Year-End GST & Income Tax Compliance Checklist for FY 2025-26

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Year-End GST & Income Tax Compliance Checklist for FY 2025-26
The Ultimate Year-End GST & Income Tax Compliance Checklist FY 2025-26 | ClearTax Advisors
🗓️ Urgent — March 31, 2026

Year-End GST & Income Tax Compliance Checklist for FY 2025-26

With just days left before the financial year closes, this is the definitive checklist for Chartered Accountants and tax professionals — covering every GST task, TDS obligation, income tax deadline, and year-end advisory action your clients need completed before the clock strikes midnight on March 31, 2026.

⚠️ Hard Deadline: 31 March 2026

1. Why This Year-End GST & Income Tax Compliance Checklist Matters Most in FY 2025-26

In a CA’s calendar, March 31 stands alone. This year-end GST & income tax compliance checklist for FY 2025-26 covers every obligation that matters — because March 31 is simultaneously the closing date of the financial year, the last date for numerous GST and income tax filings, the cut-off for LUT submissions, the deadline to opt into or out of the Composition Scheme, and the final opportunity to rectify errors in earlier returns before they crystallise into permanent liabilities.

FY 2025-26 has brought additional complexity that makes this year-end compliance checklist more demanding than previous years. The GST 2.0 reforms effective September 22, 2025 changed rate structures. The Invoice Management System (IMS) went live and altered how ITC is accepted and reconciled. The Income Tax Act, 2025 replaces the 1961 law from April 1, 2026. And Budget 2026 amended Sections 15, 34, and 54 of the CGST Act — all of which need a year-end review with clients.

In short: this year-end is busier than most. The checklist below is structured by domain — GST first, then Income Tax — with deadlines, legal references, and practical notes at each step. Use this as your complete year-end GST and income tax compliance checklist for FY 2025-26, client by client.

⚠️ Pro Tip for CAs Start client-by-client triage immediately. Prioritise GST registrants with high ITC balances, exporters needing fresh LUTs, and companies with tax audit obligations. Every day without a plan is a day closer to a penalty.
Year-end GST and income tax compliance timeline for FY 2025-26 showing key deadlines in March 2026
Fig. 1 — Key compliance milestones in March 2026. March 31 is the hardest deadline, triggering cascading obligations across GST and Income Tax.

2. GST Year-End Compliance Checklist

The GST portion of this year-end compliance checklist for FY 2025-26 involves far more than filing returns. It requires verifying ITC balances, reconciling purchase registers with GSTR-2B, completing annual return obligations, renewing LUTs, and evaluating whether the Composition Scheme is the right option for the next year. Here is a structured checklist.

