The end of every financial year is the most consequential GST compliance period in the calendar. Decisions made — or missed — in March 2026 will determine your Input Tax Credit position, return accuracy, penalty exposure, and clean start to FY 2026-27. With GST 2.0 now fully operational since September 2025 and GSTR-3B auto-population locked, the margin for error is narrower than ever. Here is your complete, actionable checklist.
Deadline: 31 March 2026 — this is the single most time-sensitive action on this checklist for exporters.
If your business exports goods or services, or supplies to Special Economic Zones (SEZs) without payment of IGST, you must file a fresh Letter of Undertaking (LUT) in Form GST RFD-11 on the GST portal for FY 2026-27 before 31 March 2026. Every financial year requires a fresh LUT — the previous year's LUT lapses automatically.
If the LUT is not filed before 1 April 2026, you will be required to pay IGST on every export invoice raised in FY 2026-27 and then file a refund claim to recover it. IGST refund processing typically takes 30–90 days, severely impacting your working capital. Additionally, IGST paid on exports is not eligible for ITC by your foreign customer, damaging your competitiveness.
LUT is available only to exporters who have not been prosecuted for tax evasion exceeding ₹2.5 crore in the preceding financial year. All other exporters must provide a Bond instead of a LUT. When in doubt, confirm with your CA.
The last date to claim ITC for FY 2025-26 is the GSTR-3B for October 2026 (filed by November 2026). However, to get ITC reporting right in your annual return (GSTR-9), all mismatches must be resolved by the March 2026 return.
Under GST 2.0, GSTR-3B Table 3 auto-population from GSTR-1 is now non-editable from July 2025. This means any downstream ITC discrepancy needs to be resolved at the source — correct GSTR-1 filing by suppliers — not by adjusting 3B figures.
| ITC Type | Source | Action Before 31 March |
|---|---|---|
| Inward supply ITC | GSTR-2B | Reconcile with purchase register; claim missed ITC in March 3B |
| RCM ITC | GSTR-3B Table 4A(2) | Ensure RCM paid and ITC claimed in same return period |
| ISD distributed ITC | GSTR-6 | Verify ISD credit matches amounts distributed to branches |
| Import ITC (IGST) | Bill of Entry / GSTR-2B | Reconcile BOE data from ICEGATE with GSTR-2B |
| Blocked ITC (Sec 17(5)) | Purchase register | Identify and reverse; do not carry forward to FY 2026-27 |
From July 2025, ITC is auto-locked in GSTR-3B based on GSTR-2B data. You can no longer manually inflate ITC claims in 3B beyond what GSTR-2B shows. If a supplier files their GSTR-1 late, your ITC only becomes available in the month that return appears in your GSTR-2B — not retroactively.
Mismatches between your GSTR-1 (outward supply details) and GSTR-3B (summary return) are the most common trigger for GST notices and audits. Every mismatch is visible to the GST department's analytics system and may generate an automated scrutiny notice under Section 61.
| Mismatch Type | Risk | Resolution |
|---|---|---|
| Turnover in 3B higher than GSTR-1 | Potential excess tax paid — claim refund | File GSTR-1A (amendment) or report correctly in next period |
| Turnover in GSTR-1 higher than 3B | Interest liability + notice | Pay differential in DRC-03 before notice; report in March 3B |
| Tax rate mismatch (e.g. 18% vs 12%) | Short payment of tax | Pay shortfall via DRC-03 immediately with interest |
| Credit notes in GSTR-1 not adjusted in 3B | Inflated liability | Ensure credit note adjustment reflected in Table 4B of 3B |
| Advances received not reported | Tax liability under-stated | Report in Table 11 of GSTR-1; pay tax via 3B |
If your GSTR-1 shows higher taxable turnover than GSTR-3B for any month, the differential represents unpaid tax. Interest at 18% per annum runs from the due date of payment. Pay via DRC-03 (voluntary payment) before a formal notice is issued — voluntary payment reduces penalty exposure significantly.
Businesses that make both taxable and exempt supplies must reverse the portion of ITC attributable to exempt supplies under Rule 42 of the CGST Rules. While monthly reversals are done on a provisional basis, the final annual calculation must be done at year-end and any excess or shortfall must be corrected in the March 2026 GSTR-3B.
The reversal amount = (Common ITC) × (Exempt turnover ÷ Total turnover). If your actual exempt turnover ratio differs from the monthly provisional ratio used throughout the year, you must calculate the difference and make the adjustment in March. From April 2025, interest is charged from 1 April on any shortfall in reversals that is reported late.
