The imposition of Goods and Service Tax Act has brought along with it lots of compliance in the form of return filing. Apart from monthly / quarterly return filing, the taxpayer also needs to file an annual return.
As per provisions of section 35 (5) of the Central Goods and Service Tax Act, 2017, every registered person whose turnover exceeds the prescribed limit is required to get his accounts audited. As per the said section, the registered person is required to submit a copy of audited annual accounts, reconciliation statement and other prescribed documents.
Provisions relating to reconciliation statement are contained under section 44 (2) of the Central Goods and Service Tax Act, 2017. As per the said section, every registered person who is required to get his accounts audited is required to file an annual return and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited financial statement.
Further it must be noted that in terms of provisions of rule 80 (3) of the Central Goods and Service Tax Rules, 2017, every registered person whose aggregate turnover exceeds INR 2 crore during the financial year needs to undertake the following –
- Such registered person needs to get his accounts audited as per section 35 (5) of the Act;
- He is required to furnish a copy of such audited annual accounts;
- He is required to file a reconciliation statement in FORM GSTR 9C, electronically.
The Central Board of Indirect Taxes and Customs, vide notification no. 49/2018 – Central Tax dated 13th September, 2018, has provided the format of such reconciliation statement to be filed in FORM GSTR 9C. FORM GSTR – 9C provides the reconciliation of tax paid, input tax credit availed and turnover.
Current article tries to provide the detail explanation of the newly introduced format.
UNDERSTANDING PARTS AND SUB-PARTS OF FORM GSTR – 9C –
The entire FORM GSTR – 9C is broadly divided into two main parts –
PART A – Reconciliation Statement; and
PART B – Certification.
Part A is sub-divided into the following 5 parts –
PART I – Basic Details;
PART II – Reconciliation of turnover declared in the audited Annual Financial Statement with turnover declared in Annual Return (GSTR 9);
PART III – Reconciliation of tax paid;
PART IV – Reconciliation of Input Tax Credit;
PART V – Auditor’s recommendation on additional Liability due to non-reconciliation;
Part B is sub-divided into the following 2 parts –
PART I – Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by the person who had conducted the audit;
PART II – Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by a person other than the person who has conducted the audit of the accounts.
BRIEFLY UNDERSTANDING SUB-PARTS OF PART A –
PART 1 – BASIC DETAILS –
1. FINANCIAL YEAR –
It must be noted here that since GST was made applicable from 1st July, 2017 in India, the period covered under first annual return would be July, 2017 to March, 2018.
2. GSTIN –
It must be noted that separate annual return in GSTR – 9C is to be filed for every GSTIN.
3. LEGAL NAME – Auto-populated
TRADE NAME – Trade name needs to be provided only in case the same is applicable
4. ARE YOU LIABLE TO AUDIT UNDER ANY ACT? – The taxpayer needs to answer the same in yes or no.
Part II of GSTR-9C deals with the reconciliation of gross and taxable turnover and the same is sub-divided into 4 parts as mentioned below –
Point no. 5 – Reconciliation of gross turnover
Point no. 6 – Reasons for un-reconciled difference in annual gross turnover
Point no. 7 – Reconciliation of taxable turnover
Point no. 8 – Reasons for un-reconciled difference in taxable turnover
Understanding the above 4 parts in detail –
POINT NO. 5 – RECONCILIATION OF GROSS TURNOVER –
Point no. 5A – Turnover (including exports) as per audited financial statements for the State / UT (for multi-GSTIN units under the same PAN the turnover shall be derived from the audited Annual Financial Statement) –
Total turnover, including the export turnover, as per audited Annual Financial Statement needs to be mentioned here. Further in case of multiple GSTIN (with same PAN), GSTIN wise turnover needs to be derived from the books of accounts.
Point No. 5B – Unbilled revenue at the beginning of Financial Year –
Value of unbilled revenue, which was recorded in the books of accounts in the last financial year and the same was carried forward to the current financial year, on which GST is payable in the current financial year needs to be mentioned here.
Point No. 5C – Unadjusted advances at the end of the Financial Year – Value of all the advances on which GST is paid and the same has not been reflected in the audited Annual Financial Statement needs to be mentioned here.
Point No. 5D – Deemed supply under schedule I – Total value of all the deemed supply under schedule I need to be mentioned here, however, deemed supply already included in turnover in the audited annual financial statement should not be included here.
Point No. 5E – Credit notes issued after the end of the financial year but reflected in the annual return – Total value of all the credit notes which are issued after 31st March for supply accounted in current financial year, however, such credit notes are reflected in the annual return, value of such credit notes needs to be mentioned here.
Point No. 5F – Trade discounts accounted for in the audited Annual Financial Statement but are not permissible under GST – Value of trade discounts which were accounted in the audited Annual financial statement but due to the same being not permissible under GST, respective GST tax is payable on such trade discount, then, value of such trade discount needs to be mentioned here.
Point No. 5G – Turnover from April, 2017 to June, 2017 – Turnover for the period from April to June, 2017 needs to be mentioned here.
