Some important GST work would need to be done as the end of the financial year has been arrived which entails some essential ramifications. The GST chores to be completed have been classified as:
- A. Related to Tax Compliance
- B. Related to GST Input Tax
- C. Related to Reconciliation
- D. Related to Law
A. Tax Compliance Regarding:
New Invoice Series
The new series of sales invoices, credit notes, and debit notes are to be initiated. You must ensure the making of the new invoice series of the invoices to be proposed from the date 01 April 2022. The concept is that every invoice is required to be unique. But, uniquely rendered that there must not be any repetition. It signifies that the invoice serial number must not repeat in the identical financial year.
E-Invoicing Under GST
GST E-Invoicing is essential for the dealers posing an average turnover exceeding Rs 20 cr from the date 1st April 2022. Now, the businesses need to validate their preparedness, need to complete the accounting software, and run the trial runs so that they are ready through or prior to the date 31st March.
GST ITC Availability for E-Invoicing
The dispute between the buyer and the seller would be directed to the loss of the business indeed if it is not enough integrated.
Aggregate Turnover Computation
Aggregate turnover – aggregate turnover directed the average value of all the taxable supplies excluding the value of the inward supplies on which the tax is subjected to pay via an individual on the grounds of the reverse charge, exempt supplies, exports of goods, or services or both and inter-State supplies of individuals owning the identical Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax, and cess. Inclusion in calculating Aggregate Turnover:- Taxable supply, exempt supply, Nil Rated supply, Zero-rated supply, Non-GST supply, and supply to distinct person, ought to be incorporated in the computation of average turnover.
There might be a condition in which the GST average turnover would vary from balance sheet turnover. Stock/ branch transfers charges would form part of GST turnover however on examining the balance sheet turnover these will not compose part of financials since the effect is the turnover neutral.
Now the average turnover is a determining factor in the mentioned decisions:
- a) Whether to file GSTR 1 in the year 2022-23 on a quarterly QRMP scheme or on a monthly grounds.
- b) whether to mention HSN codes or how many digits to be mentioned, turnover up to Rs 5 cr required to mention 4 digits, the turnover exceeding Rs 5 cr required to mention 6 digits essentially. The total 8 digits are there inside HSN/SAC codes.
- c) whether to choose the composition scheme is dependent on the turnover, the limit of the turnover is Rs 1.5 cr, 75 lacs and 50 lacs for various businesses.
- d) whether to file the ITC 04 job worker return on the half-yearly grounds or on the yearly basis since the cut off threshold is amended to Rs 5 cr vide CBIC Notification no.35 dated 24.09.2021.
Letter of Undertaking (LUT) Certificates
Letter of Undertaking (LUT) should be applied for the case of export/ sales to SEZ without paying taxes.
Debit Note or Credit Notes Under GST
For the case of the differences between the sales and purchases returns, the needed debit note or credit notes must be raised to keep our records for the purpose of the department audit trial.
RCM (Reverse Charge Mechanisms) Under GST
Towards any Inputs and tax furnished on the reverse charge mechanisms, there must be assisted by the reverse charge self invoices. These invoices are required to be generated towards the reverse charge furnished and the input chosen on the supplies obtained from the unregistered suppliers. The invoice sequence and the series to be maintained will form part of GSTR 1 filings. The tax council would indeed ask for the documentary evidence on the grounds of which the Input tax credit has opted, the self invoices would be feasible in this situation.
GST RC Updations
Top 5 commodities and services required to be updated on the GST RC system for providing the assurance to add any new line of business in a year.
Identically, any updation or changes in the address or constitution of the business are required to be ensured to be matching with the real situation.
B. GST ITC Relevant Chores Towards FY 2021-22
GST ITC Reversal Second Proviso to Section 16(2)
Where a recipient losses to pay to the supplier of goods or service or both excluding the supplies on which the tax is subjected to pay on the grounds of reverse charge, the amount for the supply value and the tax subjected to pay in a duration of 180 days from the issue date of the invoice by the supplier and the amount identical with the ITC claimed by the recipient will be added to his output tax liability and the interest in that, in the way as mentioned second proviso to section 16(2) of CGST Act.
The reverse ITC on the instance in which the firm would not furnish the consideration to the supplier in 180 days from the supplier’s invoice. Keep the creditor’s reconciliation ready for the invoices above 180 days and choose relevant actions.
Restricted GST ITC Credit Under 36(4):
Ensure to claim the credit under 36(4) of the CGST rule 2017, though you may hold the obtained goods or services including the invoice copy however 95% of restricted credit relies on the number of invoices uploaded in the portal. For instance, your 100% credit is qualified when your supplier has uploaded the invoices to the extent of 95% in the portal towards the specific month. The ITC claim has been amended to a 5% claim of the qualified credit available in the GST 2A w.e.f. 01st January 2021. That would be delinked and 105% presumptive ITC has been stopped from the date 1/01/2022. The qualified ITC has kept appearing in the GST 2B for claiming the ITC.
Keep the monthly reconciliation between the buyer ledger vs portal 2B to furnish the same details in the council audit or question from the tax department.
Blocked Credit Under GST
Section 17 (5) needs the reversal of credit in the case of goods lost, stolen, destroyed, written off, etc. The companies seem to decide to write off any inventory, if any during the year-end closing by March 31, 2022. For, ITC attributable to such goods will be reversed. Also, such blocked credit needs to be determined and the ITC needs to be reversed if ITC was wrongly taken with interest @ 24%.
