Filing the Letter of Undertaking for zero-rated supplies is mandatory before 31 March 2024. This allows taxpayers making exports without payment of integrated tax to continue their operations seamlessly into the next financial year. Without filing the LUT in time, exporters may be forced to pay IGST on exports and then claim refunds later, which can impact cash flow.
The option to avail the Quarterly Return Monthly Payment scheme is available from 1 February 2024 to 30 April 2024 for eligible taxpayers whose aggregate turnover in the preceding financial year does not exceed five crore rupees. Choosing this scheme helps reduce compliance burdens by requiring GSTR-3B filing every quarter while allowing monthly tax payments. Taxpayers not exercising this option within the deadline will be treated as regular taxpayers for the next financial year and must file returns monthly.
Enrollment in the Composition Scheme must be completed by 31 March 2024. This scheme is suitable for small taxpayers with turnover up to the prescribed threshold who want to pay GST at a fixed rate on their turnover and file simplified returns. However, a transition to the composition scheme from regular registration requires reversal of previously claimed input tax credit through the filing of Form GST ITC-03, which is due by 30 May 2024.
Goods Transport Agencies choosing to pay GST under the Forward Charge Mechanism must file their declarations between 1 January 2024 and 31 March 2024. If not opted for, the liability to pay tax shifts to the recipient of the service under reverse charge. The GTA opting to pay tax under a forward charge must comply with all the invoicing and return filing obligations as a normal taxpayer.
Financial Year-End Adjustments
Annual reversal of input tax credit must be undertaken under Rule 42 and Rule 43 of the CGST Rules, 2017. This is required where common inputs and input services are used for both taxable and exempt supplies or business and non-business purposes. Taxpayers must calculate and adjust the final amount of credit reversal based on the actual values of turnover and usage over the financial year. These adjustments must be incorporated in the March 2024 GST returns. Delay in reporting any shortfall in credit reversal may attract interest from 1 April 2024 onwards.
Reconciliation exercises are essential to ensure the accuracy of GST compliance before the end of the year. Reconciliations must be conducted between accounting records and GST returns to confirm that sales, purchases, input tax credits, and tax liabilities have been correctly recorded and reported. Reconciliation should also include a comparison of physical stock with book stock, as well as a review of E-way bills, harmonized system of nomenclature, or service accounting codes, and applicable GST rates.
Matching of input tax credit claimed with that available in GST returns is a critical task. This involves comparing ITC as per the books of accounts and as per Form GSTR-2B to identify any mismatches. Any ineligible or excess credit claimed must be reversed in the March 2024 return to avoid future scrutiny or penal consequences. Similarly, ensure that the ITC reflected in Form GSTR-3B is reconciled with GSTR-2B and the books of accounts.
Additional Considerations
From 1 April 2024, taxpayers are required to start a new invoice series for each financial year. This is mandated by GST rules to ensure proper tracking of invoices and prevent duplication. A separate and unique invoice series for each year facilitates smooth generation of E-way bills, accurate GST return filing, and refund processing. Non-compliance with this requirement may lead to system errors and unnecessary complications in day-to-day operations.
The calculation of aggregate turnover for the financial year 2023-24 must be completed accurately to determine eligibility for schemes such as QRMP and the composition scheme for the next financial year. Turnover also impacts other compliance thresholds like E-invoicing applicability and registration requirements. Therefore, businesses must compute their turnover as per the provisions of the GST law and ensure alignment across all reporting formats and portals.
Taxpayers with aggregate turnover exceeding five crore rupees during the financial year 2023-24 are required to implement E-invoicing from 1 April 2024. This means that all their B2B invoices must be registered with the Invoice Registration Portal and must carry a valid Invoice Reference Number. To prepare for this requirement, such taxpayers must complete registration on the portal, ensure software compatibility, and train staff accordingly.
Manufacturers of specified goods such as tobacco and pan masala are required to register their machines by 30 April 2024 as per the new procedure introduced with effect from 1 April 2024. The special compliance requirements include machine registration and monthly reporting obligations. Businesses falling under this category must take timely action to comply with the notification and avoid penalties.
Comprehensive Understanding of Year-End Compliance Requirements
As the financial year 2023-24 draws to a close, businesses and professionals must pay close attention to the compliance landscape under GST to ensure smooth closure of books and transition into the new year. The transition period between financial years requires a focus not only on routine compliance tasks but also on strategic choices such as opting into beneficial schemes. Decisions taken during this time can have implications for cash flow, compliance costs, and operational efficiency throughout the following year.