✅ GST Compliance Checklist — Before 31 March 2026

  • File GSTR-1 for February 2026 Due: 11 Mar 2026 Ensure all B2B invoices, credit notes, debit notes and export transactions for February are reported correctly. Verify HSN-wise summary (4-digit for turnover ≤ ₹5 cr; 6-digit for above).
  • File GSTR-3B for February 2026 Due: 20 Mar 2026 Reconcile Output Tax Liability vs ITC before filing. Note: From January 2026 tax period, GSTN has introduced system-level ITC utilisation changes — verify correct IGST/CGST/SGST set-off sequence is applied by the portal.
  • Complete ITC Reconciliation with GSTR-2B Critical Match GSTR-2B auto-populated ITC against purchase register for all 12 months of FY 2025-26. Identify ineligible ITC (Section 17(5)), reversals under Rule 42/43, and mismatches requiring supplier follow-up. See Section 3 below for a detailed approach.
  • Review and Claim Pending ITC Critical Under Section 16(4) of the CGST Act, ITC for FY 2025-26 must be claimed by 30 November 2026 (or filing of annual return, whichever is earlier). However, best practice is to reconcile and claim all eligible ITC before March 31 to avoid disputes during audit.
  • File Letter of Undertaking (LUT) for FY 2026-27 Due: 31 Mar 2026 Exporters supplying goods/services without payment of IGST must file a fresh LUT (Form RFD-11) for FY 2026-27 on the GST portal. Filing LUT after April 1 without a valid LUT means IGST must be paid on exports — creating a cash flow hit.
  • Opt into / out of Composition Scheme for FY 2026-27 Due: 31 Mar 2026 File Form CMP-02 on the GST portal to opt for Composition Scheme for the next financial year. Evaluate eligibility: aggregate turnover ≤ ₹1.5 cr for goods (₹75 lakh for NE states), ≤ ₹50 lakh for service providers. Review client wise.
  • GSTR-9 Annual Return for FY 2024-25 Deadline: Check Portal Verify whether GSTR-9 for FY 2024-25 has been filed. If outstanding, file immediately to avoid late fees. GSTR-9C (reconciliation statement) mandatory for turnover above ₹5 crore. Refer to our detailed GSTR-9 filing guide.
  • Review ITC on Capital Goods (Rule 43) Rule 43 For capital goods used for both taxable and exempt supplies, compute the annual reversal under Rule 43 for FY 2025-26. The reversal must be declared in GSTR-3B before year-end.
  • Reverse ITC on Exempt Supplies (Rule 42) If common inputs are used for exempt and taxable supplies, compute proportionate reversal under Rule 42. Reconcile provisional monthly reversals with the final annual reversal. Refer our guide on ITC Reversal under Rule 42.
  • Verify E-Invoicing Compliance Throughout FY Confirm all applicable B2B invoices were IRN-generated throughout the year. Any missed IRN invoices cannot generate ITC for the recipient. Check our E-Invoicing guide for applicability thresholds.
  • Review RCM Liability and Payments Ensure all Reverse Charge Mechanism liabilities (under Section 9(3) and 9(4) of CGST Act) were paid in cash during the year. ITC of RCM paid is eligible but cannot be offset against RCM itself — common error. See our RCM guide.
  • Check Outstanding GST Notices / Demands Urgent Log into the GST portal and check the Notices & Orders tab. Year-end is a common time for department to issue SCNs. Respond to any outstanding notices before March 31 to avoid ex-parte orders. Refer our GST Notice guide.
  • Post-Sale Discount Credit Notes — New Rule (Budget 2026) New Budget 2026 amended Section 15 read with Section 34: businesses no longer need a pre-existing agreement to claim GST benefit on post-sale discounts. Ensure credit notes are properly issued and ITC reversed by the recipient for discounts given in FY 2025-26.
  • Verify GST Registration Details are Current Confirm that the registered address, authorised signatories, bank account, and business nature are updated on the GST portal. Mismatches can cause GSTR-9 filing rejections and scrutiny notices.

3. ITC Reconciliation — The High-Stakes Year-End Task

Of all the year-end tasks, ITC reconciliation carries the heaviest consequences for errors. A mismatch between books and GSTR-2B that goes unaddressed crystallises into a demand with 18% interest and potentially a 100% penalty in cases where the department alleges fraudulent ITC claims.

For FY 2025-26, the reconciliation exercise is more complex than previous years because:

  • The Invoice Management System (IMS) introduced a new accept/reject/pending workflow for invoices.
  • The GST 2.0 rate changes (effective Sep 22, 2025) shifted several line items across slabs — some purchases from earlier in the year will have different applicable rates.
  • The new GSTR-3B advisory on system-driven ITC utilisation from January 2026 period may have auto-adjusted set-offs differently from what was previously filed.
ITC reconciliation flow diagram showing purchase register vs GSTR-2B matching process for FY 2025-26
Fig. 2 — ITC Reconciliation workflow: Purchase Register → GSTR-2B → Identify Gaps → File in GSTR-3B. Common gaps in FY 2025-26 include IMS pending invoices and GST 2.0 rate mismatches.

Step-by-Step ITC Reconciliation Approach

Step 1 — Download GSTR-2B for all 12 months. Extract April 2025 through March 2026 GSTR-2B data from the GST portal. Export as Excel.

Step 2 — Compare against Purchase Register. Map each invoice in the purchase register to GSTR-2B. Flag invoices missing from GSTR-2B (supplier has not filed their GSTR-1).

Step 3 — Check IMS (Invoice Management System). For January 2026 onwards, invoices appear in IMS before flowing to GSTR-2B. Ensure all invoices are accepted or pending — rejected invoices will not generate ITC. Log into the GST portal under “IMS” to clear any backlogs.

Step 4 — Apply Section 17(5) filter. Remove ineligible ITC — blocked credits on motor vehicles, food and beverages, beauty treatment, health services, club memberships, works contract for immovable property, and others listed under Section 17(5).

Step 5 — Compute Rule 42/43 reversals. For businesses with exempt supplies, compute the final annual reversal and compare against provisional monthly reversals. Adjust in March 2026 GSTR-3B.

Step 6 — Follow up with suppliers. For mismatches where the supplier has not filed GSTR-1, send reminders immediately. ITC without a corresponding GSTR-2B entry is at risk of disallowance. For our detailed reconciliation procedure see: GSTR-2B Reconciliation Guide.

