Year End Closure Guide for Accountants & Management – March’2022

1. YEAR END CLOSURE GUIDE FOR ACCOUNTANTS&MANAGEMENT– MARCH’2022 https://taxguru.in/chartered-accountant/year-closure-guide-accountants-management.html As Financial Year 2021-22 has been completed, it calls for certain checkpoints that each business shall ensure beforetheyclosetheirbooks.Ourteamofexpertshavelistedbelowpointstoensureaccountantsand managementareon topof theyearend checklistand thesame havebeenlisted belowfor yourperusal. Deduct TDS on year end provisions:This has been observed that company generally fails to deduct TDS on year end provision of expenses like Audit Fees, Annual Filing Charges etc. Company needs to make sure that properTDS has been deducted &paid in these cases. Verification of Closing Stocks as on 31.03.2022:In tax audit cases, also for closing of books, we need to havequantity-wise&item-wisevalueofclosingstocksason31.03.2022.Hencecompanyneedtodocumentthis detailas on 31.03.2022. Collecting Loan & FD statements:Accountants are advised to collect all running loans & Fixed Deposits andrecords actual/accrued interests properly. Takingbalanceconfirmationsofallrunningparties:Accountantsareadvisedtocollectbalance confirmationsandledgersofallsundrycreditors&sundrydebtorsandreconcilethebalances.Thisneedstobe reconcilewith 26AS as well. Taking proofs from employees against their Investment mentioned in their declaration and deduct balance TDS:Accountants have tendency to deduct TDS as per declaration filed by employees in the beginning of financial year. But in many cases it has been found that employees fails to invest as mentioned in their declarations,henceitisadvisabletocollectallproofsasmentionedinthedeclarationandre-computetax liability& deduct balanceTDS while makingpayment of salaryfor March month.

2. ReconcileInter-branchbalances:Companyshouldreconcileinter-branchbalancesandbalancesof subsidiarycompanies otherwiseclosing company’sbooks atyear endwould bechallenging. Taking reimbursement sheets from all employees:Accountants should take reimbursements sheet from all employees including directors related to F/Y 2021-22 and record all expenses related to F/Y 2021-22 in F/Y 2021-22 only. It has been found in many cases that accountants fail to take these sheets timely and records these expensesin next financial year. CollectingBankStatements:Keep/downloadbankstatementsandmaintainBRSasapplicable. Download all GSTR-2A/2Bs:Accountants are advised to download all GSTR-2A and GSTR-2B related to F/Y 2021-22 and record GST Inputs if it hasn’t been recorded except ineligible ITC. If any input recorded in books is not appearing in GSTR-2A, accountants are advised to highlight these cases with the concerned parties andask those parties to takecorrective action. IfanytransactionisappearingintheGSTR-2Aandnotrecordedinthebooks,pleasecheckwhetherthat expensebelongstothecompanyornotandrecordthesame,ifneeded. Reverse GST Inputs if payment pending or not made: In cases where company has recorded GST Inputs and it has been more than 180 days and payment hasn’t been made so far, company needs to reverse these Inputs andpay the corresponding taxliability along with interest. Double check the income where GST not paid or paid at lower rate:In all cases, where GST hasn’t been paid or paid at lower rate, please reconfirm the same with your consultant. In case of exempt export supplies, pleaseensure that proper LUT is inplace. DoublechecktheexpenseswhereTDShasn’tbeendeducted:InallcaseswhereTDShasn’tbeen deductedonexpenses,pleasereconfirmtheTDSapplicabilitywithyourconsultant&takecorrectiveaction,if needed.Also check the applicabilityof Equalisation Levy. PaymentofTax:Incaseifadequateadvancetaxesarenotpaid,pleasemakesurethepaymentofbalance taxesin April2022 to avoidfurther interestunder section 234Bof Income TaxAct, 1961.

