CA Chitresh Gupta & CA Shilpi Gupta
The Goods & Services Tax has been implemented from July 1, 2017. It has brought about a paradigm shift in the methodology of levy and collection of taxes.
GST is a transaction based Indirect tax where returns are filed periodically. It may be monthly or quarterly depending on the type of assessee or type of Return. The concept of Annual return in transaction-based tax is not new. It was prevalent in Central statutes like Excise Act in the form ER-4, 5 &7. In Service Tax also ,annual return was proposed vide notification no. 19/2016-ST dated 01.03.2016, however on account of implementation of GST, the format of the annual return was not notified. The annual return was also prevalent in various State based VAT Acts. This required assessee to consolidate the information relating to Sale, Purchase including Input Tax Credit claimed in return and file the same in the form of Annual return. The assessee was also required in certain states, to furnish a certificate from Chartered accountant about conformance of data as per Annual return and as per books.
The Annual Return under GST and then subsequent audit is largely based on the aforementioned practice as followed under various VAT statutes.
Legal Provisions of Annual Return
As per section 44(1) read with rule 80 of CGST Rules, every registered person other than:
shall furnish an annual return for every financial year electronically in form GSTR-9 or other prescribed forms on or before the thirty first day of December following the end of such financial year.
|Type of Return||Assessee liable to file Annual Return|
|GSTR 9||Filed by the regular taxpayers filing GSTR 1, GSTR 2, GSTR 3.|
|GSTR 9A||Filed by the persons registered under composition scheme under GST.|
|GSTR-9B||Filed by the e-commerce operators who have filed GSTR 8|
|GSTR-9C||Reconciliation Statement duly certified by CA or ICWA to be filed by the taxpayers, whose annual turnover exceeds Rs 2 crores during the financial year. This needs to be filed along with annual return and audited financial statement.|
Implication for Delayed/ Non Filing of Annual Return
As per proviso to section 47(2), any registered person who fails to furnish the return required under section 44 [annual return] by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent of his turnover in the State or Union territory. The late fee will be charged separately under CGST & SGST Acts respectively. Hence, total late fee will be Rs 200/- per day of default.
There is no specific penalty prescribed in the GST Law for non-filing of annual return. Therefore, in terms of Section 125 of CGST Act, 2017, general penalty of Rs 25,000/- can be imposed.
Analysis of GSTR-9
The Government has notified Form GSTR-9 & GSTR-9A through Notification No. 39/2018 – Central Tax dated 4th September, 2018.
GSTR-9 is divided into six major parts which are as mentioned below;
|II||Details of Outward and inward supplies declared during the financial year|
|III||Details of ITC as declared in returns filed during the financial year|
|IV||Details of tax paid as declared in returns filed during the financial year|
|V||Particulars of the transactions for the previous FY declared in returns of April to September of current FY or upto date of filing of annual return of previous FY whichever is earlier|
PART I: BASIC DETAILS
Part I seeks to capture the basic details of the Registered Person. The details to be provided are as under;
|3B||Trade Name (if any)|
The Financial year will be 2017-18. However, since GST has been implemented from July 01,2017, the data in the Annual Return will relate to period of July 2017 to March 2018. The GSTIN, Legal Name and Trade name as appearing in GST REG-06 is to be mentioned.
It may be noted that Annual return need to be filed for each GSTIN separately. Thus, if a multi-locational entity has 20 GSTIN, then 20 separate Annual return need to be filed. In case an entity has more than one GSTIN in the same state either due to separate business vertical or SEZ unit etc, separate annual return shall be filed.
PART II: DETAILS OF OUTWARD AND INWARD SUPPLIES DECLARED DURING THE FINANCIAL YEAR
This part specifically provides the consolidated view of Outward Supplies made by Registered person during the relevant period of FY 2017-18. This part also gives details of Inward supplies received by registered person where the person was liable to pay GST u/s 9(3) [Reverse Charge mechanism] or under Sec 9(4) [Inward supplies from Unregistered person till 12th Oct, 2018] of CGST Act. The details of Outward supplies will be taken from GSTR-1 and details of Inward supplies on which tax was paid by registered person will be taken from GSTR-3B.
