The following article was published in Magzine of Nashik Industries and Manufatures’ Associations ( NIMA) in the Feb-25 edition
By CA. Dr. Sanjay Burad (FCA, Ph.D) and CA. Anuja S. Burad (ACA, CS, BA LLB)
1. Review and Reconcile GST Returns
- GSTR-1 (Sales Return): Verify all sales transactions and ensure alignment with GSTR-3B.
- GSTR-3B (Monthly/Quarterly Return): Double-check input tax credit (ITC) claims and ensure any unclaimed ITC is filed before year-end.
2. Input Tax Credit (ITC) Reconciliation
- Verify ITC Claims: Ensure ITC is claimed in line with the taxes paid and as per the supplier’s GSTR-1.
- GSTR-2A/2B: Make sure all eligible ITC appears in the GSTR-2A/2B.
- Address Mismatches: Rectify discrepancies between ITC claimed and the supplier’s filings.
- Reversal of ITC: ITC must be reversed if payment to the supplier remains outstanding for over 180 days.
- ITC in Books vs. GSTR-2B: Ensure that ITC recorded in the books is also reflected in GSTR-2B. If discrepancies arise, follow up with the supplier.
3. Amendments to GST Laws for 2025
- GST Rate Rationalization: Manufacturers must check if their products fall under revised tax slabs.
- E-Invoicing Mandates: Ensure e-invoices are generated for all B2B transactions if the turnover exceeds INR 10 crore.
- Job Work Clarification: Review contracts with job workers to ensure proper tax treatment for goods sent for further processing.
- Input Service Distributor (ISD): ISD becomes mandatory from April 1, 2025, enabling businesses to pass on ITC for expenses incurred at the head office for multiple branches.
4. Year-End Adjustments
- Stock Reconciliation: Ensure that physical stock and book records are accurate and align with GST returns.
- Bad Debts: Reversal of ITC claimed on written-off bad debts.
- Debit/Credit Notes: Ensure all debit and credit notes are reported in GSTR-1.
5. Prepare for GST Audits
- Proper Documentation: Maintain accurate records of invoices, payments, and ITC claims.
- GSTR-9C Reconciliation: For businesses with turnover over INR 5 crore, file GSTR-9C, reconciling GST returns with financial records, certified by a Chartered Accountant.
6. GST Payment and Liability Clearance
- Clear Pending GST Payments: Settle all outstanding GST liabilities before year-end to avoid penalties.
- Advance Payment Adjustment: Verify that any advance payments made for taxes are adjusted correctly in the appropriate periods.
Conclusion
- Year-end GST compliance is essential for manufacturers to ensure they adhere to all regulatory requirements and avoid penalties.
- With the upcoming changes in ITC rules, e-invoicing, and GST rate structures, staying updated and accurate with filings is crucial.
- Manufacturers should also prepare for audits by maintaining proper documentation and reconciling GST returns with financial statements.
Key Takeaway: Manufacturers should ensure thorough reconciliation of GST returns, accurate ITC claims, and timely filing to avoid penalties and smoothen their GST compliance process for the year ahead. Consulting a GST expert can provide additional support in navigating any complexities.