Article on ‘GST – Important Activities to be carried out at the Year End’, by CS. Anita Patil, Sr.Advisor, Bizsolindia Services Pvt Ltd (April 2025)

Bizsol Thinkline / By

As the Financial Year 2024-25 draws to a close, businesses must fulfill their critical GST compliance obligations. The key tasks are outlined below:

  1. Letter of Undertaking (LUT): Apply/Renew for Letter of Undertaking (LUT) for FY 2025-26 on GSTN Portal (required for Exports and SEZ Supplies without payment of GST)
  1. Quarterly Return Monthly Payment (QRMP) Scheme Selection: Taxpayers with an aggregate turnover up to INR 5 crores can opt into or out of the QRMP scheme, which allows for quarterly return filing with monthly tax payments. The selection for FY 2025-26 should be completed by April 30, 2025.
  2. Selection of Composition Scheme: Eligible businesses to avail the Composition Scheme for FY 2025-26 shall electronically file an intimation in FORM GST CMP-02, prior to the commencement of the financial year for which the option to pay tax under the aforesaid section is exercised and shall furnish the statement in FORM GST ITC-03 in accordance with the provisions of sub-rule (4) of Rule 44 of the CGST Rules within a period of 60 days from the commencement of the relevant financial year 2025-26 i.e. by 30th May 2025.
  1. Obtain Declarations from Goods Transport Agencies (GTA): For FY 2025-26, collect declarations from GTA that they opt to pay GST under the forward charge mechanism. This documentation is crucial to justify the non-payment of GST under RCM.
  1. GST TDS/TCS credit: A taxpayer shall check for any GST TDS/TCS credit available on our GST Portal and claim the same after checking its authenticity from the books of accounts. 
  1. Reassessment of Aggregate Turnover: Businesses should reassess their aggregate turnover for FY 2024-25 to determine the applicable compliance requirements for FY 2025-26. This evaluation impacts decisions related to GST registration and eligibility for the various measures, including the Composition Scheme, the QRMP scheme, e-invoicing mandates, and adherence to Rule 86B of the CGST Rules concerning 1% cash payment.
  1. Check Applicability of E-Invoice: Any entity is liable to generate an E-invoice in the new financial year based on its turnover crossing the prescribed threshold limit of INR 5 Crore in any of the FYs starting from July 2017. 
  1. GST Amnesty Scheme 2025: The deadline for payment of outstanding GST dues is March 31, 2025, and the relevant form submission due date is June 30, 2025. This scheme offers a waiver of interest and penalties for past FYs of 2017-18, 2018-19, and 2019-20 as per Section 128A of the CGST Act.
  2. Implementation of New Invoice Series: Businesses are advised to initiate a fresh invoice series starting April 01, 2025. This applies to all transactional documents, including tax invoices, credit notes, debit notes, and bills of supply (exempted supplies), receipt vouchers, payment vouchers etc. ensuring systematic record-keeping for the new financial year 2025-26. 
  1. Following reconciliations to be maintained and appropriate actions to be ensured:
  • Outward supplies as per books and GST returns (Books vs GSTR-1 vs GSTR-3B)
  • ITC claimed in GSTR-3B vs ITC appearing in GSTR-2A & 2B
  • Reconciliation of balance of Electronic Credit and Cash Ledger as per GST portal with balance appearing in books of accounts.
  • Check if GST is properly paid/ not on other Income and sale of motor car, sale of assets etc.
  1. Check the requirement for any ITC reversals or ITC to be reclaimed.
  • Rule 37 – Any ITC reversal required on account of non-payment to suppliers / vendors within 180 days or to reclaim of any ITC in respect of supplies for which payments has been made subsequently.
  • Rule 42 or 43 – Impact of annual ITC reversal in case of exemption as well as taxable supplies to be considered to ensure common ITC reversals.
  • Check if any reversal required against goods procured rejected and returned. (Ensure the impact of the same has been considered in GST returns)
  • Review if any ineligible ITC (Blocked Input Tax credit/ ITC on exempt supplies) is not availed. If such ITC is availed, reverse such ITC along with interest.
  • Check if any supplier is registered under the Composition scheme and collect GST, Reverse such ITC along with interest.
  • ISD registrations and compliances such as return filings and distribution of pending common ITC distribution by HO to respective branch GSTN.
  1. Compliance with Goods Sent on Approval Basis: Ensure compliance with goods sent on an approval basis, including proper documentation and timely return of such goods to avoid tax