Point No. 5H – Unbilled revenue at the end of the Financial Year – Unbilled revenue which has been recorded in the books of accounts, on the accrual basis, however, GST payment for the said revenue would not be payable in the same financial year, such value of such unbilled revenue needs to be mentioned here.
Point No. 5I – Unadjusted advances at the beginning of the Financial Year – Value of such advances on which GST has not been paid, but, the same has been recognized as revenue in the audited Annual Financial Statement.
Point No. 5J – Credit notes accounted for in the audited Annual Financial Statement but are not permissible under GST – Value of credit notes which were accounted in the audited Annual financial statement. Such credit notes on account of section 34 of the Central Goods and Service Tax Act, 2017 are not permissible under GST, the value of such credit notes which are accounted but not permissible under GST needs to be mentioned here.
Point No. 5K – Adjustments on account of supply of goods by SEZ units to DTA units – Value of all the goods supplied by the SEZ unit to the DTA units need to be mentioned here but DTA units must have filed a bill of entry for the same.
Point No. 5L – Turnover for the period under composition scheme – This is applicable only to the taxpayer who had initially opted for composition scheme and later on opted out of the same. In such situation, the value of turnover for the period the taxpayer has paid GST under the composition scheme needs to be mentioned here.
Point No. 5M – Adjustments in the turnover under section 15 and rules thereunder – In case there is a difference between the taxable value and the invoice value due to the provisions of section 15 (i.e. the value of taxable supply) and the rules made thereunder, the value of such turnover needs to be mentioned here.
Point No. 5N – Adjustments in turnover due to foreign exchange fluctuations – Any difference in turnover due to fluctuations in foreign exchange needs to be reflected here.
Point No. 5O – Adjustments in turnover due to reasons not listed above – Difference in turnover due to any other reason, which is not listed above, needs to be provided here.
Point No. 5P – Annual turnover after adjustments as above – Auto-populated
Point No. 5Q – Turnover as declared in Annual Return (GSTR 9) – Annual turnover as declared under an annual return GSTR 9 under point no. 5N, 10 and 11 needs to be mentioned here.
Point No. 5R – Un-reconciled turnover (Q – P) – Auto-populated.
POINT NO. 6 – REASONS FOR UN-RECONCILED DIFFERENCE IN ANNUAL GROSS TURNOVER
Reason for the difference between annual turnover declared in audited Financial Statement (point no. 5P) and turnover as declared in the annual return in form GSTR 9 (point no. 5Q) needs to be mentioned here.
POINT NO. 7 – RECONCILIATION OF TAXABLE TURNOVER
Under point no. 7 net adjusted turnover derived at the point no. 5P above would be reduced by turnover on which GST is not payable and / or GST is not applicable and the net turnover so derived would be compared with the turnover declared in annual return.
Point No. 7A – Annual turnover after adjustments – Auto-populated – Net adjusted turnover derived at a point no. 5P above would be auto-populated here.
Point No. 7B – Value of Exempted, Nil rated, Non-GST supplies, No supply turnover – Value of turnover of exempted, nil rated, Non-GST supplies and value of no supply, net of debit notes, credit notes and amendments, should be mentioned here.
Point No. 7C – Zero rated supplies without payment of tax – Value of turnover of zero rated supplies, including supplies to SEZ, on which tax is not paid should be mentioned here. The value to be mentioned should be net of debit notes, credit notes and amendments.
Point No. 7D – Supplies on which tax is to be paid by the recipient on reverse charge basis – Value of supplies on which tax is paid by the recipient on reverse charge basis should be mentioned here and the value should be net of debit notes, credit notes and amendments.
Point No. 7E – Taxable turnover as per adjustments – Auto-populated (A-B-C-D)
Point No. 7F – Taxable turnover as per liability declared in Annual Return (GSTR 9) – Figure from Table 4N of FORM GSTR-9 should be mentioned here.
Point No. 7G – Unreconciled taxable turnover (F-E) – Auto-populated. This figure would be the difference from taxable turnover declared in annual return and taxable turnover derived at the point no. 7E.
POINT NO. 8 – REASONS FOR UN-RECONCILED DIFFERENCE IN TAXABLE TURNOVER
Reason for difference of taxable turnover at point no. 7G needs to be provided here, however, in case there is no difference point no. 8 would remain blank.
PART III – RECONCILIATION OF TAX PAID –
POINT NO. 9 – RECONCILIATION OF RATE WISE LIABILITY AND AMOUNT PAYABLE THEREON –
Under point no. 9 rate wise bifurcation of tax liability needs to be provided. Further tax liability in case of reverse charge also needs to be bifurcated rate wise.
At point no. 9P total of all the rate-wise bifurcation would be auto-populated and the same would be compared with the amount of tax paid as declared in annual return (GSTR 9) at point no. 9Q. In case there is a difference between tax paid and tax declared in annual return the same would be auto-populated at point no. 9R.
POINT NO. 10 – REASONS FOR UN-RECONCILED PAYMENT OF AMOUNT –
When there is a difference in tax paid and tax declared in annual return, i.e. point no. 9R, the reason for the said difference needs to be provided here.
