Arjuna (Fictional Character): Krishna, this week marks the end of the financial year 2022-23. The taxpayers are curious as to what shall be done before this year end to better prepare for the new financial year 2023-24. How should a taxpayer prepare himself for this year's march ending?
Krishna, (Fictional Character): Arjuna, as new year comes with new opportunities, we should make sure that previous year is ending with positive note. In our Country, the Financial Year from April to March is applicable for all Tax Laws. That's why month of March is very important for all Taxpayers.
Arjuna (Fictional Character): Krishna, what are points on which the taxpayers need to pay attention at the end of financial year for GST?
Krishna (Fictional Character): Arjuna, following are the things to keep in mind -
- Billing Series: New billing series for FY 23-24 w.e.f. 1st April 2023 should be started.
- E-Invoicing: Businesses with an annual aggregate turnover of more than Rs.10 crore, as calculated in any preceding financial year from 2017-18 up to 2022-23, must begin generating e-invoices from 1st April 2023.
- Letter of Undertaking (LUT): All the exporters or who supplies goods or services to SEZ without payment of GST should apply for LUT in form GST RFD 11 for FY 2023-24.
- Composition Scheme: Small taxpayer having turnover less than 1.5 crore should calculate tax liability under composition scheme and normal option, and accordingly may opt for the option which is beneficial to them considering all the conditions.
- Quarterly Return Monthly Payment (QRMP) Scheme: Taxpayers having Turnover below Rs 5 Crores shall have an option to select the frequency of GST return i.e., QRMP Scheme filing for FY 2023-24 till 30th April 2023.
- Reconciliation of turnover between GSTR1 and GSTR 3B and books: Prepare and reconcile the turnover as reported in GSTR 1/GSTR 3B with books of accounts for FY 2022-23.
- Reconciliation of Outward liability between GSTR 1 and GSTR 3B and books: Compile and reconcile the amount of taxes paid in GSTR 1 and GSTR 3B filed during the FY 2022-23 with books of accounts and pay the tax if there is any shortfall vide filing DRC 03 to avoid the litigation and penalty.
- Reconciliation of ITC between books and GSTR 3B and GSTR 2B: Prepare the yearly reconciliation of ITC accounted in books and ITC availed in GSTR 3B during the FY 2022-23 and reconcile the same with GSTR 2B. If transactions are not populated in GSTR 2B, the taxpayer should follow up with suppliers to furnish/report transactions in their GSTR 1 with payment of taxes in GSTR 3B. Further if ITC has been availed and the transactions not reflected in GSTR 2B then ITC should be reversed.
- Reversal of ineligible ITC: Identify the ineligible ITC u/r 42,43, etc. (Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2022-23 and reverse/pay the same along with interest thereon to avoid the litigation and demand of interest & penalty in future. Further, note that no interest leviable on reversal of wrongly availed credit but not utilized.
- Reversal of ITC if Payment not done to suppliers within 180 days:Prepare and Review that any payment to suppliers is not pending beyond 180 days from the date of issuance of supplier's invoice to avoid reversal of ITC u/s 16(2).
- Payment of RCM: Taxpayer should check and rework RCM liability as per books of accounts with RCM paid in GSTR 3B. Further, RCM as per GSTR 2B should be checked.
Arjuna (Fictional Character): Krishna, what one should learn from this?
Krishna (Fictional Character): Arjuna, the taxpayers should take precautions at the right time i.e., March ending, so that they can save themselves from litigations under GST. The benefit of taking precautions at the March end will help taxpayers to overcome all the offences in upcoming new year.