GST Year-End Checklist for FY 2025-26: Compliance and Filing Guide

Introduction to GST Year-End Compliance

The Goods and Services Tax (GST) is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services across India. For businesses, ensuring accurate and timely GST compliance is crucial. This guide offers a detailed GST Year-End Checklist for FY 2025-26 to help businesses navigate the complexities of GST returns and avoid penalties. Stay updated on the latest rules and regulations issued by the Central Board of Indirect Taxes and Customs (CBIC).

Key Objectives of the GST Year-End Checklist

The primary goals of this checklist are:

• Accuracy: Ensure all GST returns filed are accurate and reflect the true state of business transactions.
• Compliance: Adhere to all GST laws and regulations.
• Penalty Avoidance: Minimize the risk of penalties and interest due to non-compliance or errors.
• Efficiency: Streamline the GST compliance process for future periods.

GST Year-End Checklist: A Step-by-Step Guide

Here's a detailed checklist to ensure comprehensive GST compliance for FY 2025-26.

1. Data Reconciliation and Verification

Accurate data is the foundation of GST compliance. Start by reconciling your sales and purchase data with your books of accounts.

• Sales Data: Verify sales invoices, debit notes, and credit notes against your records. Check for any discrepancies.
• Purchase Data: Reconcile purchase invoices, import data, and input tax credit (ITC) claims.
• E-way Bills: Ensure all e-way bills generated match the corresponding invoices and transportation details. E-way bills are mandatory for the movement of goods exceeding ₹50,000, as per Rule 138 of the CGST Rules, 2017.

2. Input Tax Credit (ITC) Reconciliation

ITC is a crucial aspect of GST. Claiming the correct ITC can significantly impact your tax liability.

• GSTR-2B vs. Books: Reconcile the ITC available as per GSTR-2B (auto-generated statement of ITC) with your purchase register. Identify any missing invoices or discrepancies. Remember, as per Section 16(2)(c) of the CGST Act, 2017, ITC can be claimed only if the supplier has uploaded the invoice in their GSTR-1.
• Rule 36(4) Compliance: Ensure compliance with Rule 36(4) of the CGST Rules, 2017, which restricts the ITC claim to 100% of the eligible ITC reflected in GSTR-2B. Any excess claim could lead to penalties.
• Ineligible ITC: Identify and reverse any ineligible ITC claimed, such as ITC on goods or services used for personal consumption or blocked credits under Section 17(5) of the CGST Act, 2017.

3. GSTR-1 Filing Review

GSTR-1 is a monthly/quarterly return detailing outward supplies (sales). Review your GSTR-1 filings thoroughly.

• Invoice Accuracy: Verify that all invoices are correctly reported, including GSTIN of the recipient, invoice value, tax rates, and place of supply. Any errors can lead to notices from the GST department. Many businesses now use gst software to automate this process.
• HSN Codes: Ensure that the correct Harmonized System of Nomenclature (HSN) codes are reported for all goods. The CBIC has mandated the reporting of HSN codes based on the aggregate turnover of the business.
• Amendments: Check if any amendments are required for previously filed GSTR-1 returns. Rectify any errors before the year-end.

4. GSTR-3B Filing Review

GSTR-3B is a summary return of outward supplies and ITC claimed. Ensure its accuracy and consistency with GSTR-1 and GSTR-2B.

• Tax Liability: Verify that the tax liability declared in GSTR-3B matches the actual tax payable based on your sales data. Any discrepancies should be investigated and rectified.
• ITC Claim: Ensure that the ITC claimed in GSTR-3B is supported by valid invoices and complies with all relevant rules and regulations.
• Payment of Taxes: Verify that all tax liabilities have been paid on time. Late payment attracts interest at the rate of 18% per annum, as per Section 50 of the CGST Act, 2017.

5. Reconciliation of GSTR-1 and GSTR-3B

Reconciling GSTR-1 and GSTR-3B is vital to ensure consistency in your GST returns. Discrepancies can trigger scrutiny from the GST authorities.

• Sales Turnover: Match the sales turnover reported in GSTR-1 with the taxable turnover declared in GSTR-3B. Investigate any differences and provide explanations.
• Tax Liability: Ensure that the tax liability reported in both returns is consistent. If there are variations, analyze the reasons and make necessary adjustments.

6. Reconciliation of GSTR-2B and GSTR-3B

This reconciliation ensures that the ITC claimed in GSTR-3B is supported by the ITC available as per GSTR-2B.

