Activities to be undertaken for GST compliance of FY 2022-23 in March 2023

As we are fast approaching the end of the financial year 2022-23, it mandates some important activities to be carried out under the GST laws for smooth transitions of 2023-24. In this post, I have tried to mention all the important activities for friction-free transition/closure of the financial year 2022-23:

1.??????Availment of correct Input Tax Credit for the FY 2022-23

·??????Reconciliation of ITC books: The taxpayer needs to prepare the yearly reconciliation of ITC booked in books and ITC availed in GSTR 3B during the FY 2022-23 and availed in the subsequent month's GSTR 3B till 30th November 2023 or the prescribed date of filling annual return of FY 2022-23, whichever is earlier and reconcile the same?with?GSTR?2B.

·??????GSTR-1 with payment of taxes in GSTR 3b: Follow up with suppliers to furnish or report transactions in their GSTR-1 with payment of taxes in GSTR 3b in the case stated transactions are not populated in?your?GSTR?2b.

·??????Identify the ineligible ITC: Identify the ineligible ITC (Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2022-23 and reverse/pay the same along with interest thereon @24% if ITC being utilized to avoid the litigation and demand of interest & penalty in future. Further, note that no interest & penalty is leviable on the reversal of wrongly availed credit but?not?utilised.

·??????Prepare and review Past payments: One needs to prepare and review all their past payments so they can make sure that there is no payment from the supplier pending beyond 180 days from the issuance of the supplier’s invoice, if any such payment is found, then said ITC needs to be reversed along with interest 18 %. Additionally, re-avail such GSTR-3B if the payer has made such payment without any time limit. (i.e. even post-filing of GSTR 3B for October 2023 as the time limit for availing ITC u/s 16(4) of CGST Act is not applicable in the case of re-availing of an input tax credit).

·??????Composition supplier: If the payer has made purchases from any composition supplier, ITC will be not available and should not be booked in books as well as availed in GSTR 3B. If done, then, reverse the same in books as well as in the returns.

·??????Compile & reconcile ITC: One needs to compile & reconcile ITC auto-populated in GSTR 2A/2B for the full FY 2022-23 and for the period April to October 2023 (relevant for FY 2022-23) and also identify the suppliers whose registration has been either cancelled or suspended for any reasons during the FY 2022-23 for your onward needful actions.

·??????Compiled data of GSTR 2A/2B: Now, in the compiled data of GSTR 2A/2B, check the status of data of filing of GSTR 3B of the suppliers to know whether your suppliers are tax compliant or not as the ITC has been made entirely dependent on the compliances done by the suppliers.

·??????The registered and unregistered suppliers: Once you are done with all the mentioned steps, check for the transactions covered under the reverse charge mechanism (RCM) either from the registered supplier or unregistered suppliers to tax under RCM as per the time of supply provisions and claim ITC if not done earlier. Also, raise the self-invoice in case of specified goods or services covered under RCM, received from an unregistered person.

2.??????Reporting of correct outward supplies for the FY 2022-23

·??????Prepare and reconcile the turnover: The taxpayer needs to prepare and reconcile the turnover as reported in GSTR 1/GSTR 3B with books of check that it has been classified under the correct HSN/SAC code and the correct GST rate has been levied on the same. Additionally, any outward supplies of FY 2022-23 shown from April to October 2023 should be captured properly for proper disclosure in GSTR 9 & GSTR 9C of FY 2022-23.

·??????Avoid litigation and penalty: In the next step, compile and reconcile the amount of taxes paid in GSTR 1 and GSTR 3B filed during the FY 2022-23 with books of accounts and pay the tax if there is any shortfall vide filing DRC 03 to avoid litigation and penalty.

·??????Prepare the reconciliation of E-way bills: Now, simply prepare the reconciliation of E-way bills generated during the FY 2022-23 with tax invoices reported in GSTR 1 and give prior intimation to any deficiency.

·??????Check e-invoice portal: If the payer finds that it’s compulsory in his/her case to generate, check & reconcile whether all the tax invoices for B2 supplies have been duly reported on the dedicated e-Invoice portal and IRN generated with QR code and digitally signed. If not, then kindly report the same on the e-invoice portal and take the necessary action in the subsequent month’s GSTR 1. Additionally, please prepare reconciliation with e-invoices with IRN viz. e-way bills generated viz. reported or furnished in GSTR 1.

