The end of a financial year is marked with rush and chaos among the taxpayers, accountants, and tax authorities; all alike. March 31 every year is a crucial day and numerous aspects need to be taken care of before the financial year ends both for individual taxpayers and organisations. Here are some key points for businesses to consider in order to keep any legal troubles at bay.
1. Calculate advance tax payable
Indian taxation system follows the “Pay As You Earn” model with regards to companies and the dates for payment of advance taxes are 15th of June, September, December, and March of every year. So, for F.Y. 2019-20, companies were supposed to pay advance income taxes on or before 15th June, 15th September, and 15th December 2019, and 15th March 2020 respectively. In the instance where an assessee hasn’t paid at least 90% of the advance tax payable by the 31st day of March 2020, interest will get levied on the tax amount from the next day onwards. It also needs to be kept in mind that just payment of advance tax on or before 31st March is not sufficient; the amount also needs to be credited and has to reflect in the central government’s account by the due date.
2. Manage inventory
The balance sheet as on March 31, 2020 should reflect the accurate inventory of the company in its entirety. Businesses need to keep a track of and record the inventory of raw materials, finished goods, work in progress, tools, consumables, spare parts, and also make sure to have the information on their current market value.
3. Reconciliation
Every taxpayer needs to reconcile the cash ledger, credit ledger, and liability ledger with the books of accounts on the GST portal before the year end. In addition, debit notes, credit notes, rate differences, discounts, etc. need to be reconciled too. Goods and Services Tax (GST) that came into effect last year has drastically changed many standards and procedures for good, but there still is some confusion and challenges faced by the taxpayers when it comes to accessing GSTN portal and filing taxes. Government-appointed GST Suvidha Providers (GSPs) are there to help taxpayers with any such issues.
4. Generate E-way bills
Generating E-way bill for transportation of goods (both inter-state and intra-state) was made mandatory by the Government in the wake of GST implementation in India. It is in full effect since April 1, 2019 and the e-way bills for the financial year 2019-20 need to be issued before March 31, 2020.
5. Find out capital gains and capital losses
If a company has capital gains for a particular financial year, it should identify its capital assets, especially shares, debentures, and mutual funds, which if sold during the financial year, would result in capital losses. The company can then reduce its capital gains tax by selling off such assets on or before the 31st day of March.
In addition, if your business has a taxable capital gain for the financial year, you should not postpone it for the next year. Instead, book the capital gain for the year against which you can set off the capital loss from any of the 8 prior assessment years. Reaching out to the right GSP to ensure smooth compliance and tax payments may help ease the last-minute pressure off you.
Ram Iyer is Founder and CEO, Vayana Network