📌 Section 16(2)(aa) — Mandatory GSTR-2B Match As per Section 16(2)(aa) of the CGST Act (inserted by Finance Act 2021), ITC is available only to the extent it appears in GSTR-2B. ITC claimed in excess of GSTR-2B is now subject to automatic reversal and interest under Rule 88C. Ensure no excess claim exists before March 31.

4. GSTR-9 & GSTR-9C: What’s Due and When

GSTR-9 is the annual return summarising all monthly/quarterly returns filed during the financial year. GSTR-9C is the reconciliation statement (self-certified for turnover ≤ ₹5 cr; CA-certified above that). If GSTR-9 for FY 2024-25 is still outstanding, it must be filed without further delay.

Form Who Must File Turnover Threshold Status for FY 2024-25
GSTR-9 All regular GST taxpayers Mandatory above ₹2 crore; optional below Check portal for due date
GSTR-9A Composition Scheme taxpayers All registered under Composition Check portal for due date
GSTR-9C Regular taxpayers above ₹5 crore Aggregate turnover > ₹5 crore Self-certified; no CA sign needed

For a complete GSTR-9 filing walkthrough, including the table-by-table instructions and common errors to avoid, see our comprehensive GSTR-9 Annual Return Filing Guide. Also refer to the official GST tutorial portal and CBIC notifications for any due date extensions.

5. LUT for Exporters & Composition Scheme Opt-In

Letter of Undertaking (LUT) — Form RFD-11

Exporters of goods or services who wish to export without payment of IGST in FY 2026-27 must file a fresh LUT before the first export transaction of the new year. Filing it by March 31, 2026 ensures continuity with no disruption.

LUT is filed online at gst.gov.in → Services → User Services → Furnish Letter of Undertaking. No physical documents are required. The LUT is valid for the entire financial year once approved.

🚨 If LUT is not filed before first export of FY 2026-27: The exporter must pay IGST on the export supply and then claim a refund — which locks working capital for weeks or months. Avoid this by filing LUT before April 1, 2026.

Composition Scheme — Form CMP-02

Businesses wishing to opt for the Composition Scheme for FY 2026-27 must file CMP-02 by March 31, 2026. Existing Composition dealers who wish to exit the scheme must file CMP-04 before filing their first GSTR-3B for April 2026.

Evaluate Composition suitability for each eligible client: turnover ≤ ₹1.5 crore, no interstate supplies of goods, no supply of services beyond ₹5 lakh or 10% of turnover (whichever is higher), and no ITC available post-switch. For businesses with significant input tax credits, exiting Composition may be more beneficial.

Watch: GST Year-End Compliance — Practical Guidance

6. Income Tax Year-End Compliance Checklist for FY 2025-26

The income tax portion of this year-end GST & income tax compliance checklist for FY 2025-26 is uniquely significant this year. The Income Tax Act, 2025 takes effect from April 1, 2026, replacing the 1961 law. While tax liability remains unchanged (slabs are identical), terminology, section numbering, and procedures differ. The year-end is the right moment to educate clients and review their structures before the new law takes hold.

Key income tax changes from April 1 2026 including new Income Tax Act 2025, Tax Year terminology, and extended ITR-3 ITR-4 due dates
Fig. 3 — Four key income tax changes CAs must communicate to clients before April 1, 2026. Tax liability is unchanged; structure, terminology and procedures are what shifts.

