System Changes form 1st April 2021 for Businesses

The new financial year starts tomorrow, and there are many activities to be done as per year ending for the organization. Apart from those year-ending activities, some changes must be done from 1st April 2021 with respective compliances from GST, Income Tax & MCA purposes. These changes are statutory for some and for some in improving the ease of doing business. Key changes required to be carried out from 1st April in are listed below

  1. New document series

As per provisions of Goods and Service Tax, the taxpayers must maintain unique number series for the documents being issued by them for every financial year. The document sequence has to be re-set for some accounting packages. It is automatic in some accounting packages, cases where it has to be done manually; the taxpayers have to be careful and complete this step before creating any new transactions for the new financial year. Document Sequence/numbering has to be changed for the following documents in GST

  • Tax Invoice
  • Bill of Supply
  • Tax Invoice Cum Bill of Supply
  • Debit Note
  • Credit Note
  • Delivery Challan
  • Payment Voucher
  • Receipt Voucher
  • Refund Voucher

2. HSN Code

There is also a change in the HSN code requirement under GST to be printed on the Tax Invoice. The following are the changes

  • For taxpayers how are having turnover above ₹, five crores are required to show six digits
  • For taxpayers whose turnover is below ₹, five crores are required to show four digits in business-to-business transactions. In the case of Business to Customer Transactions, it is optional.

The taxpayers have to make necessary changes for the Item master if not updated with the latest provisions.

It is recommended to make changes for the item master with eight digits as it will be applicable in the near future, and changing master data frequently is not advised. Moreover, it is time-consuming and unproductive work.

3. E-invoice

e-invoice is required to be issued by taxpayers whose aggregate turnover is above ₹ 50 crores during the last three years from 1st April 2021.

It is recommended to make changes to the accounting or ERP system to address the above change.

If the taxpayer does not issue an e-invoice, is it not considered a tax invoice, and the recipient cannot take input tax credit at all.

It can be implemented using any of the four methods

  • Application Program Interface (API)
  • Secure File Transfer Protocol (SFTP)
  • Bulk JSON
  • Single JSON

For adopting any of the above methods, the taxpayers can approach any of the GST Suvidha Providers (GSPs or Application Service Providers (ASPs).

Even though the taxpayers will be using the Bulk or Single JSON upload for the generation of e-invoice from the department portal or ASP/GSP solution, the same will not be integrated with the Accounting/ERP system; this may pose a challenge in the future. It is strongly recommended to update the Accounting/ERP system with e-invoice details for future references.

4. LUT

Letter of Undertaking is required to be taken by taxpayers who are making Zero Rated Supplies, and a new one has to be obtained before 1st April 2021.

It is recommended to take the same at the earliest, or it may impact your outward supplies accordingly.

5. Accounting package with audit trail and edit log

As per the latest notification from the Ministry of Corporate Affairs, all companies using accounting packages have to ensure that there is an audit log in the accounting package with the edit log.

Companies have to ensure that they are enabling the same if they maintain the same or request their accountant or CA to do the same.

There is a difference between the audit trail and edit log, in case of audit trail only Who is Who information is captured and in case of Edit log the date elements changed is also captured for future reference.

6. Change in Income Tax Rates – TDS & TCS

Due to the pandemic and lockdowns, the Government has announced a reduction in tax rates up to 31st March 2021 for some sections, and now from 1st April, the new rates or actual rates will be applicable.

It is recommended to verify and enter the new TDS / TCS rates in the masters with the effective date to maintain the audit trail as per MCA notification. In case of shot, deductions of TDS or recovery of TCS penal provisions are applicable.

The above listed are major changes required to be carried out and same may vary from each taxpayer based on his nature of business and turnover. The taxpayers should always remember one thing, cost of non-compliance is a costly affair compared to the cost of compliance. Wherever required the taxpayers should take professional advice and not relay in information available in public domain to their best interests.


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Important changes applicable from 1st of April 2021 in GST

From 1st April 2021, some changes are being made in Goods and Service Tax which taxpayers have to follow and implement the same.


e-invoice is required to be issued by all registered taxpayers having turnover above rupees fifty crores for all B2B transactions.

  • Display of HSN codes on Tax Invoice

Taxpayers having turnover above rupees five crores are required to show six HSN code digits on all tax invoices.

Taxpayers who are having turnover below rupees five crores are required to show four digits of the HSN code in case of B2B (Business to Business) and B2C (Business to Customers) optional to show HSN codes.

  • Changes in HSN Summary while filing GSTR – 1

While filing GSTR – 1 on a monthly or quarterly basis, the taxpayers have to report the HSN codes as discussed in Point Number 2 in the HSN Summary that is in Table 12 of GSTR – 1.

Cost of Non-Compliance

The cost of non-compliance is always higher than than the cost of compliance. In case if the taxpayers are not adhering to the above changes, then the department can levy a penalty under Section 125 of CGST Act 2017, residuary penal provision of rupees twenty-five thousand for Central Goods and Service Tax and another twenty-five thousand rupees for the State Goods and Service Tax thereby making the penalty amount to rupees fifty thousand.

Taxpayers are requested to make necessary changes in their business process and accounting or billing software or return filing solutions accordingly else the penalties will be levied.

FAQ – 12

FAQ -12: My turnover during the period July 2017 to March 2018 is Rs 71.25 Lacs and basis of the Notification No 12/2017-Central Tax dated 28th June 2017, i have not shown HSN Codes on the Tax Invoice. In the Annual Return do i need to show the HSN Summary?

The said notification is only for the purpose of display on the tax invoice and not for the Returns, so you have to show the HSN Summary in the Annual Return, We need to wait and see if it is Mandatory or Optional when it is made available.