As we approach the financial year-end, businesses must focus on GST year-end activities to ensure smooth compliance and avoid penalties. Proper planning can help businesses stay ahead and manage their tax obligations effectively. This guide by Apkireturn will help you understand the essential steps to take before closing the financial year 2024-25 and planning for 2025-26.
Importance of Year-End GST Compliance
Ensuring proper year-end GST compliance is crucial to avoid legal issues and financial losses. Every business registered under GST must adhere to a checklist that includes filing returns, reconciling data, and verifying tax credits. Ignoring these responsibilities can lead to penalties, notices, or audits by tax authorities.
Key GST Year-End Activities Checklist
Below is a complete GST year-end checklist to help you wrap up the financial year efficiently:
1. Reconciliation of Sales and Purchases
- Verify that your sales and purchase records match your GST returns.
- Compare GST data with books of accounts.
- Resolve any discrepancies before filing your final returns.
- Review supplier invoices and ensure they are accurately recorded.
- Identify mismatches between GSTR-1 and GSTR-3B to correct errors promptly.
2. Filing of Pending GST Returns
- Ensure all pending yearly GST returns and monthly or quarterly returns (GSTR-1, GSTR-3B, etc.) are filed.
- Cross-check for late fees or interest applicable on delayed filings.
- Keep track of GST notices and respond promptly to avoid penalties.
- Double-check GST payments to ensure no dues remain outstanding.
3. Input Tax Credit (ITC) Verification
- Verify Input Tax Credit (ITC) claims with GSTR-2B.
- Identify any missing invoices or incorrect ITC claims.
- Claim pending ITC before the due date to avoid losses.
- Ensure ITC is utilized correctly to minimize tax outflow.
- Maintain proper records of ITC claimed for audit purposes.
4. Annual GST Return Filing
- File GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) for eligible taxpayers.
- Maintain proper documentation for audit purposes.
- Review outward and inward supply details before submission.
- Identify any missing transactions and rectify errors before filing.
- Seek professional help if reconciliation discrepancies are found.
5. Review of GST Payments and Refunds
- Check if any excess GST payment has been made and apply for a refund.
- Ensure that all GST liabilities are cleared before the year ends.
- Apply for eligible refunds on ITC, exports, or inverted duty structures.
- Track refund status and resolve any pending refund issues.
6. Rectification of Errors
- Identify and correct any mistakes in past GST filings.
- Amend incorrect invoices or tax details in the relevant GST returns.
- Ensure compliance with GST law changes introduced during the year.
- Maintain a proper audit trail of corrections made.
7. GST Audit and Documentation
- Conduct an internal audit to verify compliance.
- Keep records of invoices, tax payments, and other important documents.
- Maintain proper GST documentation for future reference.
- Ensure tax invoices, e-way bills, and other records are readily available.
- Conduct a final review of compliance status before year-end closure.
8. Transition to the New Financial Year
- Plan your tax liabilities and ITC for FY 2025-26.
- Update GST-related records, such as changes in tax rates or exemptions.
- Review customer and vendor contracts for GST implications.
- Ensure accounting systems are updated for new financial year compliance.
FAQs on GST Year-End Planning
1. Which Year GST Introduced in India?
GST was introduced in India on 1st July 2017 to replace multiple indirect taxes with a single unified tax system.
2. Which Year GST Started in India?
GST officially started in 2017 as part of the government’s tax reform initiative to simplify taxation for businesses and consumers.
3. How Many GST Returns are Filed Annually?
The number of GST yearly returns depends on the taxpayer category:
- Regular taxpayers: 25-37 returns annually (GSTR-1, GSTR-3B, GSTR-9, etc.).
- Composition scheme taxpayers: 5-7 returns annually (CMP-08, GSTR-4, etc.).
How to Plan for FY 2025-26?
Effective year-end planning helps businesses stay compliant and manage finances efficiently. Here’s how you can prepare for the upcoming financial year:
1. Set a Compliance Calendar
- Mark due dates for GST return filing.
- Schedule regular reconciliation checks.
- Keep reminders for payment deadlines to avoid penalties.
2. Train Your Accounting Team
- Educate your team about recent GST updates.
- Ensure they understand ITC claims and tax payment procedures.
- Conduct periodic training on GST amendments and compliance.
- Appoint a compliance officer to oversee tax-related activities.
3. Maintain Proper Records
- Keep track of invoices, receipts, and tax documents.
- Use accounting software to streamline record-keeping.
- Ensure all business transactions are properly categorized.
- Maintain a digital backup of all tax-related documents.
4. Stay Updated with GST Laws
- Follow updates from the GST Council.
- Consult a tax expert for guidance on regulatory changes.
- Monitor changes in GST rates and their impact on business operations.
- Keep records of government notifications related to GST.
5. Ensure Smooth GST Compliance
- Regularly reconcile data with GST returns.
- Plan ITC utilization to optimize tax liability.
- Avoid last-minute rush by preparing for return filing in advance.
- Seek professional consultation if required to avoid compliance errors.
Conclusion
Completing year-end GST activities is essential for businesses to remain compliant and avoid penalties. By following a structured year-end GST compliance plan, you can ensure a smooth transition to the new financial year. If you need expert assistance, Apkireturn is here to help with GST filing, company incorporation, and ITR services.
For expert tax guidance, contact Apkireturn at +91 766 515 6000.
