Advisory In Relation to GST before Finalizing the books of Accounts for income tax purpose

  1. A complete reconciliation to Sale declared under GSTR1 and GSTR-3B vis-à-vis books of accounts is to be made. If there is any difference between GSTR-1 and GSTR-3B, then the either of the 2 should be rectified in the current period. Differences in relation to previous periods could be adjusted by amending GSTR-1 during filing for current period (month).
  2. Mistakes, if any in GSTR-3B should be adjusted in subsequent periods GSTR-3B. If any sales are reducing/increasing then the same must be adjusted in the current tax periods and tax should also be adjusted accordingly.
  3. All the purchases and corresponding credits are to be checked and verified with GSTR-3B. Balance of books and Online Electronic Credit Ledger should be matched in entirety. Any difference should be adjusted in books or GSTR-3B accordingly.
  4. Reversal of Credits: – If there are any exempted supplies, then the credits are to be reversed as advised under Rule 42 and 43. In case of Non business use also the credits are to be reversed to the extent of 5% in case of capital goods.
  5. Reversal of credits where Higher Duty Draw Back and ROSL have been claimed:- During the period in which higher duty Draw back and ROSL were availed (i.e. July – September, 2017), No credit availed in relation to material exported during that period could be taken in the Books of Accounts. Such credits need to be reversed in GSTR-3B and books of accounts as well. If such credits are not reversed, then the Higher Duty Draw back claim may be in jeopardy and you may face customs notices for refund back of such duty draw back.
  6. Refund if already taken:- If a refund GST of period July-September, 2017 has already been taken from GST department, then the same should be immediately refunded back to the department so that there is no case of refund of higher duty draw back and ROSL to the customs department.
  7. Reversal of Credit where Payment is not made within 180 Days:- All the payments to vendors are to be made within 180 days of his Invoice. If payment is not made to the vendor within 180 of his Invoice then the credit in relation to that Invoice needs to be reversed alongwith an interest @ 24% p.a. from the date of taking such credit till the date of final reversal. It is worth to note here that as soon as the payment is made against such Invoice, such reversed credit can be taken again.
  8. RCM Payment is to be made:- Reverse Charge Mechanism was applicable on goods or services taken from transporters, Advocates and all the unregistered persons. W.e.f. 13.10.2017, such Reverse charge in relation to unregistered persons was withdrawn. However reverse charge in relation to transporters and Advocates (and some other services) is still continuing. Thus it is pertinent to note the following :- a. Reverse Charge in relation to all the unregistered persons were paid upto 13.10.2017 b. Reverse Charge in relation transporters and advocates etc are paid till date continuously. If such Reverse Charges are not paid then they should be given in current periods GSTR 3B and recorded in the books of accounts accordingly.
  9. Checking Input Tax Credit in relation to denied supplies:- Items as per attached list are denied for the purpose of taking credit. Such credits should not be taken. If any of such credits have been taken, then they should be removed from the books of accounts and GSTR-3B.
  10. Checking for any pending ITC:- Any ITC which was related to the year 2017-18 and which could not be taken due to non-receipt of Invoices or non-receipt of material, then such credit should be taken before the month of September-2018. After that period such credit could not be taken in anyway.
  11. Checking for any pending liabilities:- If any liability is pending which could not be declared in the return then the same is also to be deposited in time before finalization of books of accounts.
  12. Pending Credit/Debit notes:- Any pending debit/credit notes should also be finalised before finalisation of books of accounts and should be declared in the return before the month of September, 2018.