Financial year-end closing checklist for small businesses: what to do by 31 March

Year-end closing is the set of checks that turns twelve months of entries into a set of books your CA can file from. The hard cut-off is 31 March: stock must be counted, invoices dated, cash and bank tallied. April and May are for confirmations, matching TDS with Form 26AS and AIS, reconciling GST returns with the books, booking provisions and depreciation, and resetting invoice series. Work through the list below in order and the ITR, tax audit and GSTR-9 all become routine.

The calendar: what happens when

Dates shift with notifications; confirm the current year's on the portals or use the small business compliance calendar.

1. Count and value stock on 31 March

Nothing else on this list depends on a single day the way stock does. Print count sheets, freeze movements, count physically, and note the last inward and outward document numbers so goods in transit are handled correctly. Value the counted quantities at cost or net realisable value, whichever is lower, using the method you always use; the inventory valuation methods post walks through FIFO and weighted average.

List items to write down (damaged, obsolete, expiring) separately with their NRV. Goods with job workers and goods paid for but not received belong in your stock. Sign and date the count sheets; auditors and banks ask for them.

2. Close the cut-off for sales and purchases

Every supply made up to 31 March must be invoiced with a March date, and every supply after must carry an April date. Under GST, the time of supply for goods is generally the invoice date or removal date, and issuing a March delivery in April with an April invoice shifts tax across periods and confuses the annual reconciliation.

Check for: delivery challans not yet converted to invoices, quotations that became orders but were never billed, advances received against which invoices are pending (services need a receipt voucher and GST on the advance), and goods received in March whose bills are still to come (book them, and claim credit only when the invoice appears in GSTR-2B).

3. Confirm debtor and creditor balances

Send every customer with a balance above a threshold (say ₹25,000) a statement of account as on 31 March and ask them to confirm or dispute within 15 days. Do the same for suppliers. Confirmations catch unrecorded payments, missing credit notes, disputed invoices and plain mis-postings.

Age the balances. Debtors over 90 days should be chased hard or, if genuinely uncollectible, written off in the books before the year's accounts are finalised so the deduction under Section 36(1)(vii) is available for the year. Creditors older than the MSME deadline (45 days with a written agreement, 15 days without) create a Section 43B(h) disallowance; pay them before 31 March or accept that the expense moves to next year. The MSME 45-day rule explains the mechanics.

Also review advances: advances to suppliers that have not been adjusted for a year usually mean a bill was never booked, and advances from customers that have sat for months mean an invoice was never raised.

4. Reconcile TDS with Form 26AS and AIS

Download Form 26AS and the Annual Information Statement (AIS) from the income-tax portal after mid May, when Q4 TDS returns filed by your customers appear. Compare the TDS credit shown against the TDS you have recorded as deducted by each customer in your books.

Three kinds of mismatch show up. A customer deducted TDS but has not filed the return or has quoted the wrong PAN: chase them, because you cannot claim credit that is not in 26AS. Your books show gross receipts but no TDS entry: you booked the net amount as sales, understating turnover and losing the credit. AIS shows a receipt you never recorded: a customer paid a different account, or a marketplace reported settlements you booked differently. Every AIS line must be explainable, because the portal compares it with your return.

On the deduction side, match the TDS you deducted from vendors, contractors, rent and salary against the challans paid and the 24Q and 26Q returns filed. Issue Form 16A within 15 days of the Q4 return due date and Form 16 by 15 June. The rates and thresholds are in the TDS guide for small business and TDS on salary under Section 192.

5. Reconcile GST: books versus GSTR-1, 3B and 2B

This is the reconciliation that most often produces notices, so give it a full afternoon.

Sales. Total taxable value and tax in your sales register for April to March should equal the total in GSTR-1 for the same twelve months and the outward liability paid through GSTR-3B. Differences arise from invoices missed in a month and added later, credit notes, amendments, and export or exempt supplies reported inconsistently. List every difference with the reason; this list becomes the basis of GSTR-9.

Input credit. Total ITC in your purchase register should reconcile with ITC claimed in GSTR-3B (Table 4) and with what appears in GSTR-2B across the year. Invoices in your books but not in 2B: the supplier has not filed; follow up before 30 November or reverse. Invoices in 2B but not in your books: an unrecorded purchase or a supplier's error. Blocked credits under Section 17(5) that were claimed must be reversed with interest. Credit on purchases not paid within 180 days must be reversed under Rule 37.

Reverse charge. Freight from goods transport agencies, legal fees, and services from unregistered suppliers in notified categories attract reverse charge; check that RCM was paid in cash and credit claimed.

Electronic ledgers. Match the cash ledger and credit ledger balances on the portal with the GST payable and GST input balances in your books on 31 March. A difference here means an entry is missing.

Detailed filing mechanics are covered in the GSTR-1 and GSTR-3B filing guide.

6. Update the fixed asset register and charge depreciation

List every asset bought or sold during the year with invoice, date put to use and amount. Add to the correct block and apply the rate (10% buildings and furniture, 15% plant and vehicles, 40% computers, 25% intangibles), remembering the half-rate for assets used less than 180 days. Remove assets sold or scrapped and compute any short-term capital gain if a block goes negative.

Check that nothing capital has been booked as an expense (a ₹1.2 lakh air conditioner under "repairs") and nothing revenue has been capitalised. Match the GST input credit on capital goods with what was claimed. If you are on presumptive tax, depreciation is deemed included, but keep the register anyway; you will need the WDV if you exit the scheme.

