Preparation Steps for GST Compliance in FY 2022-23 Prior to Finalizing Accounts and Submitting GST Returns for October 2023

For GST taxpayers, the month of October 2023 is essential since it is the last month to make adjustments for any accidental errors or real faults made while filing the GST returns for FY 2022–23. The following imperative actions should be taken into account by taxpayers before they close their books of accounts and submit their GST returns for October 2023:

1. Outward supplies:

1. Reconcile the outgoing supplies, including other income, with the GSTR-1 and GSTR3B forms. The discrepancies, if any, must be taken into account in the books of accounts or in the GST filings, as applicable.

2. Reconcile the fixed assets register with information from GST returns, and then account for any discrepancies in books or GST returns as necessary.

 

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3. To verify that IRN is generated for all the supplies for which e-invoicing is applicable (i.e., B2B, exports, and SEZ supplies), reconcile the invoices as per books with the e-invoice site.

4. Reconcile the data from the e-way bill, the data from the GST returns, and the books of accounts in the case of a supply of goods. Even if it goes unnoticed during the transfer, moving items without a valid e-way bill may result in penalties during the departmental audit process.

5. Reconcile the debit and credit notes according to the books with GSTR-1 and GSTR-3B, and make the necessary adjustments for any discrepancies.

6. In case of export of goods, reconcile the shipping bills details with GSTR-1.

7. Reconciliation of advances received and adjusted according to books of accounts with that reported in GSTR-1 and GSTR-3B, as well as GST payment on such advance receipt, in the case of the supply of services.

8. Reconcile the NIL-rated, exempt, and non-GST supply turnover in books with disclosure in GST returns.

9. Check that the HSN codes recorded in the books match the HSN summary given in GSTR-1 for the fiscal year (2022–23). Additionally, this will be useful for GSTR-9 filing.

10. Any errors in the reporting of invoices, credit or debit notes made when filing returns for FY 2022–23 must be corrected by October 2023 GSTR-1.

11. The last month to issue tax credit notes and declare them in GST filings is October 2023, if any are necessary.

 

2. Inward supplies:

1. Reconcile the ITC available and availed as per books of accounts with GSTR-2B and GSTR-3B.

2. Communication to vendors for reporting of supplies not reflected in the GSTR-2B of the Company.

3. The difference ITC, which is reflected in GSTR-2B but not yet claimed and recorded in the books, must be claimed in GSTR-3B of October 2023.

 

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4. ITC reversal must be calculated and taken into account in GSTR-3B in accordance with Rules 42 and 43 of the Central Goods and Service Rules, 2017 (the “CGST Rules”) if there is any exempt income.

5. Verify whether or not the 180-day payment deadline for vendors was met. If this is not done, then reverse it with interest and get it back in the month that the supplier is paid.

6. To ensure that all the ineligible ITC as per books has been disclosed in GSTR-3B. If any such ITC has been availed and utilized, the same shall be reversed along with applicable interest.

7. The beginning balance of the “Electronic Credit Reversal and Reclaim Statement” correctly identifies and reports the ITC reversed during FY 2022–2023 and pending for recovery.

8. Make sure that ITC is identified and separately recorded in the books for inputs and capital items in accordance with the GSTR-9 disclosure requirement in Table 6.

3. RCM:

1. To locate all of the costs from the books subject to RCM (director sitting fees, legal costs, security costs, car hire costs, etc.) and reconcile those costs with the RCM liability discharged in GSTR-3B. If there is any differential liability, it will be removed along with any applicable interest.

2. Reconcile the foreign spending as recorded in the books of accounts with the service imports reported in the GST returns and the discharged RCM debt.

3. To confirm that self-invoices for all supplies receiving RCM responsibility and acquired from unregistered individuals have been issued.

4. GST payable/receivable balance:

1. Match up the closing balance on the electronic credit ledger and cash ledger with the net GST payable or receivable according to the books of accounts. The GST balance should take the taxpayer’s submitted refund claim into account, if any.

 

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5. Additional points for consideration:

1. To identify the shared expenses for related or separate individuals for which ITC has been claimed, and to cross-charge such expenses to the relevant entities based on the available most logical and reasonable factors (for example, the ratio of such entities’ turnover, etc.).

Read More: Do you know the Appropriate Tax Regime for a Revised Return Filing?

2. To confirm that tax has been discharged in accordance with location of supply laws under the proper headings.

3. To run a comprehensive check on all suppliers to ensure their timely compliance with GST return deadlines. Any default should be promptly highlighted to avoid action from department on the taxpayer during audit proceedings as the recipient of supply.