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IndiaTax & ComplianceUpdated: Sep 13, 2026
Direct Answer
Opening balance mismatches occur when back-dated journal entries are passed after the previous year was closed. To fix it, compare the current trial balance with the final audited financials and pass a rectification entry to "Retained Earnings".
The Sanctity of Opening Balances
The closing balances of assets and liabilities on March 31st must become the opening balances on April 1st. If this is broken, your balance sheet will not tally.
Causes and Fixes
- Back-dated Entries: A user may have deleted a vendor invoice from March after the audit was finalized. You must lock the accounting period in your software after audit.
- Manual Overrides: If migrating to new software, users sometimes enter incorrect opening balances. Run a Trial Balance report for April 1st and match it line-by-line with the Audited Balance Sheet.
- Prior Period Items: If the error belongs to an expense that should have been booked last year, it must be declared as a 'Prior Period Item' in the current year's tax return.