Job Work Activity
Ensure that the inputs provided for job work activity have been obtained in 1 year from the sent date and the three years for the capital goods provided for job work. When not obtained previously, that would be seen as the supply for GST payments and will meet the interest outgo of 24%. From the job work or other, the material provided directly to job work premises or direct supply required to be seen.
The job work material provided to the costumes, post to the process, requires to be examined. Periodical reconciliation will assist to ensure that the goods are obtained within the mentioned period or for an extended time duration. The ITC-04 return would be essential for the year 2021-22 for the job work transaction and that is required to be seen whether the goods provided for the job work on the date 1st April 2021 are required to obtain back by the date 31st March 2022.
C. Reconciliations of GST Relevant Chores Towards FY 2021-22
GSTR 1 Reconciliation with GSTR 3B
The outward supplies under GSTR 3B are required to be reconciled with GST 1, for the case in which the 3B turnover is lower, find out the sale bills or the invoices and when the extra tax furnished on that will be noted for the subsequent adjustments.
GSTR 3B Reconciliation with the ITC on Buyings
For the concern, the Input tax credit opted in 3B exceeds the actual buying invoices, which will be required to be reversed and paid with 24% interest. Also towards 3B, ITC is lower with respect to the qualified purchase invoices., that are required to be claimed immediately. The major thing is to determine them.
GSTR 3B/GSTR 1 Entry VS Accounting Entries
There occur various occasions when the accounts team makes the corrections of the mentioned reconciliation in GST returns but that is not shown in the accounting entries. The book entry is required to be done parallel with the GST corrections for showing a fair picture.
Reconciliation of E Way Bills with GST 1 & Additionally with GST 3B
There could be instances in which the EWBs sales exceed GST 1 sales. The same is required to be verified with sale invoices and the tax is required to be furnished when needed and identically, if EWB sales are lower than GST 1 sales, that is required to be reconciled. There would be some cases in which there is no need for e-way bill generation and the sale bills are provided.
The above required to be done to reconcile our books with GST returns. Secondly, the same will be effective for use during performing the Financial audits and the GST audits and the yearly return. The third one is that the same will be ready substantive evidence, for the case, the notices come through the heads for the mismatches in EWB vs GSTR 1 or GSTR 3B sales. The corrective actions would opt promptly for the current time.
GSTR 1 & GSTR-3B Sales Reconciliation with Balance Sheet Sales
This is an essential process assuming the mentioned procedure has been performed and will come for use during the income tax and the GST audits and the yearly returns.
ITC Ledgers GST Reconciliation
It is to be recommended to reconcile the GSTR-1 and 3B, the cash ledger and the credit ledger under the GSTN portal with the books of accounts. The taxwise credit and cash ledger are required to be matched with the corresponding ledgers under the books of accounts.
GSTR 2A Reco with Purchase Invoices
The same is suggested to the firms to download all the GSTR-2A and GSTR-2B towards all the FY 2021-22 and record all the GST inputs without the ineligible ITC claims. If any of the input is not prescribed in GSTR 2A, then the accounts team is needed to comply with the vendors and tell the management so that the same would be revamped quickly.
Reconciliation is Needed for B2B, B2C Reconciliations B2B & B2C Sales with GSTR 3B/GSTR 1 within Account Books
This is because the partial and fair requirement of the B2B sales must be shown in the books of account. This is also that the B2C sales and the receiver may not be able to receive the credit by considering the 2A and the tax which is asked for along with the liability.
D. GST Law Concerned Year Ending Chores for FY 2021-22
Expense Provisioning for Import/Domestic Services
Expense provisions for the import or domestic services with the linked entities will secure GST executions beneath the reverse charge mechanism (RCM). The accounting entries are required to be examined in detail with the supporting workings. When the provisions are made, RCM tax is required to be furnished under the provisions.
Cross-Check towards the Income on Which Zero or Partial GST is Furnished
Towards the case in which the GST on the income does not furnish or furnished at lower rates will take measures, and for the export supplies, you must ensure that you have proper LUT for the related fiscal year.
Physical Stock vs Books Stock
The physical stock is required to be reconciled with the stock under the books of accounts. The same will be handy in both the income tax and the GST audit. For any differences, the possibility of the ITC under GST reversal must opt into account.
Advanced Payments Under GST
One should ensure that GST has been paid on advances obtained from customers as of 31.03.2022.
FY 2019-20 GST Refund
The last date to apply for the refund of GST concerned to FY 2019-20 is 31.03.2022. Ensure to make the compliances within the mentioned time, if applicable.
Mentioned to Cross Charges
Cross charges are the supplies created via Head office to branch offices or vice versa. It is required to be determined and the provision is required to be executed along with that the corresponding invoice is required to be raised for the common services. The tax effect will be neutral since for one distinct individual, it is the output liability and for the other, it will be an input tax. AAR is concerned with the Columbia Asia Hospitals, mentioned that these activities will be treated as a service used to furnished by the head offices to the other places and thus the firms are needed to be cross charged and impose a GST on that.
The contents of this article are for the information and would not comprises the advice or a legal recommendation and are personal views of the author. The same relies on the related law and is available on the time and made with the left preciseness and durability. The readers were requested to check and refer to related provisions of the statute, the latest judicial pronouncements, circulars, clarifications etc prior to implementation on the grounds of the mentioned thing. On this subject, if any other possibility is there then it can not be ruled out.
