Point No.14 of Part IV of GSTR-9C provides for reconciliation of ITC declared in Annual Return (GSTR-9) with ITC availed on expenses as per audited Annual Financial Statement or books of account. The total ITC availed during the year has to be bifurcated on the basis of heads like purchases, freight/carriage, power and fuel, imported goods, rent, bank charges, capital goods, repair and maintenance etc.

Generally assesse does not maintain expense wise ITC availed. That is information like ITC claimed on rent, ITC on repair and maintenance is not maintained. But now for the annual return purpose the same need to be bifurcated. An assessee can identify the nature of service or type of goods based on the name of the supplier. The purchase department in an organization can be invited for this purpose. They know the supplier and their supply. Also, the description of goods or service is mentioned in the field prescribed for the said purpose in SAP accounting package. From that text also the assesse can bifurcate the ITC on various heads as aforesaid.

The assessee might not account ITC on all the purchase/expense. In case of blocked credit the assesse debited the GST part in the relevant expense cost only. This quantum of ITC need not be shown in this point as those ITC are not availed. In the list of ITC taken the auditor shall audit it in respect of its eligibility and if he is satisfied that credit is ineligible then said credit shall not be shown in column 4 of the table given in point 14.

It is possible that a supplier might supply more than one goods or services. In such cases, the bifurcation of ITC under various expense head may not be accurate. The accuracy level of such bifurcation will  be between 95 to 98 percent. However, such bifurcation called for in the return is merely for information purpose of the Government. Therefore, it is expected that 2 to 3 percent chance of wrong bifurcation should be excused. Had this being informed to the assessee in the implementation time then reports , register would have been prepared in such manner.

The amount of eligible ITC availed as per books should be equal to ITC claimed in Annual Return in GSTR-9. The  difference if any shall be treated as un reconciled leading to payment in case of excess claim and lapse of credit in case of excess. The reason for the difference needs to be explained.

The audit for FY 2017-18 being the first annual return under GST would be a learning to all the assessee. The appropriate solution should be sought from the auditor or consultant and steps to be taken to comply the provision of GST wherever found it is not done. There is hope some relaxation would be provided in the upcoming GST Council meeting to be held on June 21, 2019.

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