What every business must do at year end

Ending Tasks for GST for FY 2020-21

Table of contents

• New Invoice series
• Physical Stock Checking
• HSN code requirements
• Reversal of Blocked Credit
• Letter Of Undertaking
• Refund for FY 2018-19
• E-Invoicing
• QR Coding
• Restricted ITC as per 36(4)
• Reconciliation of GSTR 1 with GSTR 3B
• Reconciliation of GSTR 3B with the ITC on purchases
• GSTR 3B/GSTR 1 entry VS Accounting entries
• Reconciliation of E Way Bills with GSTR 1 and further with GSTR 3B
• Reconciliation of GSTR 1/3B Sales with Financial Statements
• Reconciliation of ITC ledgers
• Reconciliation of GSTR 2A with the purchase invoices
• B2B, B2C Reconciliations
• Cross-check for income on which Zero or partial GST is paid

1. New Invoice series :

Ensure creation of a new/unique invoice series of invoices to be raised from 01 April 2021. The series should be serially numbered. You may create multiple series at your convenience.

2. Physical Stock Checking:

The physical stock needs to be reconciled with the stock as per books of accounts. This would be handy in both income tax and GST audit. In case of any discrepancies, the possibility of ITC reversal or missed sales details may be checked.

3. HSN code requirements:

With effect from 01st April 2021 the requirement of mentioning the HSN Code is as follows:

1. Up to 5 crores turnover – Min 4 digits on all B2B supplies. (Optional for B2C supplies)
2. Above 5 crores turnover 6 digits
3. For Exporters and few notified goods –  8 digits

4. Reversal of Blocked Credit:

Section 17(5) of the CGST Act 2017 requires reversal of credit in the case of goods lost, stolen, destroyed, written off etc. The companies are likely to decide about writing off any inventory, if any during the year-end closing by March 31, 2021. In such cases, ITC attributable to such goods shall be reversed.

5. Letter Of Undertaking

The LUT need to be in place for the coming financial year 2021-22 before 01st April 2021 so that the experts don’t get stuck at the last moment.

6. Refund for FY 2018-19

The last date to apply for a refund of GST related to FY 2018-19 is 31.03.2021. Ensure to timely make the compliances, if applicable.

7. E-Invoicing

Businesses having turnover above Rs.50 crores are required to generate e-invoicing The businesses should be prepared beforehand to avoid problems once the e-invoicing is implemented.

8. QR Coding

QR code on B2C supplies by businesses having turnover above 500 crores is required to be printed from 01st April 2021. If the same is not complied with from 01st April 2021, they will be liable for penalty on all B2C supply wef 01st December 2020.

9. Restricted ITC as per 36(4):

Ensure availing credit as per the 36(4) of CGST Rule 2017, though you might have received goods or services along with an Invoice copy of the 95% restricted credit, depends on the number of Invoices uploaded in the portal. Eg. Your 100% credit is eligible only when your supplier has uploaded the invoices to the extent of 95% in the portal for the particular month. From 09th October 2019 till 31st December 2019, the rule was for 20% availment. From 01st January 2020 till 31st January 2020, the rule is of 10% availment. For the successive months of Feb, Mar, Apr, May, June, July, Aug 2020, the cumulative impact of the 10% rule need to be adjusted in Sep 2020 Gst 3B return as part of Covid 19 Relief measures.

Since the new return date extended till Sep’2020, restricted credit is applicable till the new return is going to come. The same has been revised to 5% availment of the eligible credit available in GSTR 2A wef 01st January 2021.

Keep monthly reconciliation between Purchase ledger Vs Portal to provide this information during department audit or query from the Tax department

10. Reconciliation of GSTR 1 with GSTR 3B

The outward supplies as per GSTR 3B need to be reconciled with GSTR 1; in case there is 3B turnover is less, identify it and pay tax with interest @18% as soon as possible. In case, 3B turnover is more, identify with the sale bills/ invoices and if extra tax paid, the same to be noted for future adjustments or subsequent refund where adjustment is not feasible.

11. Reconciliation of GSTR 3B with the ITC on purchases

In case, ITC taken in 3B is more than the actual purchase invoices, the same need to be reversed. nd in case, 3B itc is less than the eligible purchase invoices, the same need to be claimed immediately but not later than the due date of GSTR 3B of September of Next Financial Year.

12. GSTR 3B/GSTR 1 entry VS Accounting entries

There have been many occasions when the accounts team makes the corrections of the above reconciliations in GST returns but the same is not reflected in the accounting entries. The book-entry need to be done simultaneously with the GST corrections so as to present a fair picture.

13. Reconciliation of E Way Bills with GSTR 1 and further with GSTR 3B

There can be instances where EWBs sales are more than GSTR 1 sales. That need to be checked with sale invoices and tax need to be paid if required and similarly if EWB sales are less than GSTR 1 sales, that need to be reconciled. There can be cases where there is no requirement of E waybill generation and the sale bills have been issued. The above need to be done first to reconcile our books with GSTR returns. Secondly, it would be useful while conducting Financial audits and GST Audits and annual return. Thirdly, the same would be ready substantive evidence, in case the notices come from the authorities for mismatch in EWB vs GSTR 1 or 3B sales.

14. Reconciliation of GSTR 1/3B Sales with Financial Statements:

This is an important step assuming the above steps have been done and would come in handy while Income Tax and GST Annual Returns.

15. Reconciliation of ITC ledgers:

It is advisable to reconcile the GSTR-1 & 3B, cash ledger and credit ledger as per the GSTN portal with the books of accounts. Taxwise Credit, cash ledger need to be matched with the respective ledgers as per books of accounts.

16. Reconciliation of GSTR 2A with the purchase invoices

It is highly recommended to the companies to download all GSTR 2A for F.Y. 2020-21 and record all the GST inputs excluding the ineligible ITC claims. If any of the input is not mentioned in GSTR 2A, then the accounts team is required to follow up with the vendors and inform the management so it can be rectified immediately.

17. B2B, B2C Reconciliations

B2B and B2C sales need to be reconciled with the GSTR 3B/ 1 with the books of accounts. This need to be done for a fairer picture and to avoid an event in future where B2B sales wrongly shown as B2C sales and the receiver is not able to get the credit as per his 2A and asking for the tax and interest liability thereon.

18. Cross-check for income on which Zero or partial GST is paid

For cases where GST on income is not paid or paid at lower rates, do take corrective action. And for export supplies, make sure you have proper LUT for the concerned financial year. Go through all the points and check if any point is applicable to you or not and do the needful to implement the same.