1⃣ Reconcile GSTR-1 vs Books (Sales Reconciliation)

• Match Sales as per Books vs GSTR-1
• Check:
  • Missing invoices
  • Wrong GST rates
  • B2B vs B2C classification errors
  • Debit/Credit notes properly reported
• Ensure amendments (if any) are done before September deadline.

2⃣ Reconcile GSTR-3B vs GSTR-1

• Tax payable as per GSTR-1 should match GSTR-3B
• Check:
  • Underreported liability
  • Excess liability paid
  • RCM properly discharged

3⃣ Input Tax Credit (ITC) Reconciliation

Reconcile:

• ITC as per Books
• ITC as per GSTR-2B
• ITC claimed in GSTR-3B

Check:

• Missed ITC
• Ineligible ITC (blocked credits u/s 17(5))
• Vendor not filed GSTR-1 (ITC not reflecting)
• Reversal required (180 days non-payment rule)

4⃣ Check 180 Days Payment Rule (ITC Reversal)

• If supplier payment not made within 180 days → ITC must be reversed with interest.
• Identify unpaid creditors older than 180 days.

5⃣ Reverse ITC for:

• Personal expenses
• Motor vehicles (if not eligible)
• Exempt turnover proportion (Rule 42 & 43)
• Capital goods adjustments

6⃣ RCM (Reverse Charge Mechanism) Check

Verify:

• GTA expenses
• Advocate fees
• Import of services
• Unregistered purchases (if applicable)

Ensure:

• RCM paid
• ITC claimed properly

7⃣ E-invoicing & E-way Bill Compliance

• All applicable invoices generated with IRN
• No missed e-way bills
• Cancelled IRNs properly recorded

8⃣ GST Payable on:

• Advances (if applicable)
• Unbilled revenue
• Deemed supplies
• Stock transfers

9⃣ Annual Turnover Verification

Check turnover for:

• GST Audit applicability (if applicable)
• E-invoicing threshold
• Composition eligibility

Income Tax Year-End Checklist

1⃣ TDS Compliance Check

• TDS deducted on:
  • Contractor payments (194C)
  • Professional fees (194J)
  • Rent (194I)
  • Salary (192)
  • Commission (194H)
• TDS deposited before 31 March
• No short deduction

Late deduction = Disallowance u/s 40(a)(ia)

2⃣ Advance Tax Review

• Calculate total tax liability
• Pay 100% advance tax by 15th March
• Avoid 234B & 234C interest

3⃣ MSME (Section 43B(h)) Compliance

• Outstanding to MSME beyond 45 days?
• If unpaid → expense disallowed
• Identify MSME creditors separately

4⃣ Section 43B Expenses

Ensure payment before 31st March for deduction:

• GST payable
• PF/ESI
• Bonus
• Leave encashment
• Interest on loan

5⃣ Provision vs Actual Expense Review

• Avoid excess provisions
• Ensure supporting documents
• Check year-end expense cut-off

6⃣ Depreciation Planning

• Add fixed assets before 31 March to claim depreciation
• Put to use before 31 March
• Review block of assets

7⃣ Inventory Valuation

• Value at Cost or NRV (whichever lower)
• Remove obsolete stock
• Check consistency with previous years

8⃣ Related Party Transactions

• Verify compliance u/s 40A(2)(b)
• Arm’s length pricing
• Proper documentation

9⃣ Loan & Interest Compliance

• Interest properly accrued?
• TDS deducted on interest?
• 269SS & 269T (cash loans compliance)

Cash Transactions Review

• Cash payments > ₹10,000 (disallowed u/s 40A(3))
• Cash receipts > ₹2 lakh (penalty risk)

Very Important Cross-Checks (GST + Income Tax Link)

• Turnover as per GST = Turnover as per Books
• Gross profit reasonable vs last year
• ITC ledger matches expense accounts
• GST receivable/payable reconciled
• RCM expenses added to turnover if applicable

New Tax Regime Slab Rates for Individuals & HUF for AY 2026-27 (FY 2025-26)

• ₹0 – ₹4,00,000: Nil
• ₹4,00,001 – ₹8,00,000: 5%
• ₹8,00,001 – ₹12,00,000: 10%
• ₹12,00,001 – ₹16,00,000: 15%
• ₹16,00,001 – ₹20,00,000: 20%
• ₹20,00,001 – ₹24,00,000: 25%
• Above ₹24,00,000: 30%

So if Your Total Income is below Rs.12 Lakhs, then you don’t need to pay any tax due to Tax Rebate u/s 87A is available up-to Rs 60,000 tax liability so whatever tax liability would be calculated with above tax slab will become zero after claiming Rebate, so ultimately your total Tax Liability would be zero. so understand this from below case scenario:-

