Since the historical introduction of the Goods and Services Tax (GST) in July 2017, India’s indirect tax landscape has undergone a radical transformation. GST unified multiple taxes under a single, digital, and transparent system. Over time, many return filing mechanisms have evolved, compliance procedures have become more seamless, and taxpayers have experienced improved ease of operations.
However, even after eight years, critical annual return forms — GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) — continue to suffer from technical complexities, structural limitations, and interpretational ambiguities. Although intended to provide a robust framework for annual reconciliation and audit accountability, these forms still fall short in fully aligning with ground realities and taxpayer experiences.
The following key challenges highlight areas where improvement is essential to streamline compliance and reduce disputes.
Key Challenges in GSTR-9/9C Filing
1. Disabled Consolidation of GSTR-1 Data on Portal: The GSTR-9 form is auto-populated with data drawn from GSTR-1 (outward supplies) and GSTR-3B (summary return) filed monthly or quarterly. However, currently, the portal does not allow taxpayers to view or reconcile the compiled/consolidated GSTR-1 details directly within the GSTR-9 interface.
This partial visibility hampers verification and finalization, forcing taxpayers to rely heavily on manual cross-checking, increasing the risk of errors.
2. Ambiguous Reporting of ITC Amendments:- Post Notification 13/2025 Recent amendments under Notification 13/2025-Central Tax (dated 17-Sep-2025) introduced a welcome bifurcation of Input Tax Credit (ITC) into current year and prior year components, aiding clearer assessment.
Yet, questions remain unresolved regarding fields such as Table 6A1, where it is unclear whether only current-year Forward Charge Mechanism (FCM) ITC needs reporting or if FCM plus Reverse Charge Mechanism (RCM) ITC attributable to the preceding year must be included. The absence of clear instructions adds to taxpayer confusion and inconsistent filings.
3. Reverse Charge Mechanism (RCM) Payment Reporting Dilemma: CBIC clarified in a July 2019 press release that RCM payments and corresponding ITC should be reported in the financial year in which payment is made, not the year to which the liability relates. However, from an accounting and reconciliation perspective, it is often more logical to reflect these payments in the year of liability (Year-1) rather than in the year of payment (Year-2).
Currently, GSTR-9 lacks a segregated sub-table (especially in Table 4G) to clearly differentiate these, complicating the accurate year-wise reporting of