GST Activities due by September 2022

 

We have highlighted some of key activities under GST that need attention and action by the forthcoming due dates prescribed for the FY 2021-22.

 

As you are aware, the Finance Act 2022 amended section 34 (2) of CGST Act, 2017 to allow registered persons to issue credit note in relation to supplies, and avail input tax credit pertaining to a financial year within the earlier of following dates:

 

• 30th November following the end of the financial year (earlier, it was due date of filing GST return for the month of September), or
• Date of furnishing of relevant annual return

 

However, the Central Government has proposed the aforesaid amendment in section 34(2) vide section 102 of Finance Act, 2022 which is not yet notified by the government. Hence, we have listed below the action points to be considered to ensure compliance for FY 2021-22 by the due date of filing GST return for September 2022 from GST perspective:

 

Compliances with respect to input tax credit (‘ITC’):

 

1. In terms of Rule 42 of the CGST Rules, ITC on inputs and input services used partly for taxable and partly for exempt/non-business activities should be re-calculated based on actual turnover for the financial year and be reversed/availed by September of next financial year.

 

Hence it is pertinent to carry out computation of ITC reversal/availment, if any to be undertaken towards exempt supplies for the previous year by 30 September 2022.

 

2. Please ensure availability of tax invoices bearing the required particulars including IRN where applicable (such as GSTIN of the supplier, recipient, HSN etc) towards ITC claimed. Review the eligibility of input tax credit availed and reverse credits, if found to be ineligible.

 

3. Undertake reconciliation of ITC availed for every registration with books of account and avail/reverse differential ITC, if any. Reconcile ITC availed with details uploaded by the suppliers (as per the GSTR-2A) to ensure the following:

 

1. ITC availed from April 2021 to December 2021 on invoices not appearing in GSTR-2A does not exceed 5% of eligible ITC appearing in GSTR-2A
2. 100 percent of ITC availed from January 2022 appears in GSTR 2B

 

Issuance of credit notes:

 

4. Ensure credit notes pertaining to FY 2021-22 are raised and reported latest by GST returns filed for the month of September 2022.

 

Rectification of GST returns:

 

5. Ensure rectification of errors or omissions pertaining to GST returns filed for FY 2021-22

 

Other points of consideration:

 

• Review expenses liable to GST under reverse charge mechanism (including import of services) to ensure GST liability is discharged and due credit is availed, as applicable.

 

• E-way bill to GSTR-1 reconciliation.

 

• Review of ISD ratios, where applicable to ensure proper credit distribution.

 

• Identify any liability that may arise on account of free of cost supplies between related parties (including import of services from overseas related parties and management/ overview functions). Transfer Pricing report should also be reviewed appropriately.

 

• Reconcile turnover as per GST returns and cash/ITC balance as per GSTN with books of account.

 

• Companies to ensure that the inputs/ capital goods sent for job work are received within the prescribed time limit of one year/ three years.

 

• Identify expenses incurred by head office/branch offices pertaining to other offices and cross charge the same to the relevant branches.

 

• Review effective rate of GST and ensure that tax is remitted at prevailing rates.