GST action points for FY 2023-24 before filing GST returns for October 2024

The government is increasingly working towards streamlining of the GST compliances. As per the recent statistical report, the majority of the cases at various legal forums are related to data discrepancies with very few related to the interpretation of law. Thus, it becomes crucial for businesses to work towards strengthening their Indirect Tax compliances.
In this process, the month of October 2024 becomes important for GST taxpayers, for it is the last month to make corrections in respect of any inadvertent errors or genuine mistakes committed while filing the GST returns for FY 2023-24.
Hence, it is important that taxpayers consider the following crucial action points before closing its books of accounts and filing GST returns for October 2024:
1. Outward supplies:
A. Reconcile the outward supplies including other income as per books of accounts with GSTR-1 and GSTR-3B. The differences, if any, shall be accounted for in the books of accounts or considered in the GST returns, as the case maybe.
Note: Exempt income such as interest income and non-taxable supplies shall also be disclosed in the GST returns.
B. Reconcile the tax invoices / credit notes / debit notes as per books with e-invoice portal to ensure that IRN is generated for all the supplies for which e-invoicing is applicable (i.e., B2B, exports and SEZ supplies).
Non-generation of e-invoice and mention of IRN on tax invoice will invalidate the tax invoice as per the GST provisions of Rule 48(5) of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’).
Consequently, non-generation of e-invoice may attract sever penalties under Section 122 or Section 125 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’), as determined by the adjudicating authorities.
For taxpayers whose turnover exceed the prescribed limit of INR 5 crores but are not required to generate e-invoice shall put the following disclosure on their tax invoice –
“I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”
C. Reconcile the disposal details in fixed assets register with disclosure made in GST returns and account the differences accordingly in the books or GST returns, as the case maybe.
D. In case of businesses engaged in supply of goods, reconcile the e-way bill data with GST returns data and books of accounts.
Movement of goods without valid e-way bills, even if it remains unidentified by the GST authorities during the movement, may attract penalties during the subsequent departmental audit / scrutiny proceedings.
E. Reconcile the debit and credit notes issued during the year and recorded in the financials with GSTR-1 and GSTR-3B and differences shall be adjusted accordingly. The debit and / or credit notes shall be appropriately tagged to the tax invoice(s) against which they have been issued. The same is often requested during the GST audits and / or scrutiny by the GST authorities.
F. In case of financial credit notes, the reasons for issuance of such credit notes should be duly accounted for in the books.
G. In case of export of goods, reconcile the shipping bills details with GSTR-1 data for differences. Also, do a matching of exports data with the data on the ICEGATE portal.
H. Ensure that you are compliant with the time limit for receipt of consideration in foreign currency for export of services as per the time limit specified under the Foreign Exchange Management Act, 1999. If not received, ensure you make the payment of tax against such export transactions to stop the interest upto the date of payment of tax against such invoice.
I. In case of supply of services, reconcile advances received and adjusted as per books of accounts with the corresponding details declared in GSTR-1 and GSTR-3B and ensure GST is paid on the advance received.
J. Reconcile the NIL rated, exempt and non-GST supply turnover in books with disclosure made in the GST returns.
K. Reconcile the HSN codes accounted in books of the business with the HSN summary reported in GSTR-1 of FY 2023-24. This will be helpful for filing of Table 17 of GSTR-9 i.e., HSN summary of outward supplies.
L. October 2024 GSTR-1 is the last return to rectify (amendment) any error in reporting of invoices, credit or debit notes done while filing returns for FY 2023-24.
M. If any tax credit notes are required to be issued against the invoices issued in FY 2023-24, October 2024 is the last month to issue such tax credit note and report in the GST returns.
2. Inward supplies:
A. Reconcile the ITC available and availed as per books of accounts with GSTR-2B and GSTR-3B.
B. Communication to vendors for reporting of supplies not reflecting in the GSTR-2B of the Company but goods and / or services have been received.
C. The differential ITC reflected in GSTR-2B but not recorded and availed in the books shall be accounted for in the books of accounts and availed in the GSTR-3B of October 2024 filed on or before 30th November 2024.
D. If there is any exempt income, common ITC reversal shall be calculated and considered in the GSTR-3B in accordance with Rules 42 and 43 of the CGST Rules.