Case-1: when your Total Income is up-to 12 Lakhs:-

So if your Total Gross Salary is 12.75 Lakhs, then after reducing standard deduction of Rs.75,000/-, your Total income would be Rs.12 Lakhs and in that case your tax would be calculated as below;

First 0 to 4 Lakh Income- Tax zero, from next 4 Lakh Income from Rs 4 to 8 lakh- tax Rate is 5%, so on next Rs 4 lakhs your tax would be 4 Lakhs x 5%= 20,000 and on next 4 lakh from Rs 8 Lakh to Rs.12 Lakh, Tax Rate is 10%, so here on next Rs 4 lakhs tax would be Rs 4 Lakhs x 10%= 40,000. So total Tax liability as per above slab for 12 lakh Income would be Rs.20,000 + 40,000= Rs.60,000 so here total tax liability before cess is Rs 60,000 but here is some twist in taxation, you don’t need to pay any taxes since as per Section 87A Rebate if your income is upto 12 lakhs, then you will get rebate of 60,000, so ultimately here your tax would be Zero ( 60,000-60,000.

Case-2: when your Total Income is above 12 Lakhs:-

So if your Gross Salary is Rs.14 Lakhs and after reducing standard deduction of Rs.75000/-, your Total Income would be Rs.13.25 lakhs. that case your tax would be calculated as below;

Upto 12 Lakhs income we seen in case-1 that Tax before Rebate is Rs.60,000 so from next 12 to 13.25 lakhs, Tax Rate is 15% so on next Rs.1.25 lakh Income, Tax liability would be 1.25 lakhs x 15%= Rs.18,750/-. So here total Tax would be Rs 60,000+18750 = 78,750 and now you will not get any Rebate u/s 87A because you will get Rebate only when your income is Up-to Rs.12 lakhs so now you have to pay Tax of Rs.78,750 and 4% Cess would also be paid, so Total Tax you have to pay tax Rs.81,900/-

I hope i would able to explain about this Tax Rebate.

Note: Total Income is calculated after adding all 5 groups of income and then reducing any deduction if any available, so in New Income Tax Regime Standard Deduction up-to Rs.75000 is available for all Salaried class employees.

Due date to file Income Tax Return (ITR) of FY 2023-24 (AY 2024-25) for audit case is 31st October 2024.

Due date to file ITR of partner’s of partnership firm, if partnership firm is covered under audit, is 31st October 2024, otherwise it would be 31st July 2024.

Due date to file ITR of Director of Company is 31st July 2024, even if company is covered under audit still due date to file ITR of directors would remain on 31st July 2024.

Note: ITR can be filed after due date by paying Interest & Penalty.

Note:- Losses can be carried forwarded only if Income Tax Return is filed within due date.

• ITC can be claimed of any goods/services which are used or intended to be used for furtherance of business.

• Even if goods/service are purchased is used in business or intended to be used in business but still you have to comply the following conditions to claim ITC:-
• (i) You must have Tax Invoice or debit note. (This Tax Invoice or debit note should be filed by supplier in his GSTR-1).
• (ii) Goods/Service should be received to person.

• (iii) Tax Charged/added into invoices must be paid by supplier to the Government either through Input Tax Credit ( ITC) or through Cash (ensure supplier is genuine person and has filed GSTR-3B and paid the taxes to Government)

• (iv) Person has filed the GSTR-3B.

Along with above condition If you have purchased goods/services and have not made payment to your supplier with-in 180 days from the Invoice date then you have to reverse ITC in GSTR-3B along with Interest liability. And after that whenever you make payment to that supplier, then you are eligible to reclaim ITC again in GSTR-3B.  

if any ITC left to claim in GSTR-3B of current financial year then Input Tax Credit (ITC) can be claimed up to 30^th November of next year or before filing of GST Annual Return.

Common Input Tax Credit reversal

Note-1: If you have purchased goods which are used for personal and for business purpose then Input tax credit would be allowed only to the ratio of business purpose used.

Note-2: If any goods/services purchased and ITC claimed and this item it is used partly for sale of Taxable items goods supply and partly for exempted supply then ITC amount would be allowed proportionate to the taxable item supply only.

