Business had a challenging financial year. There was disruption to normal business due to Covid-19 pandemic. Government extended due dates for various returns, waiver of interest for late of payment and for delayed filing of returns for Small, MSMEs as well as large taxpayers. Government was extending the concessions based on rapidly changing situation. In view of the above, there is need to reconcile books with returns. Taxpayers have an opportunity to correct those errors committed unintentionally in their GST returns during financial year 2020-21.

Taxpayers needs to examine, resolve and reconcile the books with returns before filing of their monthly return for September 2021. A few areas are mentioned below, which they can review and act upon:

Sales

• GSTR1- Reconciliation of Sales register with GSTR1. In case of any difference, make appropriate corrections.
• GSTR3B – The same exercise needs to be repeated done with GSTR-3B.
• Financial books – It needs to be tallied sales uploaded in the GST portal.
• Export invoices – Ensure it is properly correlated with Customs to get refund seamlessly.
• Examine and confirm that correct reporting of NIL rated, exempted and non-taxable supplies in the GSTR-1.
• Advances from Customers – Examine the following:
• Whether if any advances received during the year?
• If yes, check if it is settled, then necessary adjustments should be carried out in books and GST portal.
• Sales/Debit notes/Credit notes of previous year (FY: 2019-20) reported in the during period from April 2020 to March 2021 needs to be deducted.
• In the same manner, Sales/Debit notes/Credit notes for the FY: 2020-21 reported after March 2021, needs to be added to arrive at the correct turnover.
• Credit notes pertaining to financial year 2020-21, which is pending to be reported in the GST portal should be done in September 2021. If not, you can only use the commercial credit note without any adjustment of GST liability.
• In case of any invoices or debit note or credit note is missed out including any corrections to invoice number, date, taxable value and total value can be done while filing the GSTR1.

Input Tax Credit (ITC)

• Examine, analysis and reconciliation of purchase register with GSTR-2A/2B availed in GST returns of FY 2020-21.
• Avail any unclaimed ITC of FY 2020-21 in September 2021 GSTR-3B.
• If any ITC is not received, co-ordinate with supplier and ensure your ITC is credited in GSTR2A/2B. In the same way, if any supplier has mis-spelt your GSTIN, request them to necessary correction.
• Check and request supplier to rectify the transactions if they had wrongly linked your invoice as B2C instead of B2B.
• Prepare list of the eligible and ineligible ITCs separately. This is required for reporting in annual return. Reconcile them with the physical copy of the invoices/debit notes. If any missing, please collect from vendors.
• Analyze ITC availed and reversed in the GST returns during the last year. If any ineligible ITC wrongly recorded in the eligible credit and vice versa, please do the necessary corrections.
• Reverse Charge Mechanism (RCM): Identify if supplies subject to RCM under GST had been correctly disclosed in GSTR-3B return
• ITC needs to be reversed, if the payment to Vendor’s invoice/debit note is not made within 180 days as per Rules 37 of CGST Rules, 2017.
• ITC reflected in GSTR-2A without corresponding invoice, please collect the same with vendor. The opposite – invoice is available with you but ITC not reflected in GSTR-2A, request vendor to file invoices details in their September 2021 GSTR-1, if not, please reverse them.
• If Rule 42 and 43 is applicable to your business, then ITC should be reversed in the following manner:
  • Actual reversal as per formula.
  • If the actual ITC calculation is less than actual reversal, reverse the balance ITC in September 2021 GSTR-3B or pay the same through Form GST DRC-03 along with interest at the rate of 18%. The interest will be calculated from April 01, 2021 (in respect of FY 2020-21) till the date of reversal or actual payment, as the case maybe.
  • If the excess ITC reversed, claim the same in September 2021.

Payment

• Check on whether correct GST rates is used along with proper HSN/SAC codes to ensure accuracy of tax liability arrived upon.
• Liability due and corresponding payments made during the year needs to be mapped correctly.

Registers

• Balance in credit registers is reconciled with financial books.

If you are able to validate the points, then you can comfortably able to file your annual returns for the financial year 2020-21.