3. Record Foreign Exchange Fluctuations Properly:In case of Foreign Parties or Assets/Investments where balance is outstanding/pending ascertain Foreign Currency Value as on 31/03/2022, apply AS-11 and record fluctuationdifference properly. Take helpof consultant if required. Reconcile unconsumed challans:Reconcile unconsumed challans as per Traces as on 31.03.2022 with the debitbalance showing in the books. Match GST ledger balances:Reconcile GST ledger balances as on 31.03.2022 (Electronic Cash Ledger, ElectronicCreditLedger &Electronic LiabilityLedger) withthe balancesshowing inthe books. GST on Advances:Check whether GST has been paid on advances appearing/received from customers as on31.03.2022. This needs to bepaid in case of services. TDS on Advance Payments:Check whether TDS has been paid on Advance Payments made to suppliers, especiallywhere balances appearing inthe books as on31.03.2022. ESIorPFRegistration:Iftheseregistrationswerenotapplicableearlierduetolowernumberof employees,pleaserechecktheirapplicabilityandapplyforregistrationunderEPF/ESIifanytimeduringtheyear numberof employees haveexceeded the number 20or 10 asthe case may be. GSTRefund:PleasemakesurethatGSTrefundsindifferentscenarioareappliedbeforetheexpiryoftime limitsprescribed. There isa generaltime limit of2 years forapplying refund inGST. Record Salary of Founders:In many cases especially in Startups we have observed that founders/directors don’t take salary properly during the year & take final call on this amount after the end of Financial Year while filing their personal ITRs later in July, hence company ended up paying their TDS component with interest. Accountants are advised to discuss the same with founders/directors & record the final amount in March 2022 itself& pay TDS accordingly. Recording Depreciationon FixedAssets:Accountantsareadvised tomake surethatproper depreciationas perScheduleIIofCompaniesAct, 2013hasbeenrecordedon FixedAssetsappearingincompanies’books. Loan to Directors or Interested Parties:Loan to directors or any other person in whom director is interestedisprohibitedbyCompaniesAct,2013subjecttocertainexceptions.Accountantneedstomakesure thecompany is notproviding or wouldnot provide any suchloan or guarantee. TransferPricing:Pleaseensurethatyourbooksarealignedwiththeagreementexecutedbetweenthe Holdingcompany or SubsidiaryCompany or Associated Enterprises. E-invoicing mandatory w.e.f. 01.04.2021:The Government has ruled mandatory E invoicing for turnover above Rs.500 crores w.e.f. 01st October 2020, for turnover above Rs.100 crores w.e.f. 01st January 2020 and for turnoveraboveRs.50croresw.e.f.01stApril2021.Now,thecompaniesandotherentitieshavingturnover above Rs. 20 crores have to mandatorily issue E invoices w.e.f. 01st April 2022. Companies need to note down thatITC mightnot be availableto recipientif supplier isnot complying withE-invoicing. InputTaxCreditedorRestrictedITCasper36(4): Make sure all GST inputs recorded in the books are appearing in GSTR-2A/2B of F.Y. 2021-22. In case it is not appearing, inform to respective parties timely and ask them to fix the same in their returns before the prescribed timeline(i.e.beforefilingthereturnofSeptember2022orAnnualReturnwhicheverisearlier).Alsotakecareof ITCrestriction of 10% or 5% asper 36(4).

4. ImportantGSTReconciliation: Reconciliation of GSTR-3B with books Reconciliation of GSTR 1 with GSTR 3B Reconciliation of GSTR-1 & books ReconciliationofGSTR-2A/2BwithGSTR-3B ReconciliationofGSTR-2A/2Bwithbooks Makesuretheseabovereconciliationsarewellpreparedandrequiredadjustmentinbooks&returnsaredone. LetterofUndertaking: The LUT should be applied for the Financial Year 2022-23 on or before 31st March 2022 so that the exports ordersdon’t face any issue atthe last moment. TaxResidencyCertificate: In case if any foreign party deducts TDS (or Withholding Tax) of the company, please make sure that the TRC should be applied for the Financial Year 2022-23 in April 2022 so that company can claim the the benefit of DTAAand avoid/reduce the TDS deduction. AnnualInformationSystem(AIS): Please make sure that amounts (Sales, Purchases, Interest etc..) appearing in the AIS are reconciled with the amountsappearing in the books ofaccounts.