This process involves assessing whether to opt for the composition scheme or QRMP scheme, evaluating eligibility for E-invoicing, recalculating annual ITC reversals, and updating invoice formats. Each of these activities must be completed within specific timelines set by the law. Ignoring these deadlines may lead to lapses that attract penalties, interest, or compliance complications.
Equally important are year-end reconciliations of turnover, tax credits, and stock positions. These reconciliations provide clarity and correctness to the final books of accounts and ensure that tax returns reflect actual business transactions. They also play a key role in ensuring that statutory records are in alignment with audit reports and future compliance submissions.
Due Dates of Various Declarations and Options under the GST Act
Timely action on year-end declarations is crucial for ensuring uninterrupted compliance and eligibility for various GST schemes in the upcoming financial year. Several deadlines are spread across the end of the financial year 2023-24 and the start of the financial year 2024-25. Each declaration plays a significant role in determining the taxpayer’s obligations, eligibility for special schemes, and overall tax strategy.
One important declaration is the filing of the Letter of Undertaking for the financial year 2024-25. This declaration must be filed by 31 March 2024 to enable the continuation of zero-rated supplies without payment of integrated tax. Failure to file the LUT before the deadline would result in the requirement to pay IGST on exports, with the additional burden of applying for a refund later.
Taxpayers eligible to opt for the Quarterly Return Monthly Payment scheme must do so between 1 February 2024 and 30 April 2024. This scheme allows eligible taxpayers to file GSTR-3B quarterly while continuing to pay taxes monthly. The timely exercise of this option reduces the frequency of filing and the administrative burden. Those who fail to opt in within the specified period must continue filing monthly returns.
Taxpayers interested in opting for the composition scheme must file Form GST CMP-02 by 31 March 2024. This is a simplified scheme for small taxpayers with turnover up to the prescribed limit. It allows them to pay tax at a fixed rate and file annual returns with limited compliance requirements. Transitioning into this scheme from regular registration also requires the reversal of previously claimed input tax credit through the filing of Form GST ITC-03. The deadline for submitting this form is 30 May 2024. The ITC reversal must reflect all stock held as of the date of transition.
Goods Transport Agencies choosing to pay GST under the Forward Charge Mechanism must submit declarations in Annexure-V between 1 January 2024 and 31 March 2024. Once this declaration is made, the GTA assumes the responsibility for paying GST on the services provided. Without this declaration, the liability to pay tax will be with the recipient of the service under reverse charge. It is important that the declaration is filed correctly and within time to avoid compliance disputes.
Closure of Books of Accounts
As the financial year ends, it becomes essential to finalize and close the books of accounts in alignment with GST compliance requirements. This involves making necessary adjustments, completing reconciliations, and preparing documentation for annual filings. Errors or mismatches discovered after the close of the financial year are more difficult to resolve and may attract interest or penalties.
One critical area is the annual reversal of common input tax credit. Under GST rules, credit availed on inputs and input services used for both taxable and exempt supplies or business and non-business purposes must be apportioned. The monthly reversal of such credit is made as per Rule 42 for inputs and input services, and Rule 43 for capital goods. However, an annual reconciliation is required at the end of the financial year to determine the final amount of ITC that should have been reversed.
If the amount reversed during the year is short or in excess, appropriate adjustments must be made in the GST return for March 2024. Any short reversal discovered after the due date will attract interest from 1 April 2024. Therefore, the calculation must be accurate, and proper documentation should be maintained to support the basis of reversal.
Besides ITC reversal, businesses must reconcile turnover reported in the books with the turnover declared in GST returns, particularly in Forms GSTR-1 and GSTR-3B. This ensures that there are no discrepancies between financial statements and tax filings. Such mismatches may lead to notices or scrutiny from tax authorities, especially when annual returns and audits are conducted.
A reconciliation between physical stock and book stock is also necessary. Any variances should be analyzed, and reasons should be documented. In cases where stock is found in excess or deficit, businesses may need to make adjustments in their financial records or tax returns. Moreover, the e-way bills generated during the year should be compared with the tax invoices declared in GSTR-1 to ensure consistency.
Taxpayers must also review whether the correct HSN codes or SAC codes and applicable GST rates have been used throughout the year. Incorrect classification may lead to incorrect tax payments, underpayment notices, or rejection of input tax credit by recipients. A comprehensive review before the year-end helps in identifying and correcting such errors proactively.