✅ Income Tax Year-End Checklist — Before 31 March 2026

  • Verify Advance Tax Payments for FY 2025-26 Critical All four advance tax instalments (June, September, December, March) should have been deposited. Shortfall attracts 1% per month interest under Sections 234B and 234C. Compute final liability in March and pay any shortfall before March 31.
  • Review Tax Regime Choice for Each Client (Old vs New) Critical Under the Income Tax Act 2025 (effective April 1, 2026), the New Tax Regime continues as default. Clients with significant deductions (HRA, 80C, 80D) should evaluate whether the old regime is beneficial. The new ₹12 lakh rebate under Section 87A under the new regime makes it attractive for many salaried individuals.
  • Ensure 80C, 80D, and Other Investments are Complete For clients opting for the Old Regime: PPF, ELSS, life insurance premiums, NSC, 5-year FD, and tuition fees — all must be invested or paid before March 31, 2026 to claim deduction in FY 2025-26. There is no retrospective claim after year-end.
  • Reconcile Form 26AS with Books Critical Download Form 26AS and AIS (Annual Information Statement) for all clients. Match TDS credited, advance tax paid, and self-assessment tax against books. Mismatches must be resolved before ITR filing. Refer our guide on TDS mismatch in Form 26AS.
  • Complete Tax Audit (Section 44AB) Where Applicable Due: 31 Oct 2026 Tax audit under Section 44AB is required for businesses with turnover above ₹1 crore (₹10 crore if cash transactions are below 5%) and professionals above ₹50 lakh. The deadline is October 31, 2026 — but data gathering, book finalisation and audit completion should begin now to avoid a last-minute crunch.
  • Review Share Buyback Taxation (New from April 1, 2026) New Budget 2026 changes buyback taxation: proceeds are now taxed as capital gains in investors’ hands (not as deemed dividend). Clients holding shares in companies that completed buybacks in FY 2025-26 should note that the old deemed dividend treatment applies for this year; the new capital gains treatment kicks in from April 1, 2026.
  • Check Updated Return (ITR-U) Eligibility if Earlier Returns Have Errors Under Section 139(8A), taxpayers can file an Updated Return (ITR-U) within 24 months from the end of the relevant assessment year. For FY 2022-23 (AY 2023-24), the last date is March 31, 2026. Do not miss this window for clients who may have under-reported income in that year.
  • Verify TAN Registration and TDS/TCS Deductions Critical Ensure TDS was deducted at correct rates throughout FY 2025-26, especially after the Budget 2026 TDS/TCS rationalisation. Verify quarterly TDS returns (24Q, 26Q) are filed. Refer our detailed TDS Rate Chart FY 2025-26.
  • Communicate the New “Tax Year” Concept to Clients New — April 2026 From April 1, 2026, the Income Tax Act 2025 replaces “Previous Year” and “Assessment Year” with a single term: “Tax Year.” Tax Year 2026-27 = what was previously FY 2026-27 (AY 2027-28). Prepare a client communication to avoid confusion during ITR filing season.

7. TDS / TCS Compliance Before Year-End

TDS compliance is a recurring liability that peaks at year-end. March 2026 requires extra attention because Budget 2026 rationalised several TDS and TCS rates, and any incorrect deductions during the year need to be identified and addressed before the Q4 return is filed.

Quarter Period TDS Return Due Date TDS Certificate (Form 16/16A)
Q1 FY 2025-26 Apr – Jun 2025 31 Jul 2025 ✓ 15 Aug 2025
Q2 FY 2025-26 Jul – Sep 2025 31 Oct 2025 ✓ 15 Nov 2025
Q3 FY 2025-26 Oct – Dec 2025 31 Jan 2026 ✓ 15 Feb 2026
Q4 FY 2025-26 Jan – Mar 2026 31 May 2026 15 Jun 2026 (Form 16A) / 15 Jun 2026 (Form 16)

Key TDS actions before March 31, 2026:

  • Verify TDS deducted at correct rates on all payments to contractors (Section 194C), professionals (Section 194J), rent (Section 194I), and salary (Section 192). Refer our guide on TDS on Salary Section 192.
  • Deposit all March 2026 TDS by April 30, 2026 (government deductors: April 7, 2026).
  • Review Switzerland DTAA — the MFN clause has been permanently deleted; TDS on payments to Switzerland residents is now 10%, not 5%. Correct any under-deduction from earlier quarters.
  • Check TCS applicability on sale of goods above ₹50 lakh under Section 206C(1H).

8. New Income Tax Act 2025: What CAs Must Know Before April 1

The Income Tax Act, 2025 received Presidential assent on August 21, 2025 and takes effect from April 1, 2026. It replaces the Income Tax Act, 1961 entirely — the most significant structural change in Indian direct taxation in six decades. For CAs, the priority is to understand the key structural shifts, even though tax liability is revenue-neutral.

Comparison of Income Tax Act 1961 vs Income Tax Act 2025 showing key differences in terminology and structure for CAs
Fig. 4 — Income Tax Act 1961 vs Income Tax Act 2025: the terminology and structure change significantly; the tax liability does not. CAs must communicate this clearly to avoid client confusion.