Part II is divided into two major parts; Table 4 & Table 5. Table 4 details about Inward & Outward supplies on which tax is paid by Registered person. This includes the following;
|A||Supplies made to un-registered persons (B2C)|
|B||Supplies made to registered persons (B2B)|
|C||Zero rated supply (Export) on payment of tax (except supplies to SEZs)|
|D||Supply to SEZs on payment of tax|
|F||Advances on which tax has been paid but invoice has not been issued (not covered under (A) to (E) above)|
|G||Inward supplies on which tax is to be paid on reverse charge basis|
|H||Sub-total (A to G above)|
|I||Credit Notes issued in respect of transactions specified in (B) to (E) above (-)|
|J||Debit Notes issued in respect of transactions specified in (B) to (E) above (+)|
|K||Supplies / tax declared through Amendments (+)|
|L||Supplies / tax reduced through Amendments (-)|
|M||Sub-total (I to L above)|
|N||Supplies and advances on which tax is to be paid (H + M) above|
An important point to note here is that GSTR-9 will contain only the data as declared in already filed returns by registered person. This is in contrast with the Annual return as filed under VAT regimes where the modification if any in the return was carried out in Annual return. The same option is not available in GSTR-9.
Another point for discussion is that at the time of preparation of GSTR 9, whether the details required to be reported at Part 4 should be:
1. Restricted to details reported in the GSTR 1 for the period July 2017 to March 2018; or
2. Should include all the details pertaining to the period July 2017 to March 2018 irrespective of the period (Maximum period September 2018) when such details are reported in GSTR 1.
Based on the combined reading of Table 4 and 5 and S.No,10 &11 in GSTR-9 along with the instructions related to these entries, one logical interpretation is that;
1. Invoices related to 2017-18 reported in any month in the GSTR 1 during 2017-18 along with Amendments relating to 2017-18 made by reporting such amendment in any subsequent month but within 2017-18 itself will be reported at Part 4 of GSTR 9; and
2. Amendments to invoices related in any month in the GSTR 1 during 2017-18 made by reporting such amendment in the GSTR 1 during the months period April 2018 to September 2018 will only be reported in Part V S. No. 10 of GSTR 9.
The registered person has to give the details of all the Outward supplies including amendments debit note /credit note effected during the year on which tax is not liable to be paid in Table 5.
|A||Zero rated supply (Export) without payment of tax|
|B||Supply to SEZs without payment of tax|
|C||Supplies on which tax is to be paid by the recipient on reverse charge basis|
|G||Sub-total (A to F above)|
|H||Credit Notes issued in respect of transactions specified in A to F above (-)|
|I||Debit Notes issued in respect of transactions specified in A to F above (+)|
|J||Supplies declared through Amendments (+)|
|K||Supplies reduced through Amendments (-)|
|L||Sub-Total (H to K above)|
|M||Turnover on which tax is not to be paid (G + L above)|
|N||Total Turnover (including advances) (4N + 5M – 4G above)|
It may be noted that Debit notes and credit notes which are in relation to these supplies should be captured only if the suitable effect of GST is provided in them. Any commercial/accounting credit or debit notes which do not contain the charge of GST should not be adjusted for the calculation of taxable value and tax amounts.
PART III: DETAILS OF ITC AS DECLARED IN RETURNS FILED DURING THE FINANCIAL YEAR
This part requires the registered person to give complete details of ITC availed, Ineligible ITC and reconciliation with GSTR-2A. This section is divided into three tables Table 6, 7, 8. The data for this section is taken from data as furnished in GSTR-3B.
