Financial Year end GST Checkpoints

Every year brings new changes to the GST law, along with various judicial decisions that affect how the financial law is interpreted and how GST returns are filed. Taxpayers need to stay ahead of compliance requirements to avoid potential interventions by tax authorities, which could result in demands for taxes, interest, and penalties. To help taxpayers navigate these complexities, we’ve compiled a list of 70 GST checkpoints to consider for the financial year ending in March 2024. These checkpoints serve as safeguards to ensure compliance and minimize the risk of non-compliance.

Compliances on the GST Portal:

1. Apply for or renew the Letter of Undertaking (LUT) for the financial year 2024-25 if you’re involved in supplies to Special Economic Zones (SEZ) and export transactions.
2. File form CMP-02 by March 31, 2024, if you wish to opt for the composition scheme for the financial year 2024-25.
3. File FORM GSTR-4 by April 30, 2024, if you’ve opted for the composition scheme for FY 23-24.
4. Consider opting in or out of the Quarterly Return Monthly Payment (QRMP) scheme by April 30, 2024.
5. File Annexure V & VI to opt for Forward Charge Mechanism (FCM)/Reverse Charge Mechanism (RCM) for Goods Transport Agency (GTA) supplies for FY 2024-25 by March 31, 2024.

Reconciliations for FY 2023-24: 6. Match outward supplies as per books with GST returns (Books vs. GSTR-1 vs. GSTR-3B) to identify any discrepancies.

1. Reconcile rates between books and GSTR-1, including tax ledgers vs. GSTR-3B for Reverse Charge Mechanism (RCM).
2. Reconcile the balance of credit and cash as per the GST portal with the balance appearing in books to identify any discrepancies.
3. Compare GSTR 2B with the Input Tax Credit (ITC) Register in books for eligible and ineligible ITC, including tracking spillover transactions.
4. Identify pending ITC as per books and GSTR 2B to optimize ITC claims and follow up with vendors if necessary.
5. Verify credits temporarily reversed and take appropriate action, such as claiming or considering them as permanently ineligible.
6. Ensure that the tax paid under Reverse Charge Mechanism (RCM) matches the RCM ITC claimed.
7. Reconcile Harmonized System of Nomenclature (HSN) codes through GSTR-1 vs. Books value.
8. Update the Electronic Credit Reversal & Recredit Statement with appropriate data.
9. Reconcile E-way bills with GSTR-1 and document reasons for any E-way bills not required against supply.
10. Reconcile E-Invoices issued during the year with tax invoices generated, including for GST credit notes and debit notes.
11. Compare books inventory with physical inventory to assess if ITC reversal is required or if there are accounting lapses and missed-out ITC.
12. Obtain confirmation from customers that ITC has been reversed against credit notes raised.

These checkpoints are crucial not only for ensuring compliance but also for preparing for the annual returns in Form GSTR 9 & 9C due in December 2024 for FY 2023-24.

Outward (liability): 19. Assess if any GST Debit Notes (DN) or Credit Notes (CN) should be issued for any value short or excess charged, or any sales returns by customers.

1. Ensure compliance with section 18(6) for transfers/sale of Plant & Machinery (P&M), including valuation checks for related party transactions.
2. Review tax utilization entries passed in books vis-à-vis electronic liability ledger.
3. Review the debtors aging report to assess the tax implication on customers, including potential implications for realization.
4. Review outstanding amounts towards export of services and goods where refund claims are being made.
5. Make amendments to GSTR-1 by changing outward supplies from Business-to-Consumer (B2C) to Business-to-Business (B2B) or the type of tax.
6. Ensure correct details where the recipient or ECO is liable to pay tax to avoid disputes with the department.
7. Verify if tax liability against receipt of advances for services and adjust accordingly.
8. Cross-charge to distinct persons and related parties for the supply of common services.
9. Ensure correct payment of Central GST (CGST) or State GST (SGST) instead of Integrated GST (IGST) and vice versa.
10. Verify income from other sources for GST liability clarity.

Inward (ITC): 30. Time the availing of credit with the receipt of goods or services, including considering Section 16, RCM credits, and eligibility on advances.

1. Check for ITC reversal required under Rule 37 due to non-payment within 180 days or reclaim of any ITC.
2. Verify vendors’ GSTR 3B filings in GSTR 2A to satisfy Section 16(2)(c) of the CGST Act.
3. Verify expenses against Input Tax Credit (ITC) not accounted for through GSTR 2B.
4. Reverse ITC against vendor credit notes reflected in GSTR 2B if necessary.
5. Account for credit where details are not reflected in GSTR 2B and consider deferred input accounts.
6. Re-compute the impact of annualized ITC reversal for exempted and taxable supplies under Rule 42.
7. Rectify any CGST/SGST availed as IGST or vice versa within the time limit.
8. Rectify credit availed in a different GSTIN of the same assessee (PAN).
9. Re-verify ITC masters and conditions used for classification of eligible ITC.
10. Ensure GSTR 2B exceeds ITC claimed in GSTR 3B, addressing any mismatches promptly.

These checkpoints provide a comprehensive overview of the various aspects of GST compliance that taxpayers need to consider. By addressing these checkpoints, taxpayers can ensure compliance with GST laws, minimize the risk of non-compliance, and focus on their core business activities.

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