Exempted supply would cover with respect to above:-

• Supply of goods/services where recipient of goods/service will pay the taxes.
• Transaction in Securities
• Sale of Land
• subject to clause (b) of paragraph 5 of Schedule II,
• Sale of building

Blocked Credit( ITC of following goods/services would not be allowed or allowed with restriction):–

Even if items would be used for purpose of business or intended to be used for business still ITC will not be allowed on following goods as per the GST law introduced, so even if these ITC is reflecting in GSTR-2A/2B, you still not be allowed to take these credit:-

• Motor Vehicle for transportation of person  whose seating capacity is up-to 13 person.( Like CAR, Bike, Sooty,  etc. purchased for business but still ITC would not be allowed)

Note: ITC would be allowed if this Motor Vehicle is

Purchased by motor vehicle dealer or

Used for Transportation of passengers or

Purchased by Motor driving school

• Vessels and aircraft

Note-1: ITC on vessels or aircraft allowed to only if this is used for making following Taxable supplies

• Purchased by dealer who deals in vessel & aircraft business
• Used for transportation of passengers
• Used for imparting training on navigating such vessels; or
• Used for Imparting training on flying such aircraft;

Used for transportation of goods;

ITC would not be allowed for following services related to motor vehicle

• General Insurance
• Servicing
• Repair & Maintenance  

Allowed only if this is used by respective businesses owners as discussed in Note-1 above

• Food and beverages

Outdoor catering

Beauty Treatment

Health Services

Cosmetic & plastic Surgery

Leasing

Renting and hiring of motor vehicles

Vessels or aircrafts

Life Insurance

Health Insurance

In above cases ITC not allowed to a normal GST registered owner but would be allowed to person who is dealing in business of same nature or category of business.

(i) Membership of a club, Health and fitness centre; and

(ii) Travel benefits extended to employees on vacation such as leave or home travel concession

Note: ITC on above is allowed only these services provided to employee is under obligation of employment.  

• works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

• Goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.- For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;

(e) goods or services or both on which tax has been paid under section 10( composition dealers are not allowed to take ITC);

(f) goods or services or both received by a non-resident taxable person except on goods imported by him;

(fa) goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013);]

(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130. (6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed.

Explanation.- For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

• land, building or any other civil structures;
• telecommunication towers; and
• pipelines laid outside the factory premises.

This post is for educational purpose and readers should take decision at their own understanding.

Author

CA. Shobhit Kesharwani

• CYBER SECURITY
• GST ITC
• INCOME TAX
• INCOME TAX SLAB RATES
• Shobhit Kesharwani & Co

Which details should be in Tax Invoice:

Sellers details
Seller Name
Address, Logo
GST Number
Mobile number

Buyers details
Buyers Name
Buyers Address with Pin code
Mobile number
GST Number if available

Other details like

Details of Item Sold or services provided
HSN Code column for goods or SAC code for services
Quantity of item sold
Quantity measure units like pcs/numbers/kg
Taxable Value (Total Value before Tax)
GST Rate and Tax Amount
Total Invoice Value (Final Value)
Invoice number and date
Vehicle number if goods transported through vehicle
Signature of supplier
Payment condition If any
If registered in MSME, then MSME Registration Number

Few Important points to be consider while issuing invoice:

1.If goods are delivered to some other place which is different from buyer address, then Invoice should contain details of ship to address, in which place & person details should be mentioned where goods are actually delivered.

2.Invoice Serial number should be unique in every financial year..every year from 1st April, Invoice number should be start with no. 1 along with prefix or suffix so that anyone after seeing Invoice, anyone may know that this invoice belongs to this financial year. Prefix or suffixe may be 2024-25 or 24-25 or etc.

3.Invoice should be issued when goods are sold or services are deliverered.

4. An exempted dealer who are dealing in GST exempted goods would not issue Tax Invoice, he will issue Bill of Supply.

5.Invoice should be consecutively serially numbered and it can be issued in multiple series.

6.Tax Invoice should be issued in 3 copies/triplicate.
First copy should be issued to buyer
Second copy should be for transporter who will deliver goods to customer place
Third copy would be with supplier
If there is no transporter then it must be issued in 2 copies.

Author

CA.Shobhit Kesharwani

If an Investor holds Equity Shares for more than a year then capital gain on sale of those shares would be called Long Term Capital Gain and would be taxable @10%, and if these capital gain on sale of shares is up-to Rs.1 Lakhs then no tax need to be pay on this Rs.1 Lakh. So today we will understand how can we save tax on this long term capital gain on sale of long term equity shares:-

Tax Planning in case of Long Term Capital Gain on Sale of Equity Shares:-

If an Investor who has invested in Equity share/lump sum mutual fund over a long period of time and has unrealized Long term capital gains from holding long term equity shares then that Investor must have realized/book long term capital gain up-to Rs.1 Lakh in a year since capital gain on sale of long term equity shares is exempted up-to Rs.1 Lakh every year.

Investor may think why he should sale those equity shares which have gained a lot over a period and may give him high returns in future also, so here trick to save LTCG Tax is that after booking/realizing profit by selling holdings of those shares it can be bought back again after few minutes/hours/days, so by doing this you can save LTCG tax up-to Rs. 1 Lakh every year.