In Table 6, details of ITC availed as declared in returns filed during the financial year is to be furnished. These include;
|A||Total amount of input tax credit availed through FORM GSTR-3B (sum total of Table 4A of FORM GSTR-3B)|
|B||Inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs)||Inputs|
|C||Inward supplies received from unregistered persons liable to reverse charge (other than B above) on which tax is paid & ITC availed||Inputs|
|D||Inward supplies received from registered persons liable to reverse charge (other than B above) on which tax is paid and ITC availed||Inputs|
|E||Import of goods (including supplies from SEZs)||Inputs|
|F||Import of services (excluding inward supplies from SEZs)|
|G||Input Tax credit received from ISD|
|H||Amount of ITC reclaimed (other than B above) under the provisions of the Act|
|I||Sub-total (B to H above)|
|J||Difference (I – A above)|
|K||Transition Credit through TRAN-I (including revisions if any)|
|L||Transition Credit through TRAN-II|
|M||Any other ITC availed but not specified above|
|N||Sub-total (K to M above)|
|O||Total ITC availed (I + N above)|
The above table specifically provides reconciliation of total credit as availed under GSTR-3B with various sources of ITC like Inward supplies from Registered person, Unregistered person, Imports, ISD etc, We also need to disclose the transition credit as filed under TRAN-I & TRAN-II.
The practical issue in compilation of this data is segregation of ITC into Input, Input services and Capital goods. In GST regime, the ITC as availed under all the above categories are claimed and recorded in the similar manner thus it will result in lot of effort to categorize the ITC availed in required categories. Further, while categorizing the ITC availed on Inputs and Capital goods, the definition as provided under GST may be kept in mind.
As per Sec 2 of CGST Act;
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;
(60) “input service” means any service used or intended to be used by a supplier in the course or furtherance of business;
Table 7 requires the details of ITC which is declared as Ineligible or reversed on account of Rule 37, 39, 42 & 43
|37||Reversal of input tax credit in the case of non-payment of consideration|
|39||Reversal of Excess Credit by Input Service Distributor|
|42||Reversal of ITC in respect of inputs or input services on account of Exempt & Non Taxable supply|
|43||Reversal of ITC in respect of Capital Goods on account of Exempt & Non- Taxable supply|
The details required under Table 7 are as under;
|A||Reversal of ITC as per Rule 37|
|B||Reversal of ITC as per Rule 39|
|C||Reversal of ITC as per Rule 42|
|D||Reversal of ITC as per Rule 43|
|E||Ineligible ITC as per section 17(5)|
|F||Reversal of TRAN-I credit|
|G||Reversal of TRAN-II credit|
|H||Other reversals (pl. specify)|
|I||Total ITC Reversed (A to H above)|
|J||Net ITC Available for Utilization (6O – 7I)|
In respect of Rule 37, where ITC is required to be reversed on account of non -payment of consideration within 180 days from the date of invoice, it is important to make clear distinction in the books of accounts within current asset account between credit available and credit deferred.
One of the practical issues which will be faced by the Industry is the disclosure of Ineligible credit. In many cases like ITC on food & beverages, works contract, rent-a cab etc was not available by virtue of Sec 17(5), the GST paid was recorded as a part of cost and expensed out. Thus , no separate disclosure was made. However, as per aforementioned table, the same needs to separately disclosed.
The reversal in GSTR-9 may be reported in following manner;
|Situation||Reporting requirement in GSTR-9|
|ITC Reversed in 2017-18||Table 7C (for input and input service) and Table-7D (for capital goods)|
|ITC Reversed by mistake and also re-availed in 2017-18||ITC Reversal in Table 7C (for input and input service) and Table 7D (for capital goods) and re-availed ITC will be auto populated in Table 6A|
|ITC Reversed in 2018-19||Table 12|
|ITC Reversed by mistake and also re-availed that ITC in 2018-19||ITC Reversed in Table 12 and re-availed ITC in Table 13|
Table 8 gives a bird eye view presentation of GSTR-2A reconciliation with ITC availed. It also computes the total ITC which will be lapsed in the current financial year. Following details are required in Table 8;
|A||ITC as per GSTR-2A (Table 3 & 5 thereof)|
|B||ITC as per sum total of 6(B) and 6(H) above|
|C||ITC on inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs) received during 2017-18 but availed during April to September, 2018|
|E||ITC available but not availed (out of D)|
|F||ITC available but ineligible (out of D)|
|G||IGST paid on import of goods (including supplies from SEZ)|
|H||IGST credit availed on import of goods (as per 6(E) above)|
|J||ITC available but not availed on import of goods (Equal to I)|
|K||Total ITC to be lapsed in current financial year (E + F + J)|
The table compares ITC as appearing in GSTR-2A with the total ITC as claimed in GSTR-3B of FY 2017-18 and credit of FY 2017-18 claimed in GSTR-3B of FY 2018-19 other than ITC claimed on RCM, Imports.
