GST Compliance Checklist for FY 2025-26

As a new financial year has begun, businesses must be updated and follow the GST regime. It serves to help avoid penalties and litigation. Compliance forms an important constituent of the system of indirect taxes. To keep the business’s financial work in line with the latest laws, staying updated is necessary. This includes tasks like renewals, reconciliation and following the new rules properly.

1. Use of 6-Digit HSN Codes is Now Mandatory

Businesses with an annual turnover above Rs. 5 crore must use a 6-digit Harmonized System of Nomenclature (HSN) code in invoices, e-way bills, e-invoices, credit/debit notes and GST returns while reporting goods and services. This allows for the proper classification of goods and services and ensures better compliance with GST rules.

2. Compulsory Registration for ISD

Businesses receiving taxable services on behalf of multiple branches must register under the Input Service Distributor (ISD) system from April 1, 2025. It will help them share the Input Tax Credit (ITC) properly between their various GST registrations.

3. Reconcile GST Returns and Books of Accounts

You must reconcile your books of accounts with the GST returns at the end of the financial year. Any mismatches found between the two can result in getting notices, penalties, or even rejection of the input Tax Credit (ITC) claim. Therefore, businesses should carefully check everything and make any necessary changes before filing their annual GST return to avoid any penalty.

4. Annually Reversal of common ITC

Entities that claim Input Tax Credit (ITC) for taxable supplies along with exempt supplies must do a yearly re-calculation and reversal by September 2025. If there is any extra ITC liability after the reconciliation, it will be charged from April 1, 2025. Therefore, businesses should properly review and make adjustments on time to prevent any unnecessary interest.

5. Check IEC and Update KYC

Businesses involved in international trade must make sure that their Importer Exporter Code (IEC) is active. The DGFT requires that IEC details are revised every year. The last date to do this is June 30, 2025. If businesses don’t meet this deadline, their IEC may get deactivated, which can block their import-export activities.

6. Renewal of the Letter of Undertaking

The businesses that are involved in exports of Special Economic Zone(SEZ) supplies without making the payment of tax need to renew their Letter of Undertaking (LUT) yearly. If they miss to do the same, it may result in the imposition of IGST on such transactions.

7. Last Opportunity to waive interest and penalties under Amnesty Scheme 2024

The Amnesty Scheme was introduced to help taxpayers waive their penalties or interest. The deadline to make the payment was March 31, 2025. But if someone has failed to make the payment, they can still apply for relief under Section 128A until June 30, 2025. This is the last opportunity for businesses to benefit.

8. Start a new invoice series

According to GST regulations, businesses must adopt a new invoice series for each financial year. This makes sure that the documentation process and reconciliation are done smoothly. Using a proper and organized invoice numbering system reduces errors and helps with GST compliance.

Timely updates, accurate records, and awareness of new rules help avoid penalties. By following these GST requirements on time, businesses can operate smoothly in the financial year 2025–26 without facing legal troubles.