Year-End Close for Jewellery Shops — Stock-take, Books, and a Clean Restart

The Indian financial year runs 1 April to 31 March. By 31 July, you'll file your income tax return; before that, your CA needs reconciled books. By 30 September, the GST annual return is due. None of this happens on schedule unless year-end closure was done properly on, well, the year-end.

For jewellery shops, year-end is especially fiddly — you've got physical inventory in three forms (stock pieces, loose stones, fine metal), customer credit balances from running schemes, gold issued to karigars, GST input pending from purchases, and decisions about how to value old stock for the books. This guide walks through it step by step.

Why 31 March matters

Five things hinge on the 31 March snapshot of your business:

1. Income tax return. Profit for the year is computed against the 1 April opening and 31 March closing balances of every account.
2. Stock valuation. The closing stock value sits on your Balance Sheet and directly affects taxable profit. Over-value stock and you over-pay tax; under-value and your books look wrong.
3. GST annual return (GSTR-9). You reconcile output, input, payments, and refunds for the year. Mismatches with monthly GSTR-3B trigger notices.
4. TDS reconciliation. Form 26AS shows what TDS your suppliers, karigars, and tenants deducted on your name. You match this against your bank.
5. Bank reconciliation and audit. If you're above audit thresholds (₹2 cr turnover under section 44AB), you need a statutory audit. Auditor wants every account reconciled.

When to actually start

The biggest mistake jewellers make is treating year-end like an event that happens on 1 April. By then, customers are walking in, new transactions are flowing, and your team is busy. The window for clean closure is 10 March to 5 April.

Recommended timeline

Plan a 2-day shop closure (1–2 April) for the stock-take. Most jewellers find this acceptable; customers respect closure for "annual audit" if announced 2 weeks ahead.

The 12-step year-end checklist

1. Pre-close cleanup. Chase pending customer payments, finalize all draft invoices, settle karigar making charges, close any half-done documents in the system.
2. Physical stock-take. Count every piece. Weigh every loose stone batch. Weigh every kilo of fine metal. Compare to system. Adjust differences.
3. Customer ledger reconciliation. Print every customer's statement; chase outstanding balances. Customer who paid but you didn't record? Recover the entry.
4. Supplier ledger reconciliation. Same exercise on the payable side. Ask suppliers for their statement-of-account if any balance feels off.
5. Karigar ledger reconciliation. Settle every karigar's running balance — gold issued out and making charges payable. Zero out where possible.
6. Bank reconciliation. Match every payment in your books against the bank statement. Outstanding cheques? Reissued. UPI mismatches? Resolved.
7. GST trueup. Reconcile GSTR-3B monthly filings against your books. Claim any pending input. Verify output matches your sales register.
8. Expense classification. Re-categorize any "Miscellaneous Expense" entries that have piled up. Your P&L is only useful if expenses are properly bucketed.
9. Depreciation. Compute depreciation on fixed assets (furniture, computers, vehicles) per Income Tax Act rates. Post as a journal entry.
10. Closing entries. Move P&L net profit to Retained Earnings. Carry-forward Asset / Liability / Equity balances to the new FY.
11. Freeze the books. Lock all entries dated <= 31 March. No backdated changes after this point.
12. Backup & archive. Export the year's data (database backup if you control it; CSV/Tally exports otherwise). Store offsite.

Physical stock-take — the hard part

This is where most jewellery shops cut corners and pay for it later. A proper stock-take has these properties:

• Done after shop close on 31 March. No movements during the count.
• Two people minimum. One reads off the system list, one weighs and confirms.
• Calibrated scale. Test the scale with a known weight before starting.
• Item-by-item, not by group. Don't trust "all the gold bangles look fine" — weigh each piece.
• Record the count, then compare. Avoid the temptation to "make it match" — record what you counted, then investigate differences afterward.

What you're counting

Reconciling differences

You will find differences. Some are normal:

• ±0.5g per piece is acceptable — calibration noise, residual polish, dust.
• Specific missing pieces — check if they're at a karigar, on approval with a customer, or in the cleaning tray.
• Surplus pieces — usually an unreceived purchase entry or a sales return not posted.
• Big shortfalls (>1% of total weight) — investigate seriously. Could be karigar wastage that wasn't captured, a payment receipt that should have been a sale, or theft.

Once you've investigated and posted any adjustment entries, run a Stock Reconciliation document in Aurex ERP — it produces an audit trail of exactly what was counted, what differed, and what was adjusted. Auditors love this; it's the gold standard for stock-take documentation.

