Indirect Taxation

April 2026

GST Year-End Compliance Update (FY 2025-26)
(Action Points for Smooth Transition to FY 2026-27)

A. Key Deadlines & Strategic Decisions

LUT Filing (Zero-Rated Supplies)

File LUT for FY 2026-27 by 31 March 2026 to continue exports/SEZ supplies without IGST.

Composition Scheme (CMP-02)

Opt-in by 31 March 2026
ITC reversal (if switching) via ITC-03 by 30 May 2026

QRMP Scheme (Quarterly Returns)

Opt-in / opt-out by 30 April 2026 (for turnover ≤ ₹5 Cr)

E-Invoicing Applicability

Mandatory from 1 April 2026 if turnover exceeds ₹5 Cr (PAN-based)

B. Mandatory Year-End Actions (Books Closure)

Reset Invoice Series

Start new invoice numbering from 1 April 2026
Ensure compliance with Rule 46 of the CGST Rules 2017, in respect of the issue of Bill of Supply by registered taxpayers availing Composition Scheme or supplying exempted goods or services or both.

Aggregate Turnover Recalculation

Recompute FY 2025-26 turnover for:
- E-invoicing applicability
- QRMP eligibility
- Composition scheme
- Rule 86B applicability

C. Year-End Reconciliations (Critical)

Outward Supplies

Books vs GSTR-1 / GSTR-3B
Advances vs adjustments
Unbilled revenue & goods-in-transit
E-way bill vs invoice matching

Inward Supplies / ITC

Books vs Electronic Credit Ledger
GSTR-2B vs Purchase Register
Unclaimed ITC tracking
ITC on:
- Damaged/short stock
- Write-off of creditors

Reversal/reclaim ledger

D. ITC Reversal & Compliance

Rule 37 (180 days unpaid vendors)

Reverse ITC + interest if unpaid
Reclaim allowed after payment

Rule 42 (Exempt Supplies)

Recalculate proportionate ITC reversal

Rule 37A (Supplier Non-Compliance)

Reverse ITC if the supplier fails to file GSTR-3B by 30 Sep 2026
Reclaim later when the supplier complies

E. Reverse Charge Mechanism (RCM) Review

Ensure GST payment under RCM for:

Import of services
GTA (if reverse charge)
Director sitting fees
Legal / advocate fees
Security services
Rent (if applicable)

F. Export & SEZ Compliance

Ensure FEMA realization within 15/18 months
- Otherwise, the refund must be reversed with interest
Obtain SEZ endorsement for zero-rated supplies

G. Job Work Compliance

Return timelines:
- Inputs → 1 year
- Capital goods → 3 years
ITC-04 Filing
- ≤ ₹5 Cr turnover → 25 April 2026
- ₹5 Cr → Half-yearly filing

H. Important Validations

E-Invoice status of suppliers (to avoid ITC denial)
Rule 86B (1% cash payment) applicability
HSN/SAC accuracy (dropdown-based reporting now mandatory)
E-way bill vs invoice reconciliation

I. System & Structural Updates

ISD Mechanism (Mandatory from 1 April 2025)

- Required for entities with multiple GST registrations

DRC-03 vs DRC-03A Adjustment

- Use DRC-03A to link past payments with demand orders

J. Administrative & Portal Checks

Update Bank Details (REG-14)
Complete Aadhaar Authentication
Verify Authorized Signatory details

K. Litigation & Risk Review

Track:
- ASMT-10 / SCN / Orders
Ensure:
- Appeals filed within time
- 10% pre-deposit paid
Evaluate:
- Provision vs contingent liability (Ind AS 37 / AS 29)

Key Risk Areas to Watch

ITC mismatch with GSTR-2B
Non-payment to vendors (180 days)
Supplier non-compliance (Rule 37A)
Invalid e-invoices
Export proceeds not realized (FEMA)

Conclusion

A thorough year-end GST review + timely actions will:

Avoid ITC reversals & interest
Prevent litigation exposure
Ensure seamless transition into FY 2026-27