GST Year-End Compliance Action Points for FY 2025-26: ITC, Credit Notes, RCM & Reconciliation Checklist

The GST framework imposes a series of time-bound obligations on registered persons in relation to transactions undertaken during any given financial year. For FY 2025-26, 30 November 2026 serves as a critical outer deadline for several compliance activities — ranging from input tax credit availment and credit note issuance to rectification of return errors and ITC reversals. Missing these deadlines can result in permanent loss of credits, denial of tax liability adjustments, and exposure to interest and litigation. The following action-point framework covers all major areas requiring attention before the prescribed timelines lapse.

1. Issuance of Credit Notes for FY 2025-26

Section 34 of the CGST Act, 2017 governs the issuance of credit notes by registered suppliers. A credit note issued in relation to invoices raised during FY 2025-26 can be used to adjust excess tax liability only if the credit note is:

  • Issued on or before October 2026, and
  • Reported in the GST returns filed on or before 30 November 2026, or the date of furnishing the annual return for FY 2025-26 — whichever falls earlier.

Action Points

  • All credit notes relating to FY 2025-26 invoices must be issued by October 2026 to preserve the benefit of tax liability adjustment.
  • Once the deadline lapses, commercial credit notes may still be issued; however, no adjustment of GST liability will be permissible against such notes.
  • Crucially, the reduction in the supplier's tax liability is contingent upon the recipient reversing the corresponding ITC. Businesses must obtain written confirmation from customers confirming that such reversals have been made. In the absence of such confirmation, authorities may deny the tax liability reduction benefit to the supplier.

Important: Non-confirmation of ITC reversal by the customer can lead to denial of tax adjustment benefits to the issuing supplier during assessment or audit proceedings.

2. Availment of Input Tax Credit on FY 2025-26 Invoices and Debit Notes

Section 16(4) of the CGST Act, 2017 places a hard deadline on ITC claims. An assessee is not entitled to claim input tax credit in respect of any invoice or debit note pertaining to inward supplies received during FY 2025-26 beyond:

  • 30 November 2026, or
  • The date of filing the annual return for FY 2025-26 — whichever is earlier.

Action Points

  • A comprehensive review of all inward supply invoices and debit notes for FY 2025-26 must be conducted immediately.
  • Any eligible ITC that remains unclaimed must be availed before the prescribed deadline.
  • There is no provision for condonation of this deadline; any ITC not availed within the specified period is permanently lost.

3. Vendor Reconciliation and GSTR-2B Matching

Pursuant to the amendment to Section 16 of the CGST Act, 2017, effective from 1st January 2022 vide Notification No. 39/2021-CT dated 21 December 2021, ITC availment is restricted to credits reflected in Form GSTR-2B of the assessee. Unmatched credits are not eligible for availment.

Action Points

  • A detailed reconciliation of purchase records against Form GSTR-2B must be undertaken for all FY 2025-26 transactions.
  • Unmatched credits must be investigated — the underlying reasons (supplier non-filing, invoice mismatch, GSTIN errors, etc.) must be identified and corrective action initiated in the GST return for October 2026.
  • Conversely, any matched credit that appears in GSTR-2B but has not yet been availed in GSTR-3B should be claimed before the deadline prescribed under Section 16(4).
  • Supplier follow-up for missing or incorrect invoice reporting should be completed without delay.

4. Reversal of ITC for Non-Payment of Consideration Beyond 180 Days

Section 16 of the CGST Act, 2017 mandates that where an assessee fails to make payment to the supplier of goods or services within 180 days from the date of the invoice, the ITC availed against such invoice must be reversed. Re-availment is permitted once payment is subsequently made.

Action Points