POINT NO. 11 – ADDITIONAL AMOUNT PAYABLE BUT NOT PAID (DUE TO REASONS SPECIFIED UNDER TABLE 6, 8 AND 10 ABOVE) –
In case there is difference mentioned at table 6, 8 and 10 and on account of said difference additional amount is payable and the said additional amount if not yet paid needs to be mentioned here.
PART IV – RECONCILIATION OF INPUT TAX CREDIT –
POINT NO. 12 – RECONCILIATION OF NET INPUT TAX CREDIT –
Point No. 12A – ITC availed as per audited Annual Financial Statement for the State / UT (For multi-GSTIN units under the same PAN this should be derived from books of accounts) – Value of ITC availed as per audited annual Financial Statement needs to be mentioned here. In case of multiple GSTIN, with same PAN, ITC of each individual GSTIN needs to be figured out and mention here.
Point No. 12B – ITC booked in earlier Financial Years claimed in current Financial Year – Value of ITC which was booked in audited Annual Financial Statement in the earlier financial year, however, the same was availed in the ITC ledger in the financial year for which the reconciliation statement is being filed needs to be mentioned here.
The value of transitional credit which was booked in an earlier year but credit was availed during the financial year 2017-2018 must be included here.
Point No. 12C – ITC booked in current Financial Year to be claimed in subsequent Financial Year – Value of ITC which is booked in the current financial year, however, the same has not been credited to the ITC ledger for the said financial year needs to be reflected here.
Point No. 12D – ITC availed as per audited financial statements or books of account – Auto-populated value (12A + 12B – 12C)
Point No. 12E – ITC claimed in Annual Return (GSTR 9) – Value of ITC claimed in annual return (GSTR 9) at Table 7J needs to be mentioned here.
Point No. 12F – Un-reconciled ITC – Auto-populated.
POINT NO. 13 – REASONS FOR UN-RECONCILED DIFFERENCE IN ITC –
In case there is a difference between ITC claimed in the annual return filed in form GSTR 9 and ITC as per audited Financial Statement, then, the reason for such difference needs to be mentioned here.
POINT NO. 14 – RECONCILIATION OF ITC DECLARED IN ANNUAL RETURN (GSTR 9) WITH ITC AVAILED ON EXPENSES AS PER AUDITED ANNUAL FINANCIAL STATEMENT OR BOOKS OF ACCOUNT –
Under point no. 14 ITC availed on various expenses needs to be bifurcated as per expenses claimed in the audited Annual Financial Statement. Various heads of expenses like bank charges, repairs and maintenance etc. are provided, however, the said list is a general list and the heads can be added and deleted as per requirement.
Eligible ITC bifurcated and totaled at point no. 14R would be compared with the ITC claimed in annual return at table 7J of GSTR 9 and any difference in the same would be auto-populated at point no. 14S.
POINT NO. 15 – REASON FOR UN-RECONCILED DIFFERENCE IN ITC –
In case of difference in ITC as arrived at point no. 14S, the reason for said difference needs to be mentioned here.
POINT NO. 16 – TAX PAYABLE ON UN-RECONCILED DIFFERENCE IN ITC (DUE TO REASONS SPECIFIED IN 13 AND 15 ABOVE) –
Tax payable on account of reasons specified for the difference at the point no. 13 and point no. 15 should be mentioned here. Tax so payable needs to be appropriately bifurcated into central tax, state / UT tax, integrated tax, cess, interest and penalty.
PART V – AUDITOR’S RECOMMENDATION ON ADDITIONAL LIABILITY DUE TO NON-RECONCILIATION –
Part V contains auditor’s recommendation on additional liability which is due on account of non-reconciliation of either turnover or input tax credit or both. The auditor also needs to recommend the requirement of any other amount payable on account of supplies which has not been included in the annual return or any amount payable on account of erroneous refund. The auditor’s need to even recommend any other outstanding demand which needs to be settled. Format of part V is as under –
| Description | Taxable Value | To be paid through cash | |||
| Central tax | State / UT tax | Integrated tax | Cess, if applicable | ||
| 5% | |||||
| 12% | |||||
| 18% | |||||
| 28% | |||||
| 3% | |||||
| 0.25% | |||||
| 0.10% | |||||
| Input tax credit | |||||
| Interest | |||||
| Late fee | |||||
| Penalty | |||||
| Any other amount paid for supplies not included in Annual Return (GSTR 9) | |||||
| Erroneous refund to be paid back | |||||
| Outstanding demands to be settled | |||||
| Other | |||||
BRIEFLY UNDERSTANDING SUB-PARTS OF PART B –
PART I – Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by the person who had conducted the audit.
PART II – Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by a person other than the person who has conducted the audit of the accounts.
Format of both the above certificate is provided in the notification and the same requires to report the observation derived on examination of the balance sheet, profit and loss account and the cash flow statement and further observation on form GSTR 9C also needs to be provided in the certificate.
Author Bio
