Section 44 (Annual Return) of The Central Goods and Services Tax, Act, 2017 (CGST Act, 2017) had been amended by Finance Act, 2021 but it was not notified at that time. Now, Central Board of Indirect Taxes and Customs (CBIC) vide Notification No. 29/2021-Central Tax dated 30/07/2021 has notified the amendment under Section 111 (Substitution of Section 44) of Finance Act, 2021 w.e.f. 01.08.2021. Accordingly, Section 44 of CGST Act, 2017 has been fully substituted with the following-
“Section 44. Annual return.
(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a causal taxable person and a non-resident taxable person, shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year electronically, within such time and in such manner as may be prescribed.”
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section.
Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”
Further, to give proper effect of amendment in Section 44 by Finance Act, 2021, Rule 80 CGST Rule, 2017 has also been fully substituted vide Notification No. 30/2021 -Central Tax dated 30th July, 2021 w.e.f. 01.08.2021. Therefore, new Rule 80 of CGST Rules, 2017 may be read as under –
Rule 80. Annual return.
“(1) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year as specified under section 44 electronically in FORM GSTR-9 on or before the thirty-first day of December following the end of such financial year through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
Provided that a person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A.
(2) Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement referred to in sub-section (5) of the said section in FORM GSTR -9B.
(3) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, whose aggregate turnover during a financial year exceeds five crore rupees, shall also furnish a self-certified reconciliation statement as specified under section 44 in FORM GSTR-9C along with the annual return referred to in sub-rule (1), on or before the thirty-first day of December following the end of such financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”.
Amendment Effects-
1. Time of filing of Annual Return: Before the amendment, the date of furnishing of Annual Return was prescribed under Section 44 of CGST Act, 2017. Now the same has been shifted from Section 44 to Rule 80 of the CGST Rules, 2017. However, time to file the annual return is same as on or before the thirty first day of December following the end of financial year.
2. Deletion of Audit Provisions – Before the amendment in Section 35 & Section 44 by Finance Act, 2021, the necessary provision of applicability of audit and auditor’s Certification under Section 35(5), read with Section 44(2) of CGST Act, 2017, read with Rule 80(3) of CGST Rules, 2017 are as under-
“Section 35(5). Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.
Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority whose books of accounts are subject to audit by the Comptroller and Auditor General of India or auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”
“Section 42(2). Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of Section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual accounts statement, and such other particulars as may be prescribed.”
“Rule 80(3). Every registered person other than those referred to in the proviso to sub-section (5) of Section 35, whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of Section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”
In view of the above provisions, every registered person whose turnover during a financial year exceeds the prescribed limit was required to get his accounts audited by a CA/CMA and to submit a copy of the audited annual accounts, the reconciliation statement under Section 44(2) of CGST Act, 2017 and such other documents in such form and manner as prescribed in this regard. Further, pursuant to Rule 80(3) of the CGST Rules, 2017 every registered person whose aggregate turnover during a financial year exceeds two crore rupees was required to get his accounts audited as specified under Section 35(5) of the CGST Act, 2017. He had to furnished a copy of audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as prescribed, duly certified, in FORM GSTR-9C, electronically.
Now, the CBIC vide Notification No. 29/2021-Central Tax dated 30/07/2021 CBIC has notified amendment under Section 110 & Section 111 of Finance Act, 2021 w.e.f. 01.08.2021. i.e. the omission of provisions u/s 35(5) & 42(2) of the CGST Act, 2017 relating to submission of audited annual accounts & the reconciliation statement in FORM GSTR-9C, i.e. now Annual GST Return can be submitted on a ‘self-certification’ basis. It is submitted that the responsibility of reconciliation in FORM GSTR-9 has been shifted to the taxpayers now instead of GST auditors earlier.
3. Exemption to file Annual Return – With the aforesaid amendment in Section 44 by Finance Act, 2021, the Commissioner is empowered to exempt any class of registered persons from filing annual return. Accordingly, being power given under the first proviso to Section 44 of CGST Act, 2017, the Government has exempted vide Notification No. 31/2021-Central Tax, dated 30th July, 2021 (w.e.f. 01.08.2021) the registered person whose aggregate turnover in the financial year 2020-21 is up to two crore rupees, from filing annual return for the said financial year. However, the option to file GST Annual Return shall be available and the taxpayers whose turnover is up to 2 crore rupees still can file the Annual Return in FORM GSTR-9 on voluntary basis. FORM GSTR 9 is mandatory for registered person whose aggregate turnover is Rs. 2 crores or more.
4. Self-certified Reconciliation Statement- Before the amendment, there was no provision in section 44 of CGST Act, 2017 regarding self-certified reconciliation statement. Now, section 44 of CGST Act, 2017 provides that annual return shall include a self-certified reconciliation statement, reconciling the value of supplies declared in the return. In this regard, Rule 80(3) of the CGST Rules, 2017 also provides that every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax, a casual taxable person and a non-resident taxable person, whose aggregate turnover during a financial year exceeds Rs. 5 crore rupees, shall also furnish a self-certified reconciliation statement in FORM GSTR-9C. FORM GSTR-9C is mandatory for registered person whose aggregate turnover during a financial year exceeds Rs. 5 crore rupees.
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Whether Annual return and Annual reconciliation is applicable if Party has only exempt sales and it exceeds Rs. 5 Crore.