Introduction:
As the financial year draws to a close, businesses must gear up for the annual ritual of evaluating their financial health, ensuring compliance with tax regulations, and preparing for the upcoming year. In this blog post, we will explore the crucial checkpoints that businesses need to consider for Goods and Services Tax (GST) compliance along with accounting practices.
Review and Reconcile Financial Statements:
Start by reviewing your financial statements, including the balance sheet, profit and loss statement, and cash flow statement. Reconcile these statements to identify any discrepancies or errors that may have occurred during the year. This step provides a solid foundation for accurate GST reporting.
Records maintenance requirements:
Both electronic and paper documents are accepted in the GST expense accounts portal.
If a business decides to proceed with e-documentation, it must authenticate each with digital signatures.
Every bill and invoice received under the taxable body’s name like credit and debit notes, delivery challan, inward and outward supply records, tax payable, and paid should be stored for six years from the date when returns were filed.
Update Books of Accounts:
Ensure that your books of accounts are up-to-date. This includes recording all financial transactions accurately, categorizing expenses correctly, and reconciling bank statements. A well-maintained set of books is essential for both GST compliance and overall financial management.
Evaluate Changes in Tax Regulations:
Stay informed about any changes in GST regulations. Governments often introduce amendments that may impact your business. Being aware of these changes allows you to adapt your processes and remain compliant.
Clear Outstanding Dues:
Review outstanding dues and ensure timely payments. Late payments not only attract interest but can also impact your GST compliance rating. Clearing dues on time contributes to a positive financial standing and fosters a good relationship with vendors and authorities.
Ensure Timely and Accurate GST Filing:
GST filing is a cornerstone of financial compliance. Ensure that all GST returns are filed accurately and on time. Review your sales and purchase registers, reconcile them with GST returns, and address any discrepancies promptly. Timely GST filing not only avoids penalties but also establishes your business as a reliable taxpayer.
Reconcile Input and Output Tax Credits:
Check the reconciliation between input and output tax credits. Verify that the Input Tax Credit (ITC) claimed is accurate and matches with the eligible expenses. This ensures that you are not missing out on any credits and helps in optimizing your cash flow.
Electronic Cash and Credit Ledger
Complementing this, the Electronic Credit Ledger serves as a virtual wallet accumulating input tax credits, providing businesses with a tool to offset their GST liabilities. This digital duo not only enhances accuracy but also contributes to a more efficient and accountable financial ecosystem.
Plan for the Next Financial Year:
Use the financial year-end as an opportunity to plan for the next year. Assess your financial goals, budget, and strategies. Consider any changes in your business model or operations that may impact GST compliance and accounting practices.
Conclusion:
As the financial year concludes, businesses must prioritize the meticulous review of their financial records, ensuring GST compliance, and preparing for the upcoming year. By following these checkpoints, businesses can not only meet regulatory requirements but also pave the way for a financially sound and successful future.
This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: January 13, 2024