Matching of Input Tax Credit and Its Reversals
Proper matching of input tax credit is one of the most crucial aspects of GST compliance. Discrepancies between ITC claimed in returns and the actual credit available as per GST records can lead to denial of credit, increased tax liability, and the imposition of interest or penalties. Therefore, businesses must conduct thorough reconciliations of ITC data.
One important reconciliation is between ITC as per the books of accounts and ITC reflected in Form GSTR-2B. Form GSTR-2B is a static statement generated monthly, showing the eligible ITC available to the taxpayer. Any credit claimed in Form GSTR-3B must align with the amounts available in Form GSTR-2B. If ITC is claimed in excess, it must be reversed, and if ITC is short claimed, it can be rectified before the annual return is filed.
Similarly, a reconciliation should be done between the ITC claimed in Form GSTR-3B and the credit reflected in Form GSTR-2B. This helps in identifying invoices not uploaded by suppliers, credit blocked under GST rules, or invoices that are incorrectly classified. If invoices are not uploaded by suppliers, businesses may need to follow up to ensure compliance and protect their credit.
A reconciliation between the ITC in the audited books of accounts and the electronic credit ledger on the GST portal must also be carried out. Any mismatch in closing balances must be resolved, either through accounting entries or corrections in future returns. It is important to ensure that all eligible ITC has been utilized correctly, and any ineligible or unmatched credit has been reversed before the year ends.
Unmatched ITC that cannot be reconciled with Form GSTR-2B should be reviewed carefully. Businesses must decide whether to reverse the unmatched portion or take corrective action through follow-ups with vendors. Any adjustments required must be done in the return for the tax period ending in March 2024, as delays beyond that point may lead to loss of credit or compliance risk.
Preparing for Year-End Transition
The final quarter of the financial year is a critical time for reviewing and consolidating all GST-related data to ensure a smooth transition into the next financial year. Apart from regular return filing, taxpayers must also focus on one-time declarations, documentation, reconciliation of discrepancies, and updating internal systems.
Ensuring that the financial records and GST returns reflect consistent and accurate data helps in preparing for audits and annual returns. Businesses must maintain adequate backup for all reconciliations and supporting documentation. It is advisable to complete these reviews well before the due date to allow sufficient time for rectification of issues.
Requirement of New Invoice Series from April 1, 2024
From the beginning of every financial year, GST rules mandate the use of a new and unique invoice series. As per Rule 46 and Rule 49 of the GST Rules, taxpayers must adopt a fresh invoice series every financial year that is unique for each type of document, such as tax invoices, credit notes, debit notes, and delivery challans. This measure is implemented to avoid duplication, enable easier tracking, and ensure clarity during audits and reconciliations.
Failure to implement a new series could lead to issues with the GST return filing, generation of E-way bills, and processing of refunds. Since these systems often validate the format and uniqueness of invoices, an outdated or repeated invoice number may trigger rejection or errors. For example, the E-way bill portal may not accept an invoice if its number overlaps with one from the previous year.
To comply, businesses should ensure their billing software or invoicing system is configured to start a new series from 1 April 2024. The new invoice series should follow a sequential order and may include alphanumeric combinations that identify the financial year and type of document. It is advisable to communicate these changes to all relevant departments and train staff to prevent the accidental use of old invoice templates or numbering formats.
This reset of the invoice series must be consistent across all GST returns. Any mismatch in invoices due to improper series implementation may cause discrepancies in returns such as GSTR-1, which could result in misreporting or ITC mismatches for recipients. Hence, proactive planning and timely execution of this requirement are critical to avoid operational disruptions.
Calculation of Aggregate Turnover for FY 2023-24
The aggregate turnover of a taxpayer during a financial year determines their eligibility for various compliance obligations and scheme benefits under the GST law. It is defined as the total value of all taxable supplies, exempt supplies, exports of goods or services, and inter-state supplies, excluding inward supplies under reverse charge and central, state, or union territory taxes.
Accurate calculation of aggregate turnover for the financial year 2023-24 is vital for deciding the applicability of compliance requirements in the financial year 2024-25. These include eligibility for the composition scheme, the QRMP scheme, the requirement of E-invoicing, audit under GST, and more.
