General compliances to adhere while closing year end financial statement

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General compliances to adhere while closing year
end financial statement
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• Supplements to year end financials With the year
  ending around the corner i.e. March 31st comes
  cumbersome and technical process of closing books
  of accounts while ensuring systematic maintenance
  of the same and complying with applicable laws.
  The article briefs about the general compliances
  to adhere to while closing the financial
  statement and plan for the upcoming one. Business
  transactions are recorded on accrual basis except
  for few on payment basis or cash basis to say.
  Outstanding liabilities and accrued incomes are
  recorded to derive at actual financial volume and
  assist in analytical assessment. Expenses or
  incomes pertaining to the previous year are to be
  considered in that previous year while
  calculating Net taxable profits. Unbilled revenue
  should also be considered in the year of the
  actual sale and receivables to be recorded
  corresponding the same. According to section 29
  of the Income-tax Act, 1961 the profits and gains
  of any business are to be computed in accordance
  with the provisions contained in sections 30 to
  43D. Non-cash transactions such as depreciation
  are to be recorded at the year end and deferred
  tax assets/liabilities to be considered in Income
  statement. Refer https//taxguru.in/income-tax/dep
  reciation-ay-2020-2021-income-tax-act-1961.html
  

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• Certain deductions are allowable on payment basis
  such as bonus or commission paid to employees
  while in employment, contribution to
  provident/superannuation/gratuity fund within
  specified dates, any sum paid by employer in lieu
  of earned leave of his employee. It has been
  clarified that sum payable as contribution to the
  employees account in the relevant fund when paid
  within specified date of the related Act shall be
  allowed as deduction whereas employers
  contribution shall be allowed if paid before due
  date of filing of income tax return as
  applicable. Any delay in payment of the
  employees contribution shall amount to
  disallowance. It is recommended to pay off
  delayed contribution before due date of filing
  returns to avoid disallowance of employers
  contribution. Rules for Professional taxes
  differs from state to state where in some cases
  beyond a certain amount only annual returns to be
  filed. Interest on loans and advances from
  specified institutions/corporations/banking
  company/ banks standing payables as on March 31st
  paid before filing of returns shall be allowed as
  deduction. The deduction will be allowed in the
  previous year in which the converted interest is
  actually paid.

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• Penalties are not allowed as deductions. CSR
  expenditures are not in the nature of business
  expenditure hence to be disallowed. Personal
  expenditures cannot be claimed as deductions. Any
  expenditure beyond Rs. 10,000 in cash and not via
  prescribed mode of payment shall be disallowed
  except for transactions mentioned in Rule 6DD of
  the Act. Such disallowances are to be added and
  then derive at taxable profits. All other passive
  incomes shall also be taxable and some might be
  classified under different heads like Rental
  incomes might fall under Income from house
  property, Interest incomes under Income from
  other sources similarly profit or loss on sale of
  fixed assets under capital gains etc. Expenses on
  which TDS was to be deducted in case of sum
  payable to resident but hasnt been will be
  disallowed to the extent of 30 of such
  expenditure. Even if TDS has been deducted but is
  unpaid till due date of filing return shall be
  disallowed. Such proportionate amount of expense
  on which TDS was ought to be deducted when paid
  shall be allowed as deduction in subsequent year
  Filing of TDS itself is quite a management,
  besides monthly payments an assessee has to file
  quarterly returns. Some of the convenient way is
  to maintain the same on monthly basis reconciling
  with books of accounts so that the mistakes can
  be rectified in the quarter itself to reduce
  penalties and interest liabilities and correct
  payment to authority is made. Now should be the
  appropriate chance to rectify the mistake and
  clear off all the TDS liabilities to avoid any
  disallowances. There are quarterly returns filed
  i.e.  24Q, 26Q, 27Q for different categories
  failing which results in penalty on daily basis.
  If any return is missed to be filed then file the
  same after reconciling the numbers with books of
  accounts. Login to traces and check for any
  outstanding demands or any pending actions to
  process return without defaults. Download
  jurisdictional reports for better understanding
  and assurance of no defaults.

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• Download the relevant untarnished forms
  16/16A/TBR after all compliances. Where an
  obligation to pay advance tax has arisen, the
  assessee shall compute the tax liability on his
  current income and deposit the same. Any tax
  payment before 31st March is defined as advance
  tax only. Though for the purpose of calculation
  of interests, due dates are to be considered.
  While acknowledging advance tax payment, TDS
  receivables will also be considered. For
  systematic and authentic basis, fetch Form 26AS
  from portal which summarises Tax deducted on the
  PAN of the assessee. If there is any deviation in
  the records then assessee can contact the
  deductor and get the same rectified before year
  end. AIS is the extension of Form 26AS. Form 26AS
  displays details of property purchases,
  high-value investments, and TDS/TCS transactions
  carried out during the financial year. Annual
  Information Statement (AIS) additionally includes
  savings account interest, dividend, rent
  received, purchase and sale transactions of
  securities/immovable properties, foreign
  remittances, interest on deposits, GST turnover
  etc.
• With world turning into global village, it
  becomes easier to conduct business overseas and
  most overlooked liability is equalisation levy
  which is to be paid by resident on specified
  services availed from a non-resident subject to
  the conditions as mentioned in the Act. All the
  payables as at year end has to be cleared off in
  March itself or the due dates as specified.
  Though a statement in Form No. 1 has to be
  furnished electronically due date for which is
  June 30th immediately after previous year. Any
  delay in such deduction and payment shall result
  in interests and penalties as the case may be.
  The assessee who are liable for audit of books of
  accounts shall for their record and ease, prepare
  a checklist and organise audit evidences
  supporting books of accounts while closing books.
  Balance confirmations are now a must to ask for
  at year end from third party to ensure correct
  and tallied balances in financial statements.
  With the Finance Act, 2023 MSME vendors have to
  record cycle of payment to get allowance of
  expenditures related thereto.

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• For the Company and LLP assessee there are annual
  returns to be filed mandatorily wherein financial
  information are submitted so its recommended to
  keep the registers for such compliances in place
  as at year end. Any delay in filing the forms or
  returns shall result in late fees. In scenarios
  where there can be predicted the possibility of
  delay then application must be submitted with ROC
  subject to cases arisen. Annual returns are
  though due late in the next year to the previous
  year for GST but ITC availed and lapsed to be
  availed, supplies reported in monthly or
  quarterly returns, output liability paid mismatch
  or any other GST related error which impacts
  numbers in financial statements must also be
  verified and reconciled. It is recommended to
  close ITC register at the same time while closing
  financial for any previous year to avoid any
  erroneous recording and reporting. Liabilities
  for output supplies should be paid off meeting
  all compliances. Only a true and genuine
  financial for previous year can be based for
  upcoming years financial planning. Financial
  planning is significant and core perspective for
  business operations. Hope this helps. Happy
  reading!
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