Year-End GST Checklist: Essential Compliance Tasks

As the financial year draws to a close, businesses must ensure their GST compliance is on point to avoid unnecessary penalties, interest, or missed benefits. From registration checks to ITC reconciliations and refund claims, this guide will help you navigate key year-end GST activities effortlessly.

Whether you're a small business owner, a finance professional, or an enterprise handling complex GST process, proactive compliance is the key to avoiding last-minute stress.

Check Your GST Registration Requirement

Assess your GST registration requirement at any point in time. If your aggregate turnover crosses the prescribed threshold or if any other condition makes registration mandatory, you must obtain GST registration.

Composition Scheme Eligibility: Check if you need to opt into the composition scheme, as this can only be done at the start of the financial year or at the time of new GST registration.

E-Invoice Applicability: If your aggregate turnover exceeds Rs. 5 crore in any financial year, e-invoicing becomes mandatory. Ensure compliance if you meet this threshold.

Check ISD Registration Eligibility

Evaluate whether your business receives common input service invoices for multiple locations. If applicable, obtain ISD registration to ensure proper ITC distribution and compliance with upcoming GST regulations.

HSN Code Compliance

Businesses with an annual turnover exceeding Rs 5 crore must mandatorily include a six-digit HSN code on all invoices. For businesses with a turnover below Rs 5 crore, a four-digit HSN code is required for B2B invoices, while it remains optional for B2C invoices. Ensure compliance to maintain transparency and avoid penalties.

Essential GST Documentation for Compliance

• Sales & Purchase Records – Ensure all sales and purchase transactions are accurately recorded and match with GST returns to avoid discrepancies.

• Credit & Debit Notes – Maintain proper documentation for any adjustments made through credit or debit notes to support claims and compliance.

• Reconciliation with GST Portal – Cross-check your accounting records with GST portal data to identify mismatches and rectify errors before filing returns.

• Audit-Ready Books – Keep organized records of invoices, payments, and adjustments to be prepared for any scrutiny or litigation.

• Legal Compliance & Proceedings – Proper documentation helps strengthen your position in case of GST assessments, audits, or legal proceedings.

Reconciliation of Financials with GST Returns

Ensure that your sales turnover, credit notes, and output tax in your financial records align with the figures reported in GSTR-1 and GSTR-3B. Strive to reconcile discrepancies by the end of March to minimize year-end adjustments. However, any unresolved differences or new discrepancies must be rectified before November 30 or the due date for filing GSTR-9, whichever is earlier.

Additionally, take strong follow-ups on Input Tax Credit (ITC) reconciliation. Match GSTR-2B with the ITC claimed in GSTR-3B and financial records, ensuring any unclaimed ITC or excess claims are adjusted within the permissible timeline. ITC-related corrections, as well as any sales adjustments, can be made until November 30 or before filing the annual return. Stay proactive to maximize compliance and avoid financial mismatches

Vendor Payments Within 180 Days 

Review vendor payments to ensure they are made within 180 days from the invoice date. If not, reverse the ITC and re-avail it after completing the payment. Failure to reverse ITC makes the entity liable to pay interest at 18% for misuse of ITC, calculated from the date of availing ITC. For example, if the invoice date is 01-01-2024, ITC is claimed in GSTR-3B on 20-02-2024, and payment is not made by 30-06-2024 (180 days), interest will be calculated.

QRMP Scheme 

Taxpayers with an aggregate turnover of up to ?5 crore in the current and preceding financial year are eligible for the Quarterly Return Monthly Payment (QRMP) Scheme. If you wish to opt in or opt out of the QRMP scheme, you can do so within the prescribed time frame.

For example, to avail the QRMP Scheme for the April-to-June quarter, apply on the GST portal between 01-02-2025 and 30-04-2025.

Claim GST Refund 

GST refunds can be claimed within two years from the relevant date, which varies based on the type of refund. Assess whether your business is eligible for a GST refund, such as for excess tax payments, exports, inverted duty structure, or other applicable cases. Ensure refund applications are filed within the prescribed two-year period to avoid missing out on eligible claims.

Physical Verification of Stock 

Conducting a physical stock verification at the end of the financial year is crucial for GST compliance. It helps businesses assess their eligibility for opting out of the Composition Scheme or applying for voluntary registration to claim ITC on available stock. Additionally, cross-checking ITC claims ensures that only eligible stock is considered, while adjustments for damaged or obsolete inventory can be made as per Section 17(5)(h). Proper stock verification minimizes compliance risks and ensures accurate reporting.

Letter of Undertaking (LUT) 

Letter of Undertaking (LUT) is a declaration filed by exporters to supply goods or services without paying GST under the export without payment of tax option. By furnishing an LUT, businesses can avoid blocking their working capital in tax payments and claim refunds on Input Tax Credit (ITC) instead. Before the start of each financial year to continue making exports without payment of tax.

Reverse Charge Payments 

Under the Reverse Charge Mechanism (RCM), GST is applicable on certain services and goods, where the recipient is liable to pay tax instead of the supplier. Businesses must ensure RCM is applied wherever required to avoid non-compliance.

Before the financial year-end, review all transactions to check if any RCM liability remains unpaid.

Reversal of ITC

Businesses must review their Input Tax Credit (ITC) claims and reverse any ineligible credit as required under applicable GST rules and sections. Ensuring timely reversals helps avoid interest and penalties.

TDS & TCS Credit Management

Accept all TDS and TCS credits in the GST portal and utilize them wherever applicable. If there is an excess balance, apply for a refund to optimize cash flow management and avoid fund blockages

Declaration by GTA

Goods Transport Agencies (GTA) have the option to choose between the Forward Charge Mechanism (FCM) and the Reverse Charge Mechanism (RCM). If opting for RCM for FY 2025-26, a declaration must be filed between 1st January 2025 and 31st March 2025.

A Smooth Transition to the New Financial Year

Staying on top of year-end GST compliance ensures your business remains audit-ready, cash flow remains intact, and no eligible ITC or refunds are left unclaimed.

• Review your compliance checklist

• Rectify discrepancies before deadlines

• Utilize ITC, claim refunds & manage cash flow efficiently

Don’t wait for notices—act now and step into the new financial year with a clean slate!

Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.