For example, if a business’s aggregate turnover crosses five crore rupees during FY 2023-24, it becomes mandatory for them to issue E-invoices from 1 April 2024. Similarly, businesses with turnover exceeding the prescribed threshold cannot opt for the composition scheme in the next year. Incorrect turnover calculation may result in opting for an ineligible scheme or failing to comply with applicable mandates.
To calculate aggregate turnover, taxpayers must consolidate data across all GST registrations held under the same Permanent Account Number. This means turnover from multiple states or union territories must be aggregated to assess eligibility. The turnover should be derived from audited books of accounts and cross-verified with the data declared in GST returns.
If the turnover calculation includes any incorrect data, such as double-counting of inter-branch transfers or inclusion of tax components, it may affect eligibility decisions. Therefore, care must be taken to include only the relevant components of supply by the GST rules. Maintaining supporting records for turnover calculation is also important, especially when eligibility decisions are questioned during audits or assessments.
Requirement for E-Invoice Registration
From 1 April 2024, E-invoicing becomes mandatory for taxpayers whose aggregate turnover exceeds five crore rupees during the financial year 2023-24. E-invoicing is the process where B2B invoices are electronically authenticated by the Invoice Registration Portal and assigned a unique Invoice Reference Number before being issued to the recipient.
The objective of E-invoicing is to standardize invoicing practices, enable real-time reporting, and reduce tax evasion. Under this system, the seller must generate an invoice using their billing system and then submit the invoice details to the government portal. Upon successful validation, the portal returns a digitally signed invoice with a QR code and Invoice Reference Number.
To implement this requirement, businesses need to register on the Invoice Registration Portal and ensure that their billing software is compatible with the prescribed schema and capable of communicating with the portal via APIs. Technical preparedness is essential, as the failure to generate a valid E-invoice renders the document invalid under GST law.
E-invoicing impacts multiple functions, including billing, accounting, logistics, and tax reporting. Businesses must review their invoice formats, train staff, and conduct internal testing before the requirement becomes applicable. E-invoices are automatically shared with the GST system, which eliminates the need for manual data entry in GSTR-1, thereby reducing errors and mismatches.
The implementation of E-invoicing also facilitates easier reconciliation of sales data, faster generation of E-way bills, and better tracking of tax credits by recipients. For businesses falling under the threshold, preparation ensures seamless compliance from day one. Delays in setting up E-invoicing systems may lead to rejection of invoices, delayed shipments, and penalties.
Machine Registration for Manufacturers of Specified Goods
Effective from 1 April 2024, special procedures have been introduced for the manufacturers of certain specified goods such as tobacco, pan masala, and similar products. These procedures include the registration of manufacturing machines, reporting of production data, and other monthly compliances to monitor the production and supply chain under the GST framework.
As per the newly notified procedure, every registered manufacturer of the specified goods is required to submit the details of their machines by 30 April 2024. This includes information such as the number of machines, capacity, location, and technical specifications. The machine registration is aimed at preventing underreporting of production and curbing tax evasion in sectors with high revenue risks.
The registration must be done through a designated form or portal specified by the authorities. Businesses must maintain updated documentation on their machinery and provide access for verification if required. Any unregistered machine used in the production process beyond the compliance date may be considered a violation, leading to penalties or other enforcement actions.
Alongside machine registration, manufacturers are expected to adhere to monthly reporting obligations that provide data on production output, dispatches, stock levels, and other relevant parameters. The government may use this data to analyze production trends and reconcile them with tax payments and sales declarations.
Importance of Timely Compliance and Strategic Decision-Making
The transition from one financial year to the next under the GST framework is not just a procedural formality but a critical period that impacts a business’s overall tax posture. Timely and accurate compliance ensures that taxpayers avoid penalties, interest, and scrutiny. It also enables smoother operations and cash flow management, especially in sectors that rely heavily on indirect tax credits and automated filings.
Businesses must ensure that all declarations, options, and adjustments are made by their respective deadlines. Failing to file the Letter of Undertaking for zero-rated supplies or missing the deadline for opting into the composition or QRMP scheme can have long-term consequences. Such oversights may result in higher tax liabilities or even disqualification from preferred schemes for the entire financial year.
Strategic decision-making is equally important. Taxpayers must evaluate whether to opt for composition scheme benefits in the coming year or continue as regular taxpayers. Similarly, understanding the implications of turnover thresholds and E-invoicing mandates will help businesses prepare in advance and allocate resources effectively. These decisions affect not only compliance requirements but also accounting processes, vendor communication, and customer interactions.
