As the year draws to a close, it’s imperative for businesses to ensure their GST compliance is top-notch. This period presents a critical opportunity to complete essential compliance tasks. By fulfilling these obligations, taxpayers can minimise the risks associated with non-compliance while enhancing their overall operational efficiency.
Annual Aggregated Turnover (AATO)
Under GST law, many activities depend on the Annual Aggregated Turnover (AATO). Businesses need to ensure they calculate their annual aggregated turnover before carrying out the following activities:
Mandatory preparation of E-invoice – As per Rule 48(4), read with Notification No. 13/2020 – Central Tax, dated 21.03.2020 (as amended), registered persons must prepare an e-invoice for the supply of goods or services (including exports) if their aggregate turnover exceeds Rs 5 Cr in any preceding financial year from FY 2017-18 onwards. To check applicability for FY 2025-26, AATO from FY 2017-18 to FY 2024-25 must be considered.
From 1st April 2025, registered persons with an AATO exceeding Rs 10 Cr must generate e-invoices within 30 days, as per the GSTN advisory dated 5th November 2024. However, some registered persons are exempt from generating e-invoices.
Dynamic QR Code – As per the sixth proviso to Rule 46, read with Notification No. 14/2020 – Central Tax, dated 21.03.2020 (as amended), an invoice must have a Dynamic QR Code if the registered person’s AATO exceeds Rs 500 Cr in any preceding financial year from FY 2017-18 onwards. To check applicability for FY 2025-26, AATO from FY 2017-18 to FY 2024-25 must be verified. Certain registered persons are exempt from this requirement.
Mandatory Registration – If, at the end of FY 2024-25, turnover exceeds the threshold limit or involves activities requiring compulsory registration, the person must apply for GST registration.
Filing of ITC-04 – ITC-04 must be filed depending on AATO:
- For AATO up to Rs 5 Cr – Annually
- For AATO exceeding Rs 5 Cr – Half-yearly
HSN Code – As per Rule 46 of the CGST Rules, the HSN Code must be mentioned on the tax invoice:
- For AATO up to Rs 5 Cr – 4-digit HSN code (if supply is made to a registered person)
- For AATO exceeding Rs 5 Cr – 6-digit HSN code (for both registered and unregistered recipients)
- Applicability for FY 2025-26 will be based on AATO from FY 2024-25.
- QRMP Scheme – The Quarterly Returns with Monthly Payment (QRMP) scheme for Q1 of FY 2025-26 may be opted for from 1st Feb 2025 to 30th April 2025, if the Annual Aggregated Turnover does not exceed Rs 5 Cr.
ISD Registration
The term “Input Service Distributor” has been defined in Section 2(61) of the CGST Act. This has been substituted vide the Finance Act 2024 and is mandatory with effect from 1st April 2025. Businesses need to check if they fall under this additional compliance requirement for FY 2025-26.
Filing of LUT
Filing of the Letter of Undertaking (LUT) is an important requirement before making any zero-rated supply in FY 2025-26.
Ensuring timely and accurate GST compliance is essential for businesses to avoid penalties and improve operational efficiency. By calculating the Annual Aggregated Turnover (AATO) correctly and fulfilling key obligations such as e-invoicing, QR code requirements, ITC-04 filing, and HSN code reporting, businesses can stay compliant and streamline their tax processes.
Additionally, monitoring changes such as mandatory ISD registration and the timely filing of the Letter of Undertaking (LUT) will help businesses adapt to evolving GST regulations and maintain smooth operations in the upcoming financial year.
[The writer, a Fellow Chartered Accountant (FCA), specialising in Goods, Services tax, Transfer Pricing and Income tax, is the co-author of the book ‘Comedium of Industrial Policy for MSMEs in Goa’ released by ICAI]
