To be addressed by 30th September

For Finance professionals in India, Financial Year ends on 31st March, but for people working in GST, it ends on 30th September.

The following points must be noted with respect to year end activity related to GST and documentary evidence that should be kept ready for future reference.

1) Input Tax Credit

i) As per Section 16(4) of CGST Act 2017, due date for claiming input tax credit for previous year is earlier of September GSTR 3B return or Annual Return.

The recipient of supply is eligible to take ITC in respect of the invoices or debit notes pertaining to the previous year, up to the date of filing Return for September (of next year)

However, this credit will be eligible only if the relevant particulars/details are uploaded by the vendors in Form GSTR 1/IFF and GSTR 3B.

Vendors who have supplied the goods or services but not uploaded their details in GSTR 1/IFF, uploading of the same is to be ensured by Bills Payable team.

Any rectification or error pertaining to this period can be rectified till September month return.

ii) Liability, in respect of (Goods Receipt Not made / Goods Receipt made and reversed) that are pertaining to previous FY, to be created by taking up with concerned departments on or before 30th September.

iii) Cases where Quality Inspection (for goods) is pending, the same to be accepted or rejected by concerned department.

In case of rejection and it is known that item would not be received in due course, credit note to be requested from vendor before 30th September. This is required to ensure that ITC credit is not lost and eligible credit can be availed in due course.

iv) As per Second proviso to Section 16(2) of the CGST Act 2017, Payment should be made to vendor within 180 days from the invoice date, as per Contractual terms. Bills Payable team should verify the Accounts Payable balances, and if required, reverse the input tax credit as the same can re-availed once payment is made as per third proviso to Section 16(2).

v) According to Section 17(5), ITC is blocked for certain cases. An examination into ITC (already availed) should be taken up, so as to reverse any ITC which was wrongly availed.

2) Output Taxes

i) Organisation to communicate with Customers for any relevant changes required in GST return filed. Any feedback given by Customer or changes asked by them for, can be verified and corrected in next return. Changes, if any, should be done in September month GSTR 1/IFF return. It will not be possible to do any changes after September 2021 for invoices pertaining to year 2020-21.

ii) Cross charge GST invoice for Common Services between 2 or more distinct persons to be issued and output liability to be discharged as per law.

iii) Any reduction in sales or change in tax value for previous FY to be incorporated in Books of Account, in respect of which Credit Note can be issued on or before 30th September.

iv) If any Tax has been collected and paid in wrong Tax head (eg. IGST instead of CGST/SGST or vice versa), then refund should be taken for incorrect tax paid and the same needs to be correctly discharged as per Section 77 of CGST Act, 2017.

3) Reconciliations

a) Input Tax

i) Reconciliation of ITC availed w.r.t. Document dated previous year with GSTR 2A/2B:

(1) If any un-reconciled/ineligible ITC has been availed, the same needs to be reversed along with interest, if the same was utilised.

(2) If any credit has been availed in wrong Tax head (eg. IGST instead of CGST/SGST or vice versa), ITC to be reversed from wrong Tax head, and to be availed in correct Tax Head.

(3) For invoices which are flowing in GSTR 2A/2B, but not yet accounted for, ITC to be taken and reversed in same month return, so that re-credit can be availed in future when the same gets accounted.

ii) Inward supplies liable to Reverse Charge must be verified and eligible ITC to be availed.

iii) Import BOE documents and ITC availed (w.r.t. Import of goods) to be reconciled and maintained in proper order.

iv) For organisations having multiple GST registrations:

(1) ITC w.r.t. IUST transactions to be availed, in case missed out.

(2) In case invoices have been accounted in wrong GST Registration but uploaded correctly by supplier, then suitable adjustment can be made in the books and ITC can be availed.

b) Output Tax

i) Turnover Reconciliation between Books of Account, GST returns must be carried out to check for liability missed out from Returns.

ii) Reconciliation to be done for Advance received and Advance adjusted in returns along with proper documentation.

iii) Contract review may be done on sample basis, to mitigate the risk of incorrect classification.

iv) Tax and Taxable Value reconciliation between GSTR 1, GSTR 3B and GSTR 9 must also be carried out.

v) E-way bill number must be generated and documentation maintained for all supplies made in excess of Rs. 50,000 or as the case maybe.

vi) Similarly, for all invoices on which E-Invoice is applicable, it should be ensured that IRN is generated and reconciled with Invoices.

vii) It should be ensured that goods sent on Job-work is received back within 1 year, else the same needs to be added to Output liability and interest to be paid.

viii) HSN/SAC codes uploaded in returns should be reconciled with books of accounts.

ix) For organisations having multiple GST registrations, value of supply w.r.t. IUST transactions must be verified and corrected in the return.

DISCLAIMER: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site doesn’t constitute legal or professional advice. It should not be relied upon for such purposes  or used as a substitute for legal advice from an attorney licensed in your state.