Suffice to say that if differential value in the clause 8D is positive, then the value in this clause is normal. However, if the differential value in this clause is Zero or negative, it points to normal values. If differential value in this clause is Zero, it tends to point to the fact that credit has been availed on inward supply and that there is no blocked credit, non-business credits. If the differential value in this clause is negative, it generally tends to point to the fact that suppliers have not uploaded their information in GSTR 1 leading to supplies not getting captured in GSTR 2A. Negative differential value in this clause may tend to point towards errors of commission/ duplication on the part of registered person while availing credit. Hence, it is stressed that working sheets must be prepared on the basis of ledger accounts/ invoice to determine and find out the exact cause of difference for initiation of remedial action either on the part of registered person or on part of suppliers of registered person.
ITC which is unavailed in GSTR-3B either on account it is ineligible or even though it was available but due to mistake, it was not claimed, it will get lapsed. Only the ITC available and not availed coming from 8E, 8F and 8J has been directed to be lapsed. ITC on reverse charge including ITC on import of service is not being reported in Table 8 and hence not being lapsed under Table 8. Merely because the said credits are not being subject to reporting purposes in Table 8 does not mean that the said credit would not lapse, if the said credit is not availed within the timelines set out in section 16(4) of CGST Act,2017.
PART IV: DETAILS OF TAX PAID AS DECLARED IN RETURNS FILED DURING THE FINANCIAL YEAR
Part IV is the actual tax paid during the financial year. Payment of tax under Table 6.1 of FORM GSTR-3B may be used for filling up the details in Table 9 as mentioned below;
|Paid through cash||Paid through ITC|
|Central Tax||State Tax/UT Tax||Integrated Tax||Cess|
The purpose of said point number 9 in Part IV is to get consolidated value of tax liability self assessed and discharged in the monthly returns by the Registered Person for the period for which Annual Return is being filed. The given details along with differential tax details as declared in Sl. No. 14 in Part V of the Form shall assume the total tax liability for the financial year which is calculated, declared and discharged by the Registered Person up to the date of filing the Annual Return. The given details shall be useful while filing reconciliation statement in GSTR 9C for the Registered Person in calculating the deviation from the actual tax liability for the financial year
Information required in this clause is of ‘tax payable’ and ‘tax paid’ (by cash or credit). Reference is given to Table 6.1 of GSTR 3B to collect information and include it here. Table 6.1 of GSTR 3B also contains ‘tax payable’ and ‘tax paid’. It is opined that ‘actual tax paid’ alone must be obtained from that Table and reported in this clause. As regards ‘tax payable’, the same must be in alignment with taxable turnover in Sl.No.4, particular 4M of GSTR 9. And if ‘tax payable’ were to be reproduced from GSTR 3B, then there would mere repetition of information without any occasion to rectify later in GSTR 9C.
Accordingly, where taxable turnover reported in GSTR 1 and GSTR 3B are in agreement with each other, there would be no ‘new’ tax liability being identified for the first time in GSTR 9. However, where they are not in agreement, which is often the case, taxable turnover reported in GSTR 1 and that on which tax is actually discharged through GSTR 3B may not be in agreement. It is for this reason that Sl.No.9 captures ‘tax payable’ based on GSTR 1 (4M) but ‘tax paid’ based on GSTR 3B (6.1).
