As the fiscal year comes to a close, business owners have to keep up with operations to maintain regulatory compliance. Among these, the Goods and Services Tax (GST) regime deserves special attention. With March 31st marking the end of India's financial year, company owners must take several important GST activities to guarantee smooth operations and compliance.
We will learn about several crucial tasks for business owners to complete by March 31st:
Reconciliation of Books: Take time to reconcile your books of accounts with the GST returns filed throughout the financial year. Ensure that all transactions are accurately recorded and match the details furnished in the GST returns. Any discrepancies should be addressed promptly to avoid penalties.
Review Input Tax Credit (ITC): Verify that all eligible input tax credits have been appropriately claimed and utilized. Rectify any discrepancies and ensure compliance with GST laws regarding ITC claims. Unclaimed credits can lead to increased tax liabilities, so it's crucial to address this before the financial year ends.
Amendments / Rectification:- It is advisable to modify and correct any errors or omissions in GSTR-1 or GSTR 3B returns for the preceding fiscal year in the March 2023 returns. The taxpayer must reconcile their books of account (Ledgers) with the uploaded returns. Adjust the differences (if any) in form GSTR 3B. Also, any mistakes committed in GSTR-1, such as uploading the incorrect GSTIN, submitting B2C invoices instead of B2B invoices, omitting invoices, and so on, can be corrected now.
GSTR 1/GSTR3B entry VS Accounting entries and Sales in Financial Statements Vs E-way bill:- Our sales are reflected in five places: GSTR-1, GSTR-3B, accounting entries, financial statements, and E-Way bills. The details of all five locations must be the same.
Variances in the value at any point may result in the payment of interest, penalty, or negative marking in GST audits. Basis GSTR 3B post journal from input and output ledgers to the electronic credit and liability ledger. Offset the liability ledger and cash payment.
File Pending Returns: If there are any pending GST returns for the current financial year, ensure they are filed without delay. Late filing can attract penalties and interest, impacting your business finances. Timely filing also helps maintain a good compliance record.
Assess Tax Liabilities: Evaluate your tax liabilities for the financial year and make provisions for any outstanding tax payments. This includes GST liabilities as well as any penalties or interest that may have accrued. Planning ahead can help avoid last-minute rushes and ensure financial stability.
Pending ITC:- It is critical to claim all of your pending input tax credits for the year. It is the end of the fiscal year, and it is time for you to finish the GST reconciliation of GSTR 2B with all of your purchase invoices. This is a crucial step towards collecting all of your pending ITC. Reconcile Credit Availed During the Year is accessible in 2B, including both missing credits (vendor follow-up) and additional credits (Expense Accounting).
Reversal of Blocked Credit:- If the individual fails to comply with the provisions of section 17(5) of the CGST Act, the buyer or the recipient has to reverse any ITC that was claimed wrongfully. They might also have to pay interest @24% from the date of making the claim to the date of claim reversal.
Calculation of GST Turnover:- The entire turnover in your current year up to March 31st is to be computed for the purpose of determining aspects such as the applicability of GST registration, eligibility for the Composition Scheme, and the need to file specified returns.
Review Exemptions and Notifications: Stay updated with the latest GST exemptions and notifications applicable to your business activities. Ensure compliance with any changes in tax rates or regulations that may have occurred during the financial year. Non-compliance can lead to legal implications, so it's essential to stay informed.
Audit and Documentation: Conduct internal audits to ensure GST compliance and maintain proper documentation of all transactions. This includes invoices, receipts, credit notes, and other relevant documents. Adequate record-keeping simplifies audits and helps in resolving any queries from tax authorities.
Communication with Suppliers and Customers: Coordinate with your suppliers and customers to ensure compliance with GST requirements. Verify that they have correctly charged and accounted for GST on transactions involving your business. Clear communication can prevent misunderstandings and ensure seamless operations.
Plan for the Next Financial Year: Take stock of your business operations and strategize for the upcoming financial year from a GST perspective. Anticipate any changes in tax laws or business activities and plan accordingly. This proactive approach can help minimize risks and optimize tax planning strategies.
Conclusion:-
In conclusion, the period leading up to March 31st is a critical time for businessmen to review their GST compliance and take necessary actions to ensure smooth operations and avoid any penalties or legal issues. By following these essential steps, businesses can navigate the complexities of the GST regime effectively and position themselves for success in the upcoming financial year.
The above article is written by Mr. Sachin Vishwakarma & Reviewed by Mr. Suyash Tripathi.