ITC on invoices not paid to suppliers within 180 days of the invoice date must be reversed. As you close the financial year, review all vendor payables older than 180 days and reverse the corresponding ITC. Once the payment is made, the ITC can be re-claimed in the period of payment.
Many businesses forget to apply Rule 37 to expenses like rent, professional fees, and subscription invoices where payment is delayed beyond 180 days. These reversals are not automated — they must be identified manually from your vendor ledger and payables ageing report.
RCM liability arises on specific inward supplies — purchases from unregistered vendors, legal services, transport (GTA), security services, director remuneration, and import of services. Review the entire year's expense ledger before 31 March to ensure all RCM entries are captured.
Section 17(5) of the CGST Act specifies categories of inward supplies on which ITC is permanently blocked — regardless of whether GST has been paid by the supplier. Any ITC inadvertently claimed on blocked categories must be reversed immediately. Do not carry this into the annual return.
| Category | ITC Status | Exception |
|---|---|---|
| Motor vehicles (≤13 seats) | Blocked | Allowed if used for resale, passenger transport business, or driving school |
| Food & beverages, outdoor catering | Blocked | Allowed if providing same as outward supply (e.g. restaurant business) |
| Health club, fitness centre memberships | Blocked | None |
| Club memberships | Blocked | None |
| Travel benefits for employees (vacation) | Blocked | None |
| Works contract (immovable property construction) | Blocked | Allowed if used for further works contract supply |
| Goods lost, destroyed, stolen, gifted | Blocked | None |
| ITC on goods/services for personal consumption | Blocked | None |
GST paid on vehicles purchased or leased for employee commuting, company cars used personally by directors, and hotel stays for employee personal travel — all are blocked under Section 17(5). Many businesses claim this ITC assuming it is eligible because it appears in GSTR-2B. Appearing in GSTR-2B does not make ITC eligible — you must apply Section 17(5) independently.
From 1 April 2025, businesses with annual turnover of ₹10 crore or above must upload invoices to the Invoice Registration Portal (IRP) within 30 days of the invoice date. Invoices older than 30 days are rejected by the IRP — they cannot be e-invoiced and therefore cannot be included in GSTR-1, blocking the buyer's ITC.
Before year-end, audit your invoice log to ensure no invoices from FY 2025-26 are still pending IRP upload. Any invoice not e-invoiced cannot generate a valid IRN and cannot support ITC for your customers.
From May 2025, the GST portal enforces mandatory dropdown-based HSN/SAC code selection:
Verify that your accounting software and GST return filings are using the correct digit-level HSN codes for all goods and services. With GST 2.0's new rate structure (5%, 18%, 40%), some HSN classifications have shifted slabs — confirm your product's current applicable rate under the post-September 2025 notifications.
The Quarterly Return Monthly Payment (QRMP) Scheme allows businesses with aggregate annual turnover (AATO) up to ₹5 crore to file GSTR-1 and GSTR-3B quarterly while making monthly tax payments through a challan (PMT-06).
The window to change your QRMP preference for FY 2026-27 is open from 1 February 2026 to 30 April 2026. Review your turnover for FY 2025-26 — if it is below ₹5 crore, consider whether QRMP reduces your compliance burden. If it is above ₹5 crore, you must exit QRMP and file monthly.
| Feature | QRMP Scheme | Monthly Filing |
|---|---|---|
| GSTR-1 frequency | Quarterly | Monthly |
| GSTR-3B frequency | Quarterly | Monthly |
| Tax payment | Monthly (PMT-06 challan) | Monthly (with 3B) |
| Eligible turnover | Up to ₹5 crore AATO | All taxpayers |
| IFF (Invoice Furnishing Facility) | Available for B2B invoices monthly | Not applicable |
| Late fee | Per quarter | Per month |
If you want to opt for the Composition Scheme for FY 2026-27, the deadline to file Form GST CMP-02 on the GST portal is 31 March 2026. This is a hard deadline — there is no extension.
The Composition Scheme offers lower tax rates (1% for traders, 2% for manufacturers, 6% for restaurants) and quarterly return filing — but prohibits inter-state sales, e-commerce supplies, and claiming ITC. It suits small, locally-operating businesses with turnover below ₹1.5 crore (₹75 lakh in some states).