PART V: PARTICULARS OF THE TRANSACTIONS FOR THE PREVIOUS FY DECLARED IN RETURNS OF APRIL TO SEPTEMBER OF CURRENT FY OR UPTO DATE OF FILING OF ANNUAL RETURN OF PREVIOUS FY WHICHEVER IS EARLIER
Part V specifically requires following to be reported;
|10||Supplies / tax declared through Amendments (+) (net of debit notes)|
|11||Supplies / tax reduced through Amendments (-) (net of credit notes)|
|12||Reversal of ITC availed during previous financial year|
|13||ITC availed for the previous financial year|
|14||Differential tax paid on account of declaration in 10 & 11 above|
The following transactions may be reported in this section
It may be noted that Debit notes / Credit notes dated after April 1,2018 will not be reported in GSTR-9 of FY 2017-18 because the circumstances necessitating credit note and debit note would have arisen only in 2018-19.
PART VI: OTHER INFORMATION
Part VI requires following information to be provided by Registered person
|15||Particulars of Demands and Refunds during FY 2017-18|
|16||Information on supplies received from composition taxpayers, deemed supply under section 143 and goods sent on approval basis|
|17||HSN Wise Summary of outward supplies|
|18||HSN Wise Summary of Inward supplies|
|19||Late fee payable and paid|
Table 15 requires the registered person to provide the details of Refunds claimed, sanctioned, rejected or pending. Non-GST refund claims (i.e. refund claimed under erstwhile law) should not be reported here. The provisional refund received may be disclosed in refunds sanctioned. Further, cases where only deficiency memo has been issued and order of rejection is not passed, the same may be reported as Refunds pending and not in Refunds Rejected. In case of export of goods with payment of tax, the shipping bill itself is treated as an application and hence if the refund amount is stated on the shipping bill but the amount is yet to be received, the same will also appear in Refunds pending table.
The aggregate value of demands of taxes (CGST, SGST/UTGST, IGST and Cees to be disclosed separately) along with interest, penalty and late fee for which an order confirming the demand has been issued by the adjudicating authority has to be reported under this head. In the scenario where the order has been passed in GST RFD-07 by way of adjustment of the amount of refund against the outstanding demand under the GST, then, the demand of tax before adjustment against refund of tax will form part of reporting under under the table 15E, demand of taxes.
Table 16 of GSTR 9 requires details of supplies received from composition tax payers supplies (inputs and capital goods) received from principal by the recipient (job-worker) and not returned within the time specified under section of the CGST Act,2017 and supplies received on approval basis from principal and returned to supplier within 180 days of supply.
For the financial year 2017-18, a summary of inward and outward supplies effected / made against a particular HSN code is to be reported in this Table 17 & Table 18 respectively. It is optional to mention HSN code for taxpayers having annual turnover up to Rs. 1.50 crores. It will be mandatory to report HSN code at two digits level for taxpayers having annual turnover in the preceding year above Rs. 1.50 crores but up to Rs. 5.00 crores and at four digits’ level for taxpayers having annual turnover above Rs. 5.00 crores. It will an onerous task for the assesee to fill Table 17 & Table 18 as HSN codes in case of inward supplies is not captured by majority of corporates.
Table 19 will contain details, in case of late filing of Annual return.
Reference all the aspects and issues discussed above, filing of GSTR-9 will be cumbersome process even for large corporates leave alone Small & medium enterprises. Some of the major challenges while filing GSTR-9 will be as follows;
It is recommended that the government may appreciate that above issues and relook the format of Annual Return to be make it more compliance friendly. It is also recommended that all the registered person and also the professionals may start the work on Annual Return so that everybody may get sufficient time to complete the same and take care of various intricacies involved in filing the same.
|CA. Chitresh Gupta
FCA, B. Com(H), IFRS (Cert.), IDT (Cert.)
Co-Author of book “GST –Law, Analysis & procedures”
Faculty on Goods & Services Tax by ICAI
|CA. Shilpi Gupta
FCA, M.Com, B.Com(H) -Shri Ram College of Commerce
Co-Author of book “GST –Law, Analysis & procedures”
Faculty on Goods & Services Tax by ICAI