Understand this tax planning by this example:-

Suppose in FY 2023-24, you have shares which have gained a lot and giving you profit of Rs. 3 Lakhs & you are thinking to hold these shares till next year so if you sell these shares in next year in FY 2024-25 then you have to pay tax on Rs.2 Lakh since LTCG is exempted up-to Rs. 1 lakhs only so you have to pay tax @10% on balance Rs. 2 Lakhs. So Income Tax would be Rs.20,000.

So here if you do tax planning then you have to sell shares and realize/book profit of Rs. 1 Lakh in FY 2023-24 and in next year 2024-25 Rs. 1 lakhs and again in FY 2025-26, book another LTCG gain Rs.1 Lakhs. So accordingly Rs.3 Lakhs LTCG would be distributed in 3 years and there would be no tax liability on assessee.

This post is for educational purpose only.

Author

CA. Shobhit Kesharwani

MSME 15/45 days payment rules applicability

Case-1

If a businessmen who is filing his Income Tax Return (ITR) u/s 44AD of Income Tax Act, 1961 and declaring presumptive profit @6% or 8% of his turnover as per the case, then the businessmen should not worry about this 15/45 days payment rule and he can make payment to his supplier even after 45 days as well and there would be no disallowances.

Case-2

If a businessmen who is not filing his ITR under section 44AD of Income Tax Act,1961 then he have to follow this MSME rules of 15/45 days payment. and he need to clear his dues within time. 45 days rule apply only when both parties have entered into agreement of payment term of 45 days or supplier have mentioned payment terms & condition on Invoices and in case of no agreement exist between both parties then 15 days rule would apply.

Conditions of payment

This MSME Rule would be applicable only if you have purchased goods/services from Manufacturer/Service Provider who have registered themself as MSME Micro & Small Enterprises. If you have purchased goods from a person who is registered as Traders in MSME, then this payment rule 15/45 days would not be applicable while payment to them.

Three Categories of businesses are defined in MSME on 01-07-2020, Micro Enterprises:-

If Turnover(Sales) is less than Rs.5 Crores and Investment in Plant & Machinary is upto Rs.1 Crore.

Small Enterprises:-

If Turnover(Sales) is less than Rs.50 Crores and Investment in Plant & Machinary is upto Rs.10 Crore.

Medium Enterprises:–

If Turnover(Sales) is less than Rs.250 Crores and Investment in Plant & Machinary is upto Rs.50 Crore.

Consequences of non payment within 15/45 days:-

As per Section 43b(h) of IT Act, 1961 if payment is not made within 15/45 days then it would be allowed as deduction in the year of payment only, means expenses of purchase of goods/services would be disallowed in the year it is incurred and would be allowed in the year of payment only.

Example-1

If Mr. A Purchased goods from a Manufacturer Mr. B( Micro MSME Registration holder) of Rs.5 Lakhs on 16-03-2024 and since no agreement exist between parties for payment then Mr. A have to make payment within 15 days i.e. within 31-03-2024, so if Mr. A failed to make payment within time and now makes payment on 10-04-2024 then in the Financial Year 2023-24, this Rs.5 Lakhs would be added to his Income and Mr. A would be liable to pay tax on this income as well.

Example-2

If Mr. A Purchased goods from a Manufacturer Mr. B( Micro Enterprises) of Rs.5 Lakhs on 16-03-2024 and Mr. A have to make payment within 15 days i.e. within 31-03-2024, so if Mr. A paid Rs.1 lakhs before 31-03-2024 and failed to make balance of Rs.4 Lakhs within 31-03-2024 and now on 10-04-2024 makes balance payment of Rs.4 Lakhs, then in the Financial Year 2023-24 this Rs.4 Lakhs would be added to his Income and Mr. A would be liable to pay tax on this additional income of Rs. 4 Lakhs as well.

How to Know whether a supplier is registered in MSME or not

You have to get confirmation from the supplier over email or through letter to know his status in MSME Registration. Contact all the suppliers/service providers whose balances are not paid and tell them to send their MSME Registration number or MSME Registration Certificate.

If some suppliers says that he has not registered on MSME, then still a written declaration is needed from them on email or letter mentioning that he has not registered on MSME.

Conclusion;-

Since this section is applicable for FY 2023-24, so everyone should calculate their outstanding balances of suppliers and should start making payment to Micro/Small Enterprises. Since reporting of this section is done by your Auditor, Chartered Accountants (CA) so you can not hide these transactions. their is no way to bypass this rule so every businessmen should do efforts to reduce their outsandings so that they can save Income Tax Liability.

This blog is written for educational purpose only.

Author

CA Shobhit Kesharwani