As the financial year draws to a close, businesses must take proactive steps to ensure compliance with Goods and Services Tax (GST) regulations. This not only helps in avoiding penalties but also ensures seamless operations for the coming year. Here’s a comprehensive checklist to guide businesses on what should be done and what pitfalls must be avoided.

Key Actions to Take Before the Financial Year Ends

1. Reconcile GST Returns with Books of Accounts

• Ensure that GSTR-1 (outward supplies) aligns with GSTR-3B (summary return) and your internal financial records.
• Verify that sales invoices match reported figures in GST returns.
• Cross-check Input Tax Credit (ITC) in GSTR-3B with GSTR-2B to avoid discrepancies.

2. Verify Input Tax Credit (ITC) Claims

• Ensure that all eligible ITC has been claimed before the deadline (due date of September return for the next financial year).
• Identify missed invoices where suppliers have uploaded details but ITC was not utilized.
• Reverse any ineligible ITC claimed on personal expenses or restricted items under Section 17(5) of the CGST Act.

3. File All Pending GST Returns

• Submit any outstanding returns (GSTR-1, GSTR-3B, GSTR-9) before the due date.
• Identify and rectify past errors in returns before the March or September correction window.
• Ensure annual returns (GSTR-9 and GSTR-9C, if applicable) are correctly filed.

4. Conduct a GST Audit (If Applicable)

• If turnover exceeds ₹5 crores, file GSTR-9C (reconciliation statement).
• Conduct an internal review to identify compliance gaps and rectify them before submission.

5. Address Pending GST Notices and Litigation

• Review any pending GST notices, audits, or disputes and resolve them before year-end.
• Keep track of appeals or ongoing litigation to ensure compliance with tribunal deadlines.

6. Issue Necessary Credit and Debit Notes

• If any credit or debit notes related to FY 2024-25 need to be issued, do so before filing the March return or the September deadline.
• Adjust output tax liability accordingly in GSTR-3B.

Common Pitfalls to Avoid

1. Late Filing of GST Returns

• Delayed return filing attracts penalties of ₹50 per day for NIL returns and ₹100 per day for others.
• Non-filing may lead to GST registration suspension or cancellation.

2. Claiming Ineligible ITC

• ITC should not be claimed for personal expenses, motor vehicles (except for specific business uses), or exempt supplies.
• Mismatched ITC claims can trigger audits and penalties.

3. Ignoring Reconciliation with GSTR-2B

• Many businesses rely on GSTR-2A, but GSTR-2B is the correct reference for ITC claims.
• ITC claimed without matching supplier invoices may be reversed.

4. Missing Deadlines for GST Refund Claims

• Refunds for exports, inverted duty structure, or excess ITC should be claimed within the prescribed time limit.
• Late refund applications can lead to rejection, causing unnecessary financial loss.

Final Thoughts

Staying ahead of GST compliance helps businesses avoid unnecessary scrutiny and penalties while ensuring smooth operations. Following this checklist ensures financial accuracy, tax savings, and regulatory adherence. Businesses dealing with complex GST structures should seek expert guidance for precise compliance and reporting.

By keeping records updated, verifying ITC claims, and maintaining timely tax payments, businesses can ensure a hassle-free transition into the next financial year. Staying proactive is the key to successful GST compliance!

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