Closing of March 2025 New Rules | Closing of FY | Income Tax | GST | MSME 45 Days Rule

Summary

In this video, CA Pooja emphasizes the importance of completing compliance tasks by March 31st to avoid tax penalties. She explains the process of sorting creditors in books of accounts, checking MSME registration status, and the necessary payment timelines for micro and small enterprises. The video also covers GST compliance, including opting for the composition scheme and filing returns for exporters and GTA businesses. CA Pooja advises viewers to complete advance tax payments and be aware of various March-end compliance tasks. She promotes her courses to enhance knowledge in accounting and tax-related fields.

Takeaways

• 😀 March is a crucial month for closing the financial year and preparing for the next. Ensure you complete all necessary tasks to avoid penalties.
• 😀 Open your books of accounts and extract the list of creditors, paying special attention to those registered under MSME (Micro, Small, Medium Enterprises).
• 😀 Sort out creditors based on whether they are Micro or Small Enterprises, based on turnover criteria—Micro: turnover up to ₹5 crores, Small: turnover up to ₹50 crores.
• 😀 If you are unsure whether a creditor is MSME-registered, contact them to confirm.
• 😀 For MSME creditors, identify manufacturers and service providers, excluding traders, for proper categorization.
• 😀 Check if there are any agreements with your creditors and review payment terms. If payment terms exceed 45 days, make sure to settle the payment within that time frame.
• 😀 If the payment terms are shorter than 45 days, adhere to those terms for timely payments to avoid compliance issues.
• 😀 Non-compliance with MSME payment deadlines will lead to disallowance of the purchase expenses in your financial statements and interest penalties.
• 😀 If no agreement exists, MSME payments must be made within 15 days from the invoice date. Delays will lead to disallowance of expenses in the current financial year.
• 😀 Ensure compliance with GST, including opting for schemes like CMP-02, handling exporters' IGST, and GST-related changes before the 31st of March.
• 😀 Check your input tax credits and make sure all necessary compliance actions are taken for the end-of-year closing, including advance tax payments and reconciling balances.

Q & A

What is the main focus of this video?

The main focus of this video is to provide guidance on crucial compliance tasks that need to be completed before the end of the financial year 2425, particularly related to MSME payments, GST, and ensuring timely tax payments to avoid penalties.

Why is it important to sort creditors by MSME registration status?

Sorting creditors by MSME registration status is essential because it determines the payment terms and the legal compliance requirements. MSME creditors must be paid within specific time frames to avoid penalties and disallowed expenses.

What are the payment deadlines for MSME creditors based on their agreements?

If there is an agreement with MSME creditors, payments must be made within 45 days. If there is no agreement, payments must be made within 15 days of receiving the invoice to avoid disallowed expenses and additional interest liabilities.

What could happen if MSME payment terms are not followed?

If MSME payment terms are not followed, the corresponding purchase expenses will be disallowed in the financial year, which could lead to a higher taxable income. Additionally, there may be interest liabilities, which are three times the RBI interest rate.

What should be done if a creditor's MSME registration status is unclear?

If the MSME registration status of a creditor is unclear, the business should contact the creditor and confirm whether they are registered under MSME. This step ensures compliance with payment deadlines for MSME registered creditors.

What is the importance of the 45-day payment term for MSMEs?

The 45-day payment term for MSMEs ensures that businesses comply with the MSME Development Act. If payments are made beyond this period, they could be disallowed as an expense, which impacts the financial statements and increases the tax liability.

How does MSME compliance affect your audit?

During an audit, the auditor will verify the payment records for MSME creditors. If payments are not made according to the prescribed terms, the auditor will disallow the corresponding expenses, affecting the business’s profitability and tax filings.

What is the significance of completing GST-related tasks by March 31st?

Completing GST-related tasks by March 31st, such as opting for the Composition Scheme (CMP 02) or fulfilling RCM (Reverse Charge Mechanism) obligations, is crucial to ensure that the business remains compliant with tax laws and avoids penalties or missed opportunities in the new financial year.

What is the advance tax payment requirement for businesses?

Businesses are required to pay advance tax if their tax liability exceeds ₹10,000. The advance tax should be paid by March 15th to avoid penalties and ensure smooth closure of the financial year.

What are the benefits of the courses offered on the website?

The courses offered on the website are designed to help businesses enhance their knowledge of tax compliance, accounting, MSME, TDS, and GST. These courses can assist professionals in securing higher positions in jobs or starting their own practices, as well as ensuring proper compliance with tax regulations.