Key Structural Changes — Income Tax Act 2025

Old Terminology / Rule (1961 Act) New Terminology / Rule (2025 Act) Impact on CAs
Previous Year (PY) + Assessment Year (AY) Tax Year (TY) Redefine all client communications. TY 2026-27 = income of April 2026–March 2027.
ITR-3/ITR-4 due July 31 ITR-3/ITR-4 due August 31 One month additional time for non-audit, non-business ITR filers. Plan workload accordingly.
ITR-U within 2 years Updated Return provision retained For AY 2024-25 onwards, ITR-U filing window remains 24 months from AY end.
Complex language, 298 sections Simplified language, fewer sections New section numbering — update all internal templates, checklists, and advisory letters.
Dispute resolution — manual Stronger tech-based dispute resolution Learn the new faceless appeal and tech portal updates expected in FY 2026-27.
✅ Good News for CA Practices The new Act does not change tax rates or liability for FY 2026-27. Slab rates remain the same. The ₹12 lakh rebate under Section 87A of the new Act (equivalent to old 87A) continues. Your clients will not pay more or less tax — they just need new vocabulary.

9. Penalty & Interest Summary — Cost of Missing Deadlines

Missing year-end compliance deadlines is never just a procedural lapse — it has a direct financial cost for your client. Here is the penalty and interest reference for the most common obligations:

Default / Non-Compliance Provision Penalty / Interest Severity
GSTR-3B late filing Section 47 CGST Act ₹50/day (₹20/day if nil return), max 0.25% of turnover 🔴 High
Excess ITC claimed beyond GSTR-2B Section 50 + Rule 88C 18% p.a. interest + possible 100% penalty 🔴 High
Advance Tax shortfall (income tax) Sections 234B, 234C 1% per month on shortfall amount 🔴 High
GSTR-9 late filing Section 47 CGST Act ₹200/day (₹100 CGST + ₹100 SGST), max 0.25% of turnover 🟡 Medium
LUT not filed — export without IGST payment Section 16 IGST Act IGST must be paid; refund process blocks cash flow 🟡 Medium
TDS not deducted / short deducted Sections 201, 271C 1% p.m. interest (non-deduction) + penalty equal to TDS amount 🔴 High
Tax Audit Report not filed by due date Section 271B 0.5% of turnover, max ₹1,50,000 🟡 Medium
ITR-U missed for AY 2023-24 Section 139(8A) Last date March 31, 2026 — after that, no recourse 🔴 High

Need Help Completing Year-End Compliance?

Our team of expert CAs at ClearTax Advisors specialises in GST reconciliation, GSTR-9 filing, TDS compliance, and year-end advisory — handling clients across industries before the March 31 deadline.

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10. Frequently Asked Questions

Q1. What is the last date to opt for the Composition Scheme for FY 2026-27?
The last date to opt for the Composition Scheme for FY 2026-27 is 31st March 2026 by filing Form CMP-02 on the GST portal under Services → Registration → Application to Opt for Composition Levy.
Q2. What happens if GSTR-9 is not filed by the due date?
Late filing of GSTR-9 attracts a late fee of ₹200 per day (₹100 CGST + ₹100 SGST), subject to a maximum of 0.25% of turnover in the respective state. Additionally, interest under Section 50 applies on any unpaid tax liability reflected in the annual return.
Q3. Is LUT mandatory for every financial year?
Yes. A Letter of Undertaking (LUT) must be filed afresh for each financial year on the GST portal. The LUT filed for FY 2025-26 expires on March 31, 2026. Exporters who fail to file LUT for FY 2026-27 before their first export transaction must pay IGST and then claim a refund — disrupting working capital.
Q4. What is the “Tax Year” concept under the new Income Tax Act 2025?
The Income Tax Act, 2025, effective April 1, 2026, replaces the terms “Previous Year” and “Assessment Year” with a single unified concept: “Tax Year.” Tax Year 2026-27 refers to income earned between April 1, 2026 and March 31, 2027. Tax liability is calculated for that Tax Year itself — there is no separate assessment year concept. This is a terminological and structural change; tax rates and liability remain unchanged.
Q5. Can ITC be claimed for FY 2025-26 after March 31, 2026?
Yes — Section 16(4) of the CGST Act allows ITC for FY 2025-26 to be claimed up to 30th November 2026 (or filing of the annual return for that year, whichever is earlier). However, best practice is to reconcile and claim all ITC before or by March 2026 GSTR-3B to avoid disputes during GST audit and to ensure supplier mismatches are resolved while the financial year is still current.
Q6. What is the due date for ITR-3 and ITR-4 for FY 2025-26?
For non-audit taxpayers filing ITR-3 (business and profession) or ITR-4 (presumptive income), the due date under the Income Tax Act, 2025 has been extended to 31st August 2026 (effective from Tax Year 2026-27 onwards, i.e., also applicable for FY 2025-26 / AY 2026-27). ITR-1 and ITR-2 due dates remain 31st July. Tax audit due dates remain 31st October.

Related Reading

Official Resources

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