Being proactive about compliance and planning helps avoid the last-minute pressure that often leads to errors. It also provides more time for reconciliation, verification of data accuracy, and addressing discrepancies. Businesses should ideally create an internal GST year-end checklist and assign responsibilities to ensure that all aspects are covered well before deadlines.
Preparing for Annual Return and Reconciliation Statement
Once the financial year concludes, businesses will be required to file their annual return in Form GSTR-9 and, if applicable, a reconciliation statement in Form GSTR-9C. These returns consolidate the data from all periodic filings made during the year and provide a comprehensive summary of a business’s GST profile.
Preparing these forms requires extensive reconciliation between the books of accounts and the data filed in regular GST returns. This includes matching turnover, tax paid, input tax credit claimed, and tax payable. Any mismatch identified must be explained, adjusted, or corrected through appropriate disclosures. The annual return also highlights various liabilities and reversals that may have been missed in monthly filings.
For businesses with turnover exceeding the audit threshold, Form GSTR-9C must be certified by a chartered accountant or cost accountant. This adds another layer of scrutiny and requires that all supporting documents, such as invoices, purchase registers, ledgers, and reconciliation statements, be accurate and complete.
If any short payment of tax or excess ITC claim is discovered during this process, it must be paid along with applicable interest. On the other hand, any unclaimed ITC or excess tax paid may be rectified, subject to the conditions and deadlines laid down in the law. Timely and accurate filing of these returns reduces the chances of receiving notices or being selected for detailed scrutiny by the authorities.
Therefore, businesses should start preparations for annual return and reconciliation early by consolidating data, closing ledgers, and completing all reconciliations by the end of March. Any unresolved issues should be escalated for resolution so that the final return is accurate and error-free.
Internal Controls and Documentation
An often overlooked aspect of GST compliance is maintaining proper internal controls and documentation. Every adjustment, reversal, declaration, and reconciliation must be supported by adequate records. These records not only ensure transparency within the organization but also serve as evidence during audits, investigations, or inquiries by tax authorities.
For example, documents supporting reversal of ITC, such as calculation sheets under Rule 42 and 43, must be properly archived. Similarly, backup for turnover reconciliation, credit mismatch resolutions, and scheme eligibility calculations should be maintained systematically. Having access to accurate records during annual filings or future disputes saves time and builds a stronger case.
Businesses should also consider updating their compliance checklists, SOPs, and accounting policies in line with changes applicable from 1 April 2024. Any staff involved in GST operations should be trained in the new requirements, especially those related to E-invoicing, invoice series resets, and machine registration procedures.
It is also recommended to conduct an internal GST review or mini-audit before closing the books. This can help detect discrepancies or non-compliances that may have been overlooked during routine operations. Periodic reviews strengthen governance and reduce future risks.
Role of Technology in Year-End Compliance
In the modern GST regime, technology plays a central role in compliance management. Businesses must leverage automation tools and accounting software to streamline filings, reconcile data, generate reports, and track deadlines. Technology helps minimize errors, reduce manual work, and improve efficiency in compliance processes.
Accounting software should be updated to start a new invoice series from 1 April. E-invoicing capabilities must be integrated into the billing systems for those becoming liable from the new year. Similarly, reconciliation tools should be used to match ITC across GSTR-2B, GSTR-3B, and the books of accounts to detect mismatches quickly.
Most software now comes with dashboards that track filing statuses, highlight pending tasks, and raise alerts for upcoming deadlines. Using these features during the year-end period ensures that critical tasks are not missed. Businesses should also back up all data before the transition to the new financial year and ensure that audit trails are available for review.
Technology also aids in compliance collaboration among different departments like finance, operations, and legal. A centralized compliance calendar, task allocation, and document repository enable better coordination and faster resolution of issues. Investing in the right technology tools can significantly enhance the compliance framework.
Conclusion
The financial year-end is a crucial period for businesses to ensure complete and accurate GST compliance. Overlooking year-end tasks can result in interest, penalties, and potential litigation. By following a detailed checklist, covering reconciliation of books, timely return filings, input tax credit adjustments, and rectification of errors, businesses can remain compliant and financially healthy.
As FY 2023–24 concludes, businesses must give priority to matching their GST returns with financial records, rectifying discrepancies, and submitting necessary declarations. Ensuring all amendments, credit claims, and liability declarations are completed by the applicable deadlines is key to maintaining transparency and reducing compliance risk.