business operates under multiple state registrations, it is recommended that invoices be issued with separate, unique series or serial numbers in each jurisdiction.
Invoice Details
Invoices must include all critical details required by GST regulations, such as the GSTINs of both the recipient and the supplier, their addresses, the place of supply, detailed GST amount, and an invoice number limited to 16 digits.
HSN Codes
Regarding the HSN (Harmonized System of Nomenclature) codes on invoices, a 4-digit HSN code is required for registered entities with an aggregate turnover of Rs. 5 crores in the previous financial year. In comparison, a 6-digit HSN code is mandatory for those with a turnover exceeding Rs. 5 crores. Electronic invoicing (E-invoicing) is mandatory for registered entities with an aggregate turnover exceeding Rs. 5 crores in the previous financial year, with a 6-digit HSN code required for all E-invoices.
Reverse Charge Mechanism (RCM) Documentation
For transactions involving supplies from unregistered individuals under the Reverse Charge Mechanism (RCM), the following documentation is essential:
- A self-generated invoice must be created for each transaction. Failure to do so may lead to questions regarding the Input Tax Credit (ITC) claimed on these transactions during assessments or audits.
- To ensure compliance and proper record-keeping, a payment voucher is required for every payment made to RCM suppliers, regardless of their registration status.
GST Returns and Bookkeeping Guidelines
Keep your financial records in check with these GST return filing and bookkeeping practices:
Reconciliation of Financials with GST Returns
- Ensure sales turnover, credit notes, and output tax as per your financial records align with the figures reported in GSTR-1 and GSTR-3B for the previous year.
- Resolve any discrepancies between GSTR-1 and GSTR-3B, understanding the reasons for differences to address them during audits or assessments effectively.
Input Tax Credit (ITC) Reconciliation
- Reconcile the ITC according to your financial records with the ITC claimed in GSTR-3B, ensuring it matches the GSTR-2B obtained from the GST portal.
- Ensure reconciliation of GSTR-2B with the ITC claimed in GSTR-3B and your financial records by November 30 of the following year to address any unclaimed ITC or excess claims within the permissible timeline.
Supplier Confirmations
- Confirm with suppliers who have submitted GSTR-1 but not GSTR-3B to ensure the ITC you claim isn’t disallowed when they file their GSTR-3B. Save all related correspondence.
- For suppliers who have filed GSTR-3B but not GSTR-1, urge them to file GSTR-1 to ensure the ITC appears in your GSTR-2B.
In cases where suppliers haven’t filed both GSTR-1 and GSTR-3B, prompt them to file both returns immediately and maintain a record of all communications for audit purposes.
Review of ITC and Reverse Charge Mechanism (RCM) Liabilities
- Examine your books for any ineligible or mistakenly claimed ITC and reverse such claims if necessary.
- Assess liabilities under RCM in your books to verify if they’ve been reported in GSTR-3B and paid accordingly, including applicable interest.
Addressing Pending Liabilities and Credits
- Any missed output tax liabilities or credit notes for the previous financial year should be reported by November 30 of the following year or by the annual return filing date, whichever comes first.
- Review vendor payments within 180 days from the invoice date; reverse the ITC if payments haven’t been made; and reclaim the ITC once payment is completed.
GST on Other Incomes and Asset Sales
- Ensure GST compliance on other taxable incomes and asset sales, paying any due GST along with interest if necessary.
- By adhering to these guidelines, businesses can maintain compliance with GST regulations and prepare effectively for potential audits or assessments.
Other Key Considerations for GST Compliance
Other Key Considerations for GST Compliance is listed as follows:
- Renewal of Letter of Undertaking (LUT): Exporters who intend to ship goods or services without paying IGST must renew their LUT at the end of each fiscal year to ensure uninterrupted export activities for the next financial year (2023-24).
- GST Refund Applications: Submit any GST refund claims within the two years stipulated by GST regulations to avoid forfeiting the refund entitlement.
- Filing of ITC-04: Entities with an aggregate turnover exceeding Rs. 5 crores must file ITC-04 semi-annually, while those with a turnover up to Rs. 5 crores must do so annually.
- QRMP Scheme Election: The option to join or exit the Quarterly Return Monthly Payment (QRMP) Scheme for the first quarter of the fiscal year 2024-25 is open until April 30, 2024.
- Maintenance of Records:
- Ensure all accounts, documents, and records follow GST legislation requirements.
- By closely adhering to these points, registered exporters and businesses can ensure compliance with GST regulations, facilitate smooth operations, and avoid legal complications.
Conclusion
Adhering to GST regulations is essential for businesses in India to ensure smooth operations and compliance. By following a comprehensive GST Compliance Checklist, companies can enhance efficiency, reduce risks, and evade penalties by completing the outlined tasks for the fiscal year-end and the forthcoming year. Key components such as registration, invoicing, filing returns, and maintaining proper documentation are crucial for aligning with regulatory requirements and contributing to business success. Through proactive and meticulous attention to GST obligations, businesses can effortlessly manage tax complexities and concentrate on their primary activities with assurance.
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