• Eligible ITC: Verify that the eligible ITC claimed in GSTR-3B matches the ITC available as per GSTR-2B. Note any variances. Businesses should review gst audit handbook ay guidelines, from the ICMAI, which outline required reconciliations.
• Reversals: Reconcile any ITC reversals made in GSTR-3B with the corresponding entries in your books of accounts.

7. E-Invoice Compliance

E-invoicing is mandatory for businesses with an aggregate turnover exceeding ₹5 crore. Ensure compliance with e-invoicing norms.

• Invoice Registration Portal (IRP): Ensure that all applicable invoices are registered on the Invoice Registration Portal (IRP). The IRP generates an Invoice Reference Number (IRN) for each e-invoice.
• QR Code: Verify that all e-invoices contain a valid QR code, as mandated by the CBIC. The QR code contains details of the invoice, IRN, and other relevant information.
• Reporting: Report e-invoices accurately in GSTR-1. Failure to comply with e-invoicing norms can result in penalties and rejection of ITC claims.

8. Composition Scheme Review

If you are under the composition scheme, review your eligibility and compliance with the scheme's rules.

• Eligibility: Ensure that you continue to meet the eligibility criteria for the composition scheme, such as turnover limits and restrictions on inter-state supplies.
• Quarterly Returns: File quarterly returns (CMP-08) and annual returns (GSTR-4) accurately and on time. The composition scheme requires simplified compliance procedures but comes with limitations on ITC claims.
• Payment of Tax: Pay tax at the prescribed rate applicable to the composition scheme. Late payment attracts penalties and interest.

9. Annual Return Filing (GSTR-9)

GSTR-9 is an annual return summarizing all GST transactions for the financial year. It's a comprehensive document that requires careful preparation.

• Data Compilation: Compile all relevant data from GSTR-1, GSTR-3B, and your books of accounts. The annual return requires detailed information about sales, purchases, ITC, and tax payments.
• Reconciliations: Reconcile the data reported in GSTR-9 with the data reported in monthly/quarterly returns. Address any discrepancies before filing the return.
• Due Date: File GSTR-9 before the due date (typically December 31st of the following financial year). Late filing attracts penalties.

10. GST Audit

Businesses with an aggregate turnover exceeding ₹5 crore are required to get their accounts audited by a Chartered Accountant or Cost Accountant.

• Appointment of Auditor: Appoint a qualified auditor to conduct the GST audit. Ensure that the auditor has a thorough understanding of GST laws and regulations.
• Audit Report: Obtain an audit report (GSTR-9C) from the auditor. The audit report should highlight any discrepancies or non-compliance issues identified during the audit.
• Filing GSTR-9C: File GSTR-9C along with GSTR-9 before the due date. Failure to file GSTR-9C can result in penalties and scrutiny from the GST authorities.

11. Stay Updated with Notifications and Circulars

The CBIC regularly issues notifications, circulars, and clarifications regarding GST laws and procedures. Staying updated is crucial for compliance.

• CBIC Website: Regularly visit the CBIC website (www.cbic.gov.in) to stay informed about the latest updates. Subscribe to email alerts to receive notifications directly in your inbox.
• Professional Advice: Seek professional advice from tax consultants or GST experts to understand the implications of new regulations. Keeping abreast of gst and customs updates is vital.

12. Documentation and Record Keeping

Maintain proper documentation and records of all GST transactions. This is essential for audits and assessments.

• Invoices: Keep copies of all sales and purchase invoices, debit notes, and credit notes.
• Returns: Maintain records of all GST returns filed (GSTR-1, GSTR-3B, GSTR-9, GSTR-9C).
• E-way Bills: Keep records of all e-way bills generated.
• Books of Accounts: Maintain proper books of accounts, including ledgers, journals, and cash books. As firms adopt accounting focus, digital solutions become critical.

Conclusion

GST compliance requires meticulous attention to detail and adherence to evolving regulations. By following this comprehensive GST Year-End Checklist for FY 2025-26, businesses can ensure accurate returns, minimize the risk of penalties, and maintain a smooth GST compliance process. Remember to stay updated with the latest notifications and circulars from the CBIC and seek professional advice when needed. Ignoring gst evasion impact can have serious consequences.

Disclaimer

This guide is for informational purposes only and does not constitute professional advice. Consult with a qualified tax professional for specific guidance related to your business.

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Disclaimer

This article is for educational purposes only and does not constitute professional legal, tax, or financial advice. The information provided is based on public sources and may change over time. We are not responsible for any actions taken based on this content. Please consult a qualified professional for specific advice related to your situation.