As the financial year 2025–26 comes to an end, businesses registered under GST should review key compliance requirements before 31 March 2026. Completing year-end GST checks helps businesses avoid penalties, interest, and input tax credit (ITC) mismatches in the upcoming financial year.
A timely review also ensures that tax records, invoices, and GST returns remain accurate and compliant with regulations. Below are the important GST year-end actions every business should consider.
1. Composition Scheme – Opt-in or Opt-out
Small businesses with an aggregate turnover up to ₹1.5 crore can choose the Composition Scheme, which offers simplified tax filing and lower tax rates.
Before 31 March 2026, eligible taxpayers should review whether they want to:
- Continue under the composition scheme
- Opt into the scheme
- Opt out and move to the regular GST scheme
Taking the right decision helps businesses manage compliance and tax liability more efficiently.
2. LUT Renewal for Exporters
Businesses involved in exports can supply goods or services without paying IGST by submitting a Letter of Undertaking (LUT).
Exporters must renew their LUT for FY 2026–27 before 31 March 2026 to continue exporting without paying tax. If the LUT is not renewed, exporters may need to pay IGST and later claim a refund, which can affect cash flow.
3. QRMP Scheme Option Changes
Businesses registered under the Quarterly Return Monthly Payment (QRMP) scheme have the flexibility to file GST returns quarterly while paying taxes monthly.
Taxpayers can opt in or opt out of the scheme for Quarter 1 of FY 2026–27 until 30 April 2026. Businesses expecting higher transaction volumes may prefer monthly return filing for better record management.
4. Job Work Reporting – ITC-04 Filing
Manufacturers who send goods to job workers must report these transactions through Form ITC-04.
This form includes details of:
- Goods sent to job workers
- Goods received back
- Goods supplied directly from the job worker’s premises
The due date for filing ITC-04 for FY 2025–26 is 25 April 2026.
5. Sales and Purchase Reconciliation
GST year-end reconciliation is essential to ensure accuracy in tax reporting. Businesses should compare and reconcile:
- GSTR-1 vs GSTR-3B
- Books of accounts vs GST returns
- Missing invoices
- Debit notes and credit notes
Proper reconciliation helps identify discrepancies and correct them before they lead to compliance issues.
6. New Invoice Number Series
Under GST regulations, businesses must maintain unique and sequential invoice numbers for each financial year.
From 1 April 2026, businesses should start a new invoice series for:
- Tax invoices
- Credit notes
- Debit notes
Maintaining a clear invoice sequence improves audit readiness and ensures regulatory compliance.
7. E-Invoicing Applicability
From 1 April 2026, businesses with aggregate turnover above ₹5 crore are required to generate e-invoices through the Invoice Registration Portal (IRP).
E-invoicing helps improve transparency, reduces tax evasion, and automatically integrates invoice data into GST returns.
Businesses approaching this turnover threshold should ensure their billing or accounting systems are prepared for e-invoicing requirements.
8. Review Blocked Input Tax Credit (Section 17(5))
GST law restricts ITC on certain expenses under Section 17(5). Businesses should review their records to ensure ITC has not been incorrectly claimed on ineligible items.
Common blocked ITC examples include:
- Motor vehicles used for personal purposes
- Food and beverages
- Membership of clubs or health services
- Certain construction or works contracts
A careful review helps businesses correct errors and maintain proper tax compliance.
9. Cross Charge and ISD Compliance
Businesses operating with multiple GST registrations or branches must distribute input tax credit correctly.
This can be done through:
- Cross charge, where one branch charges another for shared services
- Input Service Distributor (ISD), where the head office distributes ITC to other branches
Proper allocation ensures the correct utilization of input tax credit across all business locations.
Conclusion
The end of the financial year is a critical time for businesses to review their GST compliance and ensure that all filings, reconciliations, and documentation are in order. Completing important actions such as LUT renewal, invoice series updates, ITC review, and GST return reconciliation before 31 March 2026 can help businesses avoid unnecessary penalties, interest charges, and compliance notices.
By conducting a proper GST year-end review, businesses can start the new financial year with accurate records, improved tax planning, and stronger financial control. Staying proactive with GST compliance not only reduces risks but also helps maintain smooth business operations and better regulatory adherence.