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Post Financial Year GST Adjustment related to Invoices


Off late at the end of the financial year 2017-18 it has been seen that most of the taxpayers have committed two mistakes 1) either they have not declared the invoice in their returns filed during previous financial year or 2) they have failed to claim Input Tax Credit with respect to invoices received by them in last financial year i.e. 2017-18. Most of them are worried about the consequences.

In the first case where the taxpayer has not discharged any tax liability pertaining to the previous year, they can do so anytime after the end of the financial year and pay GST along with interest. Even in case where the taxpayer has issued a debit note and tax liability is still to be discharged, there is no outward time limit for paying the tax on such debit notes. The liability can be discharged any time along with the interest. But this might have negative consequences as well. Not discharging the tax liability would mean that the customer of such taxpayer shall not be able to avail the input tax credit. Also the GST Star Rating of the taxpayer shall fall. But since it is the very first year, no taxpayer can be expected to be perfect in his compliance, hence forth nothing to worry most of the taxpayers are sailing in the same boat along with you.

In the second case where the taxpayer has forgotten to claim input tax credit or any invoice is detected at the later stage for claim of input tax credit, the taxpayer should immediately claim such input tax credit in his next GSTR 3B returns. Such input tax credit can be claimed maximum in GSTR 3B return pertaining to September succeeding after the end of financial year or the date of filing of annual return whichever is earlier. For instance input tax credit with respect to an invoice received in Financial Year 2017-18 can be claimed maximum in GSTR 3B return filed for the month of September 2018. Where the taxpayer fails to claim, such input tax credit shall lapse and would be treated as loss for the business. Although despite not eligible as input tax credit under GST, the taxpayer can claim the said loss of ITC as a deduction under business head while filing his income tax return.

The other prominent question which arises is that whether such adjustments after the end of Financial Year would be reported anywhere or not? Let us remind the readers that there is an annual return as well as per section 44 of CGST Act 2017. Any adjustments made after the financial year shall be reported in such annual return whose due date is 31st December 2018. Also for taxpayers whose aggregate turnover in the preceding financial year 2017-18 exceeds Rs. 2 crores their books of accounts shall be separately audited as per GST Act. The post financial year adjustments shall be reported by the professional conducting such audit. 

The taxpayer should ensure that he makes all such adjustments before he files his annual return. The auditor will reconcile his financial statements and the monthly returns filed by the taxpayer and deviations (if any) found would be reported along with the month in which such deviation has been rectified.      



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