If you switch from regular GST to Composition Scheme from 1 April 2026, you must reverse all ITC on inputs, semi-finished goods, and finished goods held as on 31 March 2026 by filing Form ITC-03 within 60 days of filing CMP-02 (i.e. by approximately 30 May 2026). Failure to reverse this ITC is a compliance violation.
GST rules require that every financial year begins with a fresh, unique invoice series. You cannot continue the same invoice number sequence from FY 2025-26 into FY 2026-27. The invoice series must restart from 1 April 2026.
Include the financial year in your invoice prefix (e.g. "SC/2627/001") so that invoices from different years are immediately distinguishable during audits and reconciliation. This simple practice prevents significant confusion during GSTR-9 filing and ITC matching for customers.
Conduct a physical stock count as of 31 March 2026 and reconcile with your stock register and accounting records. Any excess stock found has GST implications (potential liability). Any shortage must be explained — if due to theft, destruction, or pilferage, the ITC on those goods must be reversed under Section 17(5)(h).
Under GST, goods sent on approval basis (consignment sales) must be either returned or sold within 6 months from the date of supply. If any goods were sent on approval before 30 September 2025 and have not been returned or invoiced, the supply is deemed to have occurred — you must raise a tax invoice and pay GST immediately. Review all pending consignment stock before 31 March.
Inputs sent for job work must be returned within 1 year (3 years for capital goods) from the date of sending. Review all job work challans — any goods sent before 31 March 2025 that haven't returned must be treated as deemed supply and GST must be paid.
GST refund applications are subject to a 2-year limitation period from the date of relevance. Refunds not applied for within 2 years are permanently barred. Review all potential refund claims before 31 March 2026:
Any refund entitlement arising from transactions in March 2024 will hit the 2-year limitation on 31 March 2026. If you have unclaimed export ITC refunds or inverted duty refunds for FY 2023-24, file the application before this date — after which the claim is permanently lost.
| # | Action | Who Must Act | Deadline | Consequence of Missing |
|---|---|---|---|---|
| 1 | File LUT (Form GST RFD-11) for FY 2026-27 | All exporters & SEZ suppliers | 31 Mar 2026 | Must pay IGST on all exports; refund delay of 30-90 days |
| 2 | Reconcile ITC with GSTR-2B for all FY 2025-26 months | All regular taxpayers | Mar 2026 return | Missed ITC permanently lost after annual return filed |
| 3 | Resolve GSTR-1 vs GSTR-3B turnover mismatches | All regular taxpayers | 31 Mar 2026 | Interest @18%/yr + audit notice + penalty |
| 4 | Rule 42 annual ITC reversal (exempt supply ratio) | Businesses with exempt supplies | Mar 2026 3B | Interest from 1 April 2025 on shortfall |
| 5 | Rule 37 reversal for unpaid vendor invoices (>180 days) | All taxpayers with old payables | Mar 2026 3B | Wrongful ITC claim; interest + penalty |
| 6 | Full-year RCM liability review and payment | All taxpayers using services | Mar 2026 3B | Interest + demand; RCM ITC also lost |
| 7 | Reverse blocked ITC under Section 17(5) | All taxpayers | Mar 2026 3B | Demand + penalty; wrongful credit claim |
| 8 | E-invoice IRP uploads — pending FY 2025-26 invoices | ₹10 crore+ turnover businesses | 31 Mar 2026 | Customer ITC blocked; B2B relationship risk |
| 9 | Update HSN/SAC codes to 4-digit or 6-digit | All GST-registered businesses | Ongoing | Return rejection; GSTR-1 error |
| 10 | Opt in/out of QRMP scheme for FY 2026-27 | Turnover below ₹5 crore | 30 Apr 2026 | Stuck in wrong filing frequency for full year |
| 11 | File CMP-02 (Composition Scheme opt-in) | Eligible small businesses | 31 Mar 2026 | Cannot switch to Composition for FY 2026-27 |
| 12 | Reset invoice series for FY 2026-27 | All businesses | 1 Apr 2026 | Return errors; audit mismatch |
| 13 | Physical stock count & reconciliation | All businesses with inventory | 31 Mar 2026 | ITC reversal on shortage; excess stock liability |
| 14 | Review approval goods (6-month) & job work (1-year) limits | Manufacturers, traders | 31 Mar 2026 | Deemed supply + GST liability + interest |
| 15 | File GST refund applications for FY 2023-24 (2-yr limit) | Exporters; inverted duty businesses | 31 Mar 2026 | Refund permanently barred after 2 years |
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