Do this - Before you close the Books for FY 20-21!!
March-2021, last month of the Financial Year 2020-21 is about to end and this calls for certain checkpoints that each business shall ensure before they close the financial year.
There are following few things to consider before the year ends to be compliant with the laws & regulations and also as a general trade practice.
1. Payment of adequate Advance Tax:
Check whether Advance Tax has been paid, pay balance tax if required otherwise interest would be charged.
2. Check TDS deduction & Deposit:
- Kindly check whether the TDS had been deducted on all the expenses wherever applicable. where TDS hasn’t been deducted on expenses, please reconfirm the TDS applicability with your consultant & take corrective action, if needed. Also check the applicability of Equalization Levy.
- Check whether TDS has been paid on Advance Payments made to suppliers, especially where balances appearing in the books as on 31.03.2021.
- TDS on Year-end Provisions – There is a possibility that we might fail to deduct TDS on year-end provisions, so make sure that you have done the same.
- Reconcile unconsumed challans as per Traces as on 31.03.2021 with the debit balance showing in the books.
3. Investment proofs from Employees:
It is advisable to collect all proofs as mentioned in the investment declaration given by the employees and re-compute tax liability & deduct balance TDS while making payment of salary for March month.
4. Reimbursement to the Employees:
You should take reimbursements sheet from all employees including directors related to FY 2020-21 and record all expenses in FY 2020-21 only. It has been found in many cases that accountants fail to take these sheets timely and records these expenses in next financial year.
5. Salary to the Founders / Directors:
In many cases especially in Start-ups we have observed that founders/directors don’t take salary properly during the year & take final call on this after the end of Financial Year while filing their personal ITRs later in July, hence company ends up paying their TDS component with interest. You are advised to discuss the same with founders/directors & record the final amount in March 2021 itself & pay the TDS accordingly.
6. Balance Confirmation:
-Collect balance confirmations and ledgers of all sundry creditors & sundry debtors and reconcile the balances. This needs to be reconciled with 26AS as well.
- Company should reconcile inter-branch balances and balances of subsidiary companies otherwise closing company’s books at year end would be challenging.
7. Loans and Investments:
You must take the Loan accounts and Investment records to record the accrual of Interest in the books.
8. GST Reconciliation:
- We must do the GST reconciliation to check for the difference if any. To start with, reconciliation must be done for every GSTIN and then must be considered at a PAN level. Reconciliation must be done across months for the entire FY. Not just that, but the amendments made to GST returns of the previous FY in the current FY must also be considered.
- Reconcile GST ledger balances as on 31.03.2021 (Electronic Cash Ledger, Electronic Credit Ledger & Electronic Liability Ledger) with the balances showing in the books.
- Check whether GST has been paid on advances appearing/received from customers as on 31.03.2021. This needs to be paid in case of services.
- Make sure these reconciliations are well prepared and required adjustment in books & returns are done.
- 31st March, 2021 is the last date to apply for the refund of GST related to FY 2018-19. Make sure company has applied, if applicable.
9. Letter of Undertaking:
The LUT should be applied for the FY 2021-22 on or before 31st March 2021 so that the exports orders don’t face any issue at the last moment.
10. Foreign Exchange Fluctuations:
In case of Foreign Parties or Assets/Investments where balance is outstanding, ascertain Foreign Currency Value as on 31/03/2021, apply AS-11 and record the fluctuation difference properly. Take help of the consultant if required.
11. ESI or PF Registration:
If these registrations were not applicable earlier due to lower number of employees, please recheck their applicability and apply for registration under EPF/ESI if anytime during the year number of employees have exceeded the number 20 or 10 as the case may be.
12. Last Date to file or revise ITR for FY 2019-20:
If by any reason company or any of its employees have failed to file ITR of FY 2019-20 by due date & haven’t yet filed, 31st March, 2021 is the last date to file belated return or revised return of FY 2019-20 with late fee up to Rs 10,000. After this date these ITRs cannot be filed, make sure all such returns have been filed.
13. Verification of Closing Stock as on 31st March, 2021:
In tax audit cases, also for closing of books, we need to have quantity-wise & item-wise value of closing stocks as on 31.03.2021. Hence conduct the physical verification of closing stock on 31st March,2021.