If the Company has engaged in any transaction in securities during the year, ensure that 1% of the transaction value of securities is considered in exempt income for common ITC reversal.
E. Check whether the suppliers’ payment has been done within 180 days or not. If not done, then reverse the same along with interest and re-avail in the month of payment to the supplier.
F. To ensure that all the ineligible ITC as per books has been disclosed in Table 4(B)(1) of GSTR-3B. If any such ITC has been availed and utilized, same shall be reversed along with applicable interest under Section 50 of the CGST Act.
G. The ITC reversed during FY 2023-24 (upto July 2023 for monthly filers and April – June 2023 period for quarterly filers), FY 2022-23 or in any previous financial year and pending for reclaim is identified and duly reported in opening balance of “Electronic credit reversal and reclaim statement”.
This statement has been reopened on the GSTN portal from 15th September 2024 to 31st October 2024 for reporting opening balance and upto 30th November 2024 for making amendments.
H. Ensure that ITC for inputs and capital goods is identified and separately recorded in the books as per the requirement for disclosure in Table 6 of GSTR-9.
I. To reverify the books and ITC register to identify instances wherein ITC has been claimed in respect of ITC blocked under Section 17(5) of the CGST Act.
If such ITC is availed and utilized, the same needs to be reversed alongwith interest at the rate of 18% per annum.
3. Reverse Charge Mechanism (‘RCM’):
A. To identify all the expenses from the books on which RCM is applicable (director sitting fees, legal expenses, security expenses, car hire charges, renting of residential property etc.) and reconcile the same with RCM liability discharged in GSTR-3B. The differential liability, if any, shall be discharged along with applicable interest, if any.
B. Reconcile the foreign expenditure for services as per books of accounts with import of services disclosed in the GST returns.
Also, reconcile whether RCM liability has been discharged on all import of service transactions.
Note: If the services are imported from foreign related party and the recipient taxpayer in India is eligible for full ITC, such recipient taxpayer has the option to not discharge GST on such import of services from foreign related party. In such case, the value of services will be deemed to be considered as NIL. (Circular No. 210/4/2024-GST, dated 26th June 2024)
C. Ensure that self-invoices have been issued for all supplies received from unregistered persons and attracting GST liability under reverse charge.
D. Ensure that all reverse charge expenses wherein ITC is not eligible are permanently reversed in Table 4(B)(1) of GSTR-3B. Similarly, the same shall be removed from the credit receivable in the books of the Company and expensed off in the Statement of Profit and Loss of the business.
The balance ITC, if any, not claimed by the Company shall be claimed in the GST return filed for October 2024 or else reported in the opening balance in RCM liability / ITC statement.
4. GST payable / receivable balance:
A. Reconcile the net GST receivable or payable as per books of accounts with the closing balance as per electronic credit ledger and cash ledger.
B. While reconciling the GST balance, taxpayer should consider the refund claim filed and / or received by the taxpayer during the year, if any.
5. Additional points for consideration:
A. To identify the common expenses incurred for related or distinct persons on which ITC has been availed and cross-charge the same to the respective entities on the basis of most rational and reasonable factors available (for example – in the ratio of turnover of such entities, etc.).
B. To correctly value and discharge GST in respect of corporate guarantee provided by the Company on behalf of its group company, if any.
C. To ensure third party common expenses incurred by the Company at head office are cross charged to respective GSTIN by the head office and ITC in respect thereof is claimed by the respective branch GSTIN’s.
D. To identify instances wherein tax has been discharged under incorrect tax head (CGST + SGST instead of IGST and vice-a-versa). In such cases, the registered taxpayer should pay the tax under the correct tax head and claim refund for tax paid under the incorrect tax head.
No interest shall be payable in such cases of payment of tax under the wrong tax head (Section 77 of CGST Act / Section 19 of the Integrated Goods and Services Tax Act, 2017 (‘IGST Act’))
E. 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.
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Disclaimer: The above article is based on the author’s understanding and view of the tax laws, tax rules, the relevant circulars, and notifications. Please refer to the latest law and consult the author before forming any opinion based on the information provided above as tax laws are subject to frequent changes. The author is not responsible for any issues arising due opinion formed based on the above article without consultation with a tax consultant. In any manner whatsoever, the views expressed in this article should not be construed as the views of the firm that the author is associated with. The author can be contacted at [email protected].