·??????Check invoices raised during the FY 2022-23: Next, check whether all the invoices raised during the FY 2022-23 have been properly reported in GSTR 1 and taxes have been paid thereon in GSTR 3B. In case, any kind of amendment is required viz. GSTIN, Invoice Number, Invoice Date, Taxable Value, taxes, B2C to B2B, etc., needs to be done, and then the same must be done by 30th November 2023 or the date of filing the Annual return for FY 2022-23, whichever is earlier.

·??????Check the tax compliances: Also, check the tax compliances in case of the supply of business assets during the FY 2022-23 on which ITC has been availed.

·??????Check whether the same has been returned within the time limit prescribed: In case of material sent for job work, one must check whether the same has been returned within the time limit prescribed (Inputs – 1 year and Capital goods – 3 years) and whether the same has been duly reported in ITC 04.

·??????Check the final verification: Once you do everything in this part of verification, Check whether the goods sent on an approval basis have been either returned within 6 months or sold on the issuance of tax invoices.

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3.??????Important Activity to be undertaken.

·??????Apply for a letter of Undertaking (LUT) in Form GST RFD 11 for FY 2023-24: The most important step here is to be taken by the exporters before the beginning of FY 2023-24: Apply for a Letter of Undertaking (LUT) in Form GST RFD 11 for FY 2023-24 to continue export of goods/services or supplies to SEZ without payment of GST from 01st April 2023.

·??????File for FY 2023-24 till 30th April 2023: Time limit to avail of the option to opt-out from the QRMP Scheme: Taxpayers having a Turnover below Rs 5 Crores shall have the option to select the frequency of GST to return filing for FY 2023-24 till 30th April 2023. So, if the taxpayers have opted for Jan – Mar 2023 and want to continue monthly filing of returns from FY 2023-24, they need to take action by 30th April 2023.

·??????Avail the ITC about FY 2022-23 till 30th November 2023: The time limit for availing of ITC about the FY 2022-23 coming to an end: Avail the ITC about FY 2022-23 till 30th November 2023 or the date of filing of Annual return for FY 2022-23 whichever is earlier. Hence, preparing reconciliation of ITC for FY 2022-23 is availed in FY 2022-23 and in the period April to October 2023 for proper disclosure in GSTR 9 & GSTR 9C of FY 2022-23.

·??????Don’t issue credit notes after the prescribed date: The time limit for issuance of credit notes under GST for FY 2022-23: Credit Notes for supplies made during FY 2022-23 can be issued but not later than 30th November 2023 or the date of filing of the Annual return for FY 2022-23 whichever is earlier. Hence, capture CN details of FY 2022-23 are shown in FY 2023-24 and in the period April to November 2023 for proper disclosure in GSTR 9 & GSTR 9C of FY 2022-23.

4.??????Other Important Aspects for FY 2022-23.

·??????Check all the details carefully: One needs to check carefully whether the purchase (ITC) register prepared for FY 2022-23 contains all necessary details/ information like tax invoice no./ date, description of goods or services, nature of goods or services like -inputs/capital goods/input services and account head, etc. for ITC matching with supplier’s invoice.

·??????Rule 42 and rule 43: Computation of reversal of ITC under Rule 42 and Rule 43.

·??????Check all the required information twice: Check whether the sales register (Output taxes) captures all the necessary/ details information as required.

·??????Check total Tax: Check the tax has been correctly calculated and paid under RCM in case of import of Services, sitting fees paid to directors, GTA, Security Services, rent a Cab, Advocate fees, etc.

·??????Provisions of GST Law have been duly complied Make sure that all the other provisions of GST Law have been duly complied with.

·??????Reconcile GST TDS/TCS credit: Reconcile GST TDS/TCS credit reconciliation with e-Cash Ledger on the GST portal and books of accounts for FY 2022-23.

·??????Disclose the break-up of the total expenditure of entities registered or not registered under GST: To report under clause 44 of the Tax Audit Form (Form 3CD) for Financial Year 2022-23, the entity (on which Tax Audit is applicable by the relevant section of the Income Tax Act, 1961) needs to disclose the break-up of the total expenditure of entities registered or not registered under GST. The entity is advised to prepare the following work to report the expense under the aforesaid clause in the Form 3CD:-

(a)???Total Amount of Expenditure (capital expenditure as well as revenue expenditure) incurred during FY 2022-23.

(b)????Expenditure in respect of entities registered under GST.

(c)?????(Expenditure in respect of entities not registered under GST.

(d)???Expenditure relating to goods or services exempt under GST.

(e)???Expenditure relating to entities falling under the composition scheme.

(f)?????Expenditure relating to other registered entities.

(g)???Total payment to registered entities.