  2. Few additional pointers for GSTR-2A & 2B reconciliation:
  • Invoice-wise GSTR 2A & 2B reconciliation to ensure at an annual level.
  • In case the xregistration of supplier is cancelled for non-payment of taxes or non-filing of returns, send communication to such supplier to that effect.
  • Identification of default vendors for the purpose of recovery of tax paid along with interest.
  • Follow up for any required amendments in invoices with respective suppliers / vendors.
  • Follow up with suppliers to report transactions in their Form GTSR 1 so that same may get populated in your GSTR 2A/2B.
  1. Validation of RCM liability:
  • Ensure if the liability is being paid in respect of all input supplies notified for reverse charge and all the amendments have been taken care of.
  • Check if the tax is paid under RCM matches with ITC under RCM. RCM liability should be more than or equal to ITC under RCM.
  • Ensure timely payment of RCM liability, interest liability need to be discharged in respect of any delay in tax payments.
  • Ensure to prepare Self Invoice for payments made for RCM.
  1. Check pending realizations of Export of Goods and Services, compliances of FEMA and GST to ensure.
  2. Check if IRN is generated for all B2B, Export Invoices and Debit/Credit Notes for B2B supplies, if turnover exceeds 5 Crore and E-Invoice provisions are applicable.
  3. Reconciliation of E-way Bill issued during the year vis-a-vis tax invoices/delivery challans generated.
  4. In case of reconciliation of books inventory with physical inventory, assess if ITC reversal to be required.
  5. In case of continuous supply of services, ensure whether the invoice is raised on the basis of the decided milestone and demand notes etc.
  6. Update the masters (vendor details, GSTINs, product descriptions, tax rates etc.)
  7. Cross charge to distinct person and related parties for supply of common services.
  8. Birds-eye view of compliance status or a walk back to ensure no lapse in compliances. Any interest short paid, late fee not paid etc. Check if any amendments are required to be made in GST returns and pending bookings to ensure in books.
  9. Issuance of GST Debit note/ Credit note & IMS portal compliance: Assess the need to issue any DN/CN for any value short/excess charged and to be communicated to customers, so as to accept the same by customers on IMS portal.
  10. Whether Credit Notes have been issued for sales returned by the customers?
  11. Review disclosures on Invoice, Delivery Challan, Receipt Voucher, other documents, etc. are as per GST Rules, 2017.
  12. Check the status of GST refund applied for and due and proper accounting of balance due in books.
  13. Ensure tax liability against receipt of advances and adjustment thereof to derive at unadjusted advances at year end.
  14. Track status of goods sent on job work or goods sent on approval whether all the goods have been received back within the due time period.
  15. If some of the registrations are required to be closed on account of no business activities, file its NIL returns if pending and then file surrender application for the same.
  16. Invoicing for goods sent on approval.
  17. Amendments to GST registration certificate – w.r.t. future Products, additional places, Services etc.
  18. In case any amount paid/reversed under protest, ensure receivable is accounted and reported on the asset side of Balance Sheet.
  19. Check if Accounts and Records are maintained as per GST Laws for Inward Supplies & Outward supplies with all requisite details.
  1. Compliance of Section 43(b)(h) of Income Tax Act.: In view of amendments made in Section 43B(h) w.r.t. disallowance of the purchases of goods or services received from MSME, if such payments are not made within the due date as prescribed under MSME Act and it cannot be considered as allowed expenditure. In view of the same, if there are outstanding payments as per your books of accounts within 45 days from the date of invoice as on 31.3.2025 then such purchases of goods or services will be disallowed and added to the taxable income for the year. In other words, any payment overdue by 45 days as on 31st March 2025 will be considered as disallowed expenditure and the same may be allowed in the financial year, in which payment is made. It will unnecessarily add cost of interest as 3 times of interest rate charged by the bank payment to such MSME suppliers + Interest on short advance tax paid considering such purchases.

By addressing aforesaid key activities, businesses can ensure compliance with GST regulations, avoid penalties, and maintain smooth tax operations and can navigate smoothly to the new financial year.