Every registered taxpayer whose aggregate turnover exceeds two crore rupees during a financial year shall be audited in accordance with subsection (5) of section 35 of the CGST Act, 2017 and shall include a copy of the annual accounts audited and a duly certified reconciliation statement in FORM GSTR-9C.
However, the limit for GSTR-9C of FY 2018-19 has been increased to Rs 5 crore as set out in the CBIC notification dated 23 March 2020.
GSTR-9C is a reconciliation statement between the annual returns reported in GSTR-9 for the FY and the taxpayer’s audited annual financial statements by auditor.
This form includes the gross and taxable turnover and ITC taken by the taxpayer as per their business books of account, reconciled with the relevant figures after consolidating all their GST returns (GSTR-1, GSTR-3B and other) for the financial year and any difference should be reported by the reconciliation. There should be a clear explanation and the reason for the difference. GSTR-9C has to be released by every GSTIN.
GSTN has provided a huge relief to the taxpayers for filing GSTR-9C during this pandemic. Now the due date to file GSTR-9C has been extended:
GSTR-9C shall be prepared and approved by a Chartered Accountant or Cost Accountant. It must be submitted by the taxpayer on the GST platform or via a facilitation centre, along with other documents such as copying the Audited Accounts and Annual Report in GSTR-9 format.
The due date for filing the annual returns in GSTR-9 is the same deadline for GSTR-9C submission. Consequently, the GSTR-9C must be submitted on or before 31 December of the year following the audited FY in question.
If considered necessary, the due date can be extended by the Government.
This GST Reconciliation Statement needs to be written by a Chartered Accountant or Cost Accountant. The CA will note any variations between the information reported in all the GST returns and the audited accounts with the reasons for the variations. This argument serves as the basis for verification by the GST authorities of the accuracy of the taxpayers’ GST returns. This is because, in GSTR-9C, the CA must recognize any potential liability resulting from the reconciliation exercise and GST audit.
The late fees for failing to pay the yearly return by the due date are Rs. 200 per day. This implies that in case of delay the person must pay Rs. 100 under the CGST Act and Rs. 100 under the SGST Act as a penalty. The penalty is subject in the relevant state to a maximum of 0.25 percent of taxpayer turnover.
No specific provision for GSTR-9C late fee, Hence, subject to a general penalty of Rs. 25,000.
The GSTR-9C has consisted of two main parts:
The statistics in the audited financial statements are at the PAN level. Therefore, The turnover, tax paid and ITC received on a given GSTIN(or State / UT) must be excluded from the organization’s audited accounts as a whole.
The reconciliation statement has been divided into five parts:
Part-I: Basic details:
The basic details consist of FY, GSTIN, Legal Name, and Trade Name. The taxpayer should also mention whether he is subject to audit under any other law or not.
Part-II: Reconciliation of turnover declared in the Audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9)
This involves reporting to the audited financial statements of the gross and taxable turnover declared in the annual return. It has to be noted that the Audited Financial Statements are most often at the PAN level. For reporting in GSTR-9C, this could require the break up of the audited financial statements at the GSTIN level.
Part-III: Reconciliation of tax paid:
This section involves GST rate-wise reporting of the tax liability that arose according to the accounts and paid as reported in the GSTR-9 with the differences thereof respectively. Furthermore, the taxpayers are required to state the additional liability due to unreconciled differences noticed at reconciliation.
Part-IV: Reconciliation of Input Tax Credit (ITC):
This part involves reconciling the input tax credit used by taxpayers as reported in GSTR-9 and as reported in the audited financial statement. It also needs to report expenses booked in accordance with the Audited Accounts, with a breakdown of eligible and ineligible ITC and reconciliation of eligible ITC with the amount claimed in accordance with GSTR-9.
Part-V:Auditor’s recommendation on additional liability due to non-reconciliation:
Here the Auditor is required to report any tax liability identified through the reconciliation exercise and GST audit, pending taxpayer payment. This may be a turnover failure or ITC non-reconciliation due to:
Finally, the GSTR-9C format instructions specify that taxpayers will be given an option to settle taxes as recommended by the auditor at the end of the reconciliation declaration.
The GSTR-9C may be certified by the same CA who had conducted Audit of books of accounts, or other than Person who had conducted Audit of books of accounts.
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