Closing the books

This is the accounting half. The mechanics:

1. Bring revenue and expense accounts to zero

P&L accounts (Revenue, COGS, Expenses) all have zero opening balances on 1 April. They accumulate during the year and must be flattened back to zero on 31 March. The accounting move:

• Debit every Revenue account by its credit balance.
• Credit every Expense account by its debit balance.
• The net (revenue − expenses) goes to Retained Earnings (credit if profit, debit if loss).

This is one big journal entry called the closing entry. In Aurex ERP, the Year-End Close feature does this automatically — you click "Close FY 2025-26", and Aurex posts the closing JE, sets opening balances for 2026-27, and locks the year.

2. Carry-forward balance-sheet accounts

Asset, Liability, and Equity accounts (Cash, Bank, A/R, A/P, Inventory, Capital, Retained Earnings) keep their balances. The 31 March closing balance becomes the 1 April opening balance for the new FY.

3. Depreciation

One journal entry at year-end:

Where ₹X = depreciation per Income Tax Act rates on each fixed-asset category. Common categories for jewellers:

• Furniture & fixtures — 10% WDV
• Computers — 40% WDV
• Machinery (refining equipment) — 15% WDV
• Vehicles — 15% WDV (30% for newly purchased in some periods)

Your CA will confirm the exact rates and method for your shop.

GST year-end reconciliation

Three numbers must agree by year-end:

• Output GST in your books vs. the sum of monthly GSTR-3B output rows.
• Input GST in your books vs. the sum of monthly GSTR-3B input rows vs. GSTR-2B (auto-populated from supplier filings).
• GST paid in cash + ITC utilised = total GST liability per GSTR-3B.

Reconciling these for the first time is painful — invariably some inputs were claimed in one month but the supplier hasn't filed, or you forgot to claim something. Fix these before 30 September (annual return due date) — after that, ITC for the prior year is permanently lost.

The annual return: GSTR-9

GSTR-9 is the year's summary — outputs, inputs, payments, refunds, by HSN. If your turnover > ₹2 crore, you also file GSTR-9C (audit reconciliation). Your CA does the actual filing, but they need your books reconciled first.

Starting 1 April clean

Once the year is closed, the new FY begins. A few first-day-of-FY things to do:

• Reset invoice numbering. Most shops restart from 00001 on 1 April with a new FY label (MAIN/2026-27/00001). Aurex does this automatically.
• Confirm opening balances. Open the Trial Balance — every Asset / Liability / Equity line should match what you carried forward. P&L accounts should be zero.
• Update annual budgets. If you set a sales target or expense budget, refresh it.
• Renew compliance. Shops & Establishment licence, trade licence renewals usually due in April.
• Insurance review. Stock insurance premium often gets renewed around now; reassess sum-insured against your new closing stock value.

By April 15, you should be fully operational on the new FY with last year fully closed in the books.

FAQs

What if I have to backdate an entry after year-end close?

You shouldn't. Once books are closed, post the correcting entry in the current FY with a reference to the original transaction. If something material was genuinely missed (e.g., a large invoice from last year discovered in April), talk to your CA — there are formal "prior-period adjustment" entries for this.

How do I value closing stock?

The Income Tax Act allows two methods: Cost (whatever you paid for it) or Lower of Cost or Market Value. Most jewellers use cost-based valuation. If you switch methods, declare it in the tax return — and stick with the new method going forward.

What about gold rate fluctuations on closing stock?

Closing stock is valued at your cost, not the day's market rate. If you bought 100g of gold at ₹5,000/g and the rate on 31 March is ₹6,000/g, your stock is valued at ₹5,00,000 on the Balance Sheet, not ₹6,00,000. The unrealised gain isn't taxable.

Do I need an auditor?

Statutory audit is mandatory if turnover > ₹2 crore (section 44AB) or you're a company. Below that, you can self-prepare with a CA's help. Most jewellers above ₹1 crore turnover engage a CA full-time for monthly compliance and year-end close — well worth the ₹50k–₹1L annual fee.

What's the single biggest year-end mistake jewellers make?

Skipping the physical stock-take. Doing the books without confirming the actual stock weight against system records means your Balance Sheet has fiction on it. Audit catches this eventually; if you're really unlucky, the GST department catches it first.

How long should I keep year-end records?

Income tax requires 6 years. GST requires 72 months from the annual return due date — roughly 6 years too. Aurex retains your data indefinitely while you're a subscriber and for 90 days after cancellation. For long-term archival, do an annual CSV export.

This is general guidance. Specific tax and GST rules change with each Finance Act; always confirm with a practising CA for the year you're closing. Last updated May 2026.