Every month, taxpayers and businesses are already familiar with routine compliances such as GST return filing, TDS payments, and other periodic tax obligations. These are part of regular compliance that most businesses follow throughout the year.
However, March is different.
Being the last month of the financial year (FY 2025-26), March brings several additional tax tasks and year-end checks that taxpayers must complete before 31 March 2026. Missing these important actions can lead to interest, penalties, compliance issues, or even tax notices later.
Another important development is that the New Income Tax Act, 2025 is expected to come into effect from 1 April 2026, making it even more important to close the current financial year with proper compliance and reconciliation.
Therefore, before the financial year ends, taxpayers should ensure that the following important tasks are completed.
1. Pay Advance Tax – Due Date: 15 March 2026
Advance tax is applicable when a taxpayer’s total tax liability during the financial year exceeds ₹10,000.
The fourth and final installment of advance tax must be paid by 15 March 2026.
Failure to pay advance tax within the prescribed timeline may attract interest under sections 234B and 234C of the Income Tax Act.
For taxpayers opting for Presumptive Taxation under Section 44AD or Section 44ADA, the entire advance tax liability can be paid up to 31 March 2026.
2. Perform GST Reconciliation Before Year End
Before the financial year closes, businesses should carry out a proper GST reconciliation to ensure that the data reported in GST returns matches with books of accounts and other compliance records.
Important reconciliations include:
- Matching GSTR-1 with GSTR-3B turnover
- Reconciling E-Way Bill and E-Invoice data with reported sales
- Comparing Input Tax Credit (ITC) as per books with GSTR-2B
- Verifying that ITC claimed in GSTR-3B matches eligible ITC
Completing these reconciliations before the year end helps avoid GST notices, ITC reversals, and future compliance disputes.
3. LUT Filing for Exporters – Last Date 31 March 2026
Businesses involved in exports often supply goods or services without payment of GST under a Letter of Undertaking (LUT).
If a taxpayer intends to continue exporting without paying GST in FY 2026-27, a fresh LUT must be filed before 31 March 2026.
The LUT must be submitted online in Form GST RFD-11 on the GST portal.
Failure to file LUT before the deadline may require exporters to pay GST on exports and later claim refunds, which can affect cash flow.
4. Opt for Composition Scheme (If Eligible)
Taxpayers currently under the regular GST scheme who wish to switch to the Composition Scheme for FY 2026-27must submit the option before 31 March 2026.
The option is exercised by filing Form CMP-02 on the GST portal.
To opt for the composition scheme:
- The taxpayer’s turnover must generally not exceed ₹1.5 crore
- Certain restrictions apply depending on the nature of business
Missing this deadline means the taxpayer will have to continue under the regular GST scheme for the next financial year.
5. File Updated Income Tax Return (ITR-U)
Taxpayers who have not filed their Income Tax Return for FY 2020-21 (Assessment Year 2021-22) still have one final opportunity to correct this.
The last date to file an Updated Return (ITR-U) for that year is 31 March 2026.
After this date, taxpayers will lose the opportunity to voluntarily correct or report previously unreported income for that financial year.
6. Complete Tax-Saving Investments (Old Tax Regime)
Taxpayers who intend to claim deductions under the old tax regime must ensure that eligible investments are completed before 31 March 2026.
Common deductions include:
- Section 80C investments (PPF, ELSS, life insurance, etc.)
- Section 80D health insurance premium
- NPS contributions under Section 80CCD
- Housing loan principal repayment
Any investments made after 31 March 2026 will not qualify for deductions for FY 2025-26.
7. Calculate Annual Turnover for Compliance Planning
Before the financial year ends, businesses should calculate their total annual turnover up to 31 March 2026.
This is important because turnover determines several GST compliance requirements for the next financial year.
For example:
- If turnover crosses ₹5 crore, E-invoicing becomes applicable.
- If turnover exceeds ₹2 crore, GST Annual Return (GSTR-9) becomes mandatory.
- If turnover exceeds ₹1.5 crore, the taxpayer may not be eligible for the composition scheme.
Knowing the turnover in advance helps businesses prepare for upcoming compliance requirements.
Conclusion
While routine monthly tax compliances continue throughout the year, the month of March requires special attentiondue to its significance as the financial year end.
Before 31 March 2026, taxpayers should ensure that:
- Advance tax obligations are fulfilled
- GST data is properly reconciled
- Exporters file LUT for the next financial year
- Composition scheme options are exercised if required
- Pending income tax returns are updated
- Tax-saving investments are completed
- Annual turnover is reviewed for next year’s compliance requirements
With the New Income Tax Act, 2025 expected to apply from 1 April 2026, closing the current financial year with accurate compliance and proper tax planning becomes even more important.
Timely action in March can help taxpayers avoid penalties, interest, and unnecessary tax notices in the future.
Visit www.cagurujiclasses.com for practical courses