7. Book provisions, prepaid amounts and accruals

Accrual accounting means March expenses go into March even if the bill comes in April. Provide for: March electricity, telephone and internet, audit fees, salaries and bonus for March, interest on loans up to 31 March, commissions earned by agents on March sales, and any invoice you know is coming for services already used.

Move forward anything paid in advance: insurance premium covering April onward, annual software subscriptions, rent paid for April in March. These are prepaid expenses (a current asset), not this year's cost. Book interest accrued on fixed deposits as income.

For Section 43B items (GST, PF and ESI employer share, bonus, leave encashment, bank interest), a provision is only deductible if the amount is actually paid by the ITR due date. Plan the cash for these payments in April to July.

8. Cash, bank and loans

Reconcile every bank account to 31 March using the method in the bank reconciliation guide. Take a physical cash count on the evening of 31 March and match it with the cash book; a book balance of several lakh in cash is both a Section 269ST risk and a sign of unrecorded expenses. Get loan statements from every lender and match the outstanding principal and the interest charged. Unsecured loans from friends and family need a signed confirmation, the lender's PAN and evidence that the money moved through bank.

9. Payroll year-end

Reconcile the salary register with the bank transfers, PF ECRs, ESI challans and professional tax paid for all twelve months. Collect Form 12BB and investment proofs from employees who chose the old regime before finalising March TDS. Compute the year's TDS for each employee, deposit the balance with March salary, file Q4 24Q by 31 May and issue Form 16 by 15 June. Note the bonus payable for the year under the Payment of Bonus Act if you have 20 or more employees, and gratuity accruals for staff past five years.

10. Reset invoice series and settings for 1 April

Rule 46 of the CGST Rules requires the invoice number to be a consecutive serial number, unique for a financial year. Most businesses start a new series on 1 April (for example 2027-28/0001) so that the year is obvious on every document and the GSTR-1 tables stay clean. Do the same for quotations, challans, receipts and purchase vouchers. Update the year on letterheads and templates, check that HSN digit requirements still apply to you (4 digits up to ₹5 crore, 6 above), and review whether your turnover crossed ₹5 crore, which triggers e-invoicing from the next year, or ₹2 crore, which makes GSTR-9 mandatory. Numbering conventions are detailed in invoice numbering rules in India.

11. Backups and record retention

Export the year's books, sales and purchase registers, ledgers, bank statements, GST returns, TDS returns and payroll records to a dated folder. Keep two copies, one in the cloud and one offline. Income-tax records should be kept for at least six years from the end of the relevant assessment year, GST records for 72 months from the annual return due date, and PF/ESI records as required by the respective authorities. If you change software, export in a format (Excel or CSV) that does not depend on the old vendor.

Worked example: a Pune freelance designer's close

Riya runs a design studio in Pune as a proprietorship with two employees, GST-registered, and pays tax under Section 44ADA. Her FY 2026-27 close, in April 2027:

Sales register shows ₹38,40,000 taxable value; GSTR-1 for the year shows ₹37,90,000. The difference is a ₹50,000 invoice dated 30 March that she uploaded in April's GSTR-1. Noted for GSTR-9 (voluntary for her) and no tax lost since 3B for April included it.

Form 26AS shows TDS of ₹3,60,000 under Section 194J from eleven clients; her books show ₹3,78,000 across twelve clients. One client's ₹18,000 is missing because the client has not filed Q4 26Q. She emails them; the credit appears in June.

ITC: ₹1,42,000 in books, ₹1,36,500 in 2B. ₹5,500 relates to a co-working invoice where the supplier filed late; she waits, and it appears in May's 2B, well before 30 November. She also spots ₹3,200 of credit claimed on a client dinner, blocked under 17(5), and reverses it with interest.

Provisions: March electricity ₹4,200, audit and CA fee ₹25,000, March salaries ₹1,10,000 already paid. Prepaid: annual design software ₹48,000 paid in February, of which ₹44,000 belongs to next year. Depreciation on a ₹1,20,000 laptop bought in August: 40% × 1,20,000 = ₹48,000.

She resets her invoice series to RS/27-28/001, sends her CA the folder by 15 May and files ITR-4 in July.

Common mistakes

Backdating April invoices to March to hit a turnover target, or the reverse to defer tax. GST time-of-supply rules and e-way bill records make this visible.

Treating the CA's ITR as the close. The CA works from what you send; if debtors are wrong in the books, they are wrong in the return.

Claiming ITC that is not in 2B and hoping the supplier files. After 30 November it is gone.

Leaving PF and GST for March unpaid until October. Section 43B disallows them for the year if paid after the ITR due date, and employee PF paid late is disallowed permanently.

Skipping the physical count and rolling forward the software balance. The gap surfaces eventually, usually during a bank stock audit.

Not resetting the invoice series and then issuing duplicate numbers in April, which GSTR-1 rejects.

Losing the data in a software migration or a laptop crash with no export.

How VyaparKit helps

VyaparKit does not close your books, but it produces the year-end lists. The stock count sheet gives you printable, location-wise sheets for the 31 March count. The outstanding statement with ageing and the payables statement are the debtor and creditor confirmations you send out, and the customer ledger and vendor ledger answer disputes line by line. Documents follow financial-year numbering, so the 1 April series reset happens on its own.

Next steps

• Print this list, assign each item a date between now and 31 May, and put the dates in your calendar.
• Order the stock count for 31 March and print count sheets a week before.
• Send balance confirmations to your top 20 customers and suppliers in the first week of April.
• Download 26AS and AIS in the third week of May and match line by line before sending anything to your CA.
• Read profit and loss statement explained to understand what the closed books will show you.