Year-End Accounting Checklist for Indian Businesses (FY 2025–26)

The Indian financial year ends on 31 March. For most businesses, the weeks leading up to year-end are chaotic — there is a rush to close pending entries, reconcile accounts, and generate reports. The businesses that handle year-end smoothly are the ones that prepare systematically, not frantically.

This checklist covers everything you need to close your books properly for the Indian financial year — in Tally or any other accounting system.

Why Year-End Closing Matters

Year-end closing is not just a formality. A clean close means:

• Accurate financial statements for your CA and for IT returns
• GST annual return (GSTR-9) reconciles cleanly with monthly returns
• Opening balances for the new year are correct, avoiding cascading errors
• Audit readiness — no scrambling when auditors request documents
• Clean data for business decisions and lender/investor presentations

The Complete Year-End Checklist

1. Complete All Pending Data Entry

Before anything else, ensure all transactions for the year are recorded. This seems obvious, but many businesses have weeks of pending purchase invoices or expense entries.

• All purchase invoices received up to 31 March entered
• All sales invoices issued up to 31 March entered
• All expense vouchers (petty cash, staff expenses) entered
• All bank transactions (NEFT, RTGS, UPI, cheques) entered
• Salary and payroll entries for March posted
• Any outstanding debit notes and credit notes entered

In Tally, use the Day Book report to review all entries for the last week of March and check for gaps.

2. Bank Reconciliation — All Accounts

Reconcile every bank account to the 31 March bank statement. This is non-negotiable.

• Download statements for all bank accounts as of 31 March
• Complete reconciliation in Tally for each account
• Document any legitimate outstanding items (cheques issued but not cleared)
• Investigate any items outstanding more than 30 days — these may need reversal
• Print or export the Bank Reconciliation Statement for each account

See our detailed guide: Bank Reconciliation in Tally Prime.

3. GST Reconciliation

This is one of the most time-consuming year-end tasks. The goal is to ensure your books match your GST portal records.

• Compare total sales in Tally with GSTR-1 filed for the year (April–March)
• Reconcile GSTR-2A / GSTR-2B (auto-populated ITC) with purchase entries in Tally
• Identify any ITC claimed in books but not showing in GSTR-2B — these need to be reversed or followed up with vendors
• Ensure all e-invoices issued during the year are accounted for
• Check that RCM (reverse charge) entries are correctly recorded
• Prepare for GSTR-9 annual return (due by 31 December of the following year)

4. Accounts Receivable (Debtors) Review

• Print the Outstanding Receivables report in Tally
• Review all debtor balances — identify which are overdue and by how long
• Send payment reminders for overdue accounts
• Assess if any receivables are bad debts and need to be written off
• Confirm the closing balance with key customers (debtor confirmation letters)
• Check that any advances received are applied against invoices correctly

5. Accounts Payable (Creditors) Review

• Print the Outstanding Payables report
• Review all creditor balances and ensure they match vendor statements
• Process any pending payments that need to hit this financial year
• Confirm the closing balance with key vendors (creditor confirmation letters)
• Ensure advances paid to vendors are adjusted against invoices

6. Inventory / Stock Reconciliation

For businesses with inventory, this is critical.

• Conduct a physical stock count as of 31 March
• Compare physical count with stock balance in Tally
• Investigate any discrepancies — losses, damage, theft, or unrecorded consumption
• Record stock adjustment entries in Tally for any differences found
• Value closing stock correctly (FIFO, weighted average, or standard cost — consistently applied)
• Ensure all goods received but not invoiced are captured

7. Fixed Assets and Depreciation

• Ensure all assets purchased during the year are capitalised correctly
• Calculate and post depreciation for the full year (as per Companies Act or IT Act, as applicable)
• Remove any assets disposed of or scrapped during the year
• Update the fixed asset register
• Verify asset values in Tally balance sheet match the fixed asset register

8. Provisions and Accruals

Under accrual accounting, expenses incurred by 31 March must be recognised even if not yet paid.

• Provision for audit fees (your CA's fee for the year)
• Provision for bonus or incentives payable to staff
• Accrued interest on loans
• Provision for income tax (advance tax and self-assessment tax)
• Any outstanding utility bills or rent for March

In Tally, these are recorded as Journal vouchers — Dr Expense, Cr Outstanding Liability.

9. Loans and Borrowings Reconciliation

• Get a statement from your bank or NBFC for all outstanding loans
• Reconcile the closing balance in Tally with the lender's statement
• Ensure interest accrued is correctly recorded
• Check that all EMI payments are correctly split between principal and interest

10. TDS Compliance

• Ensure all TDS deductions for the year have been deposited with the government
• File Q4 TDS returns (due by 31 May)
• Reconcile TDS deducted in books with Form 26AS / AIS
• Issue Form 16 to employees (due 15 June)
• Issue Form 16A to vendors where TDS was deducted

11. Directors' / Partners' Accounts

• Ensure director's remuneration, loans, and advances are correctly recorded
• Check that any personal expenses debited to company accounts are properly accounted for
• For partnerships: review partner capital accounts, drawing accounts, and interest calculations

12. Generate and Review Financial Statements

Once all the above tasks are done, generate final financial statements:

• Profit and Loss Account — review all income and expense heads
• Balance Sheet — verify all asset and liability balances make sense
• Cash Flow Statement (if required)
• Trial Balance — check that it balances and there are no suspense balances

In Tally: Gateway of Tally → Reports → Balance Sheet / P&L. Use F1 to toggle detailed view.

13. Tally Year-End: Create New Financial Year

In Tally, you do not need to "close" the year — you simply switch to the new year. To start recording transactions for April of the new year:

• Press F2 (Change Period) and enter a date in April
• Tally automatically creates a new financial year
• Opening balances carry forward automatically

Important: you can still enter or modify transactions in the old year even after starting the new year. Tally handles multiple years simultaneously.

14. Backup Your Data

Before your CA begins audit work, take a clean backup of your Tally data:

• Go to Gateway of Tally → Data → Backup
• Store the backup in at least two locations (local hard drive + cloud)
• Label it clearly: CompanyName_FY2025-26_PreAudit_31Mar2026

Year-End Timeline

Common Year-End Mistakes to Avoid

• Entering March invoices in April — always check the invoice date, not the received date
• Skipping physical stock count — closing stock directly affects your P&L (cost of goods sold)
• Ignoring GSTR-2B mismatches — ITC mismatches can result in demand notices months later
• Not backing up before audit — auditors may request changes; you want a clean pre-audit backup
• Leaving suspense/clearing accounts open — all suspense entries must be cleared before year-end

Behind on Your Books? AutoTally Can Help

Many businesses reach year-end with months of backlog data entry. AutoTally specialises in catching up Tally books — we have handled backlogs of 6–12 months for businesses just like yours. Our team can take your pile of invoices and bank statements and deliver clean, reconciled books within 10–14 days.

Get a free quote and tell us how far behind you are. No judgement — just clean books before your CA deadline.