Comprehensive Guide to Year-End GST Compliance for FY 2024-25

As the financial year 2024-25 concludes, businesses must meticulously finalize their GST records. Accuracy in closing GST books is crucial, as any errors can negatively affect audit reports. Beyond preventing adverse outcomes, precise record-keeping facilitates a smooth transition into the upcoming year. This guide offers a comprehensive checklist to ensure all GST compliance requirements for FY 2024-25 are met, helping businesses avoid last-minute complications.

Ensuring Smooth GST Compliance for FY 2024-25 Year-End

Turnover and Tax Obligations

• Verify that the turnover, including credit and debit notes, reported in accounting records aligns with figures in GSTR-1 and GSTR-3B.
• Correct any errors or omissions in GSTR-1 or GSTR-3B filings for the prior financial year by the March 2025 return deadline.
• Match e-Way bill and e-invoice data with the sales register.
• Accurately declare other income sources, such as proceeds from fixed asset sales and miscellaneous earnings.
• Confirm tax remittance on advance payments received for services.
• Ensure export proceeds are realized within a one-year timeframe.
• Comply with regulations concerning supplies made to merchant exporters (0.1% GST).

Input Tax Credit (ITC) Availment and Usage

• Reconcile the Input Tax Credit General Ledgers with the balance shown in the electronic credit ledger on the GST portal.
• Examine expense ledgers for any eligible ITC that might have been overlooked, such as GST on bank charges.
• Align the ITC register with GSTR-2B:
• ITC claimed for FY 2024-25 should correspond with GSTR-2B data.
• Reverse any ITC not reflected in GSTR-2B.
• Communicate with vendors regarding any missing invoices. Utilize the Invoice Management System (IMS) on the GST portal to manage incorrect purchase invoices or ITC discrepancies for the financial year, ensuring timely resolution of 'Pending' invoices.
• Compare ITC utilization entries in accounting records against the electronic liability ledger on the GST portal.
• Confirm that blocked ITC under Section 17(5) has not been claimed. If claimed in error, ensure it is reversed in both ledgers and returns.
• Verify that any time-barred ITC for FY 2024-25 was reversed by November 30, 2025.
• Rule 37: Ascertain if ITC reversal is necessary due to non-payment within 180 days or if any ITC needs to be reclaimed after payment for supplies.
• Rules 42 and 43: Evaluate the effect of annualized ITC reversal (excluding capital goods) and re-compute if required.
• Rule 37A: Although the deadline is November 30, 2025, ensure suppliers whose documents were used to claim ITC have properly filed GSTR-3B for relevant months.
• Obtain mandatory Input Service Distributor (ISD) registration by March 31, 2025, if common input services (domestic or imported) are used.
• Verify correct ITC distribution by ISD to all distinct entities.
• For capital goods sold during the year, ensure ITC reversal is calculated according to GST regulations.

Reverse Charge Mechanism (RCM) Obligations

• Review the expense section of the Profit & Loss Statement to identify RCM liabilities for the financial year, including:
• Security services
• Advocate services
• Goods Transport Agency (GTA) services
• DSA commission expenses
• Rent-a-cab services
• Residential dwelling rentals
• Imported services
• Align the RCM payable General Ledger with actual RCM payments made during the year.
• Compare RCM paid with RCM ITC claimed, excluding any ineligible ITC.
• Confirm that RCM has been paid for all applicable transactions as per statutory requirements.
• Reconcile RCM payable according to GSTR-2B with the amounts paid during the year.
• Real estate clients must ensure that at least 8% of goods and/or services are procured from registered persons, verifying calculations and specific legal provisions.

Tax Deposits and Closing Balances

• Reconcile outward taxes declared in GSTR-1 with those reported in GSTR-3B.
• Ensure that tax liabilities under RCM and CGST Section 9(5) are settled exclusively through cash payments.
• Pay 18% interest on any delayed tax payments by debiting the electronic cash ledger, as stipulated by Section 50 of the CGST Act.
• Align the closing balances of the electronic cash and credit ledgers with the business's accounting records.

Distinct Document Numbering

• Implement a new, unique numbering sequence for documents like:
• Invoices
• Credit notes
• Debit notes
• Bills of supply
• ISD invoices
• Receipt vouchers
• Payment vouchers
• Refund vouchers
• Ensure the character limit for these document series does not exceed 16.

Additional Compliance Requirements

• Obtain declarations from Goods Transport Agencies (GTAs) confirming their choice to pay GST under Forward Charge for FY 2025-26. These declarations serve as justification for not paying GST under RCM and must be retained.
• Taxpayers performing zero-rated supplies without IGST payment must submit a Letter of Undertaking (LUT) for FY 2025-26 by March 31, 2025.
• File the annual return for the Remission of Duties and Taxes on Exported Products (RoDTEP) for FY 2023-24 by March 31, 2025.
• Update the Importer-Exporter Code (IEC) on the Directorate General of Foreign Trade (DGFT) portal between April and June 2025.
• Assess the applicability of e-invoicing and 6-digit HSN code reporting based on the Aggregate Annual Turnover (AATO) of the preceding financial year.
• Determine if the 30-day e-invoice generation limit applies, relevant for businesses with a turnover of Rs. 10 crore or more in the prior financial year.
• File ITC-04 for the period October 2024 to March 2025 before April 25, 2025.
• Examine refund applications for any that might expire beyond the two-year period.
• For goods sent on an approval basis, confirm adherence to the six-month return time limit.
• For job work, verify the time limits for returning goods:
• Inputs: 1 year
• Capital goods: 3 years
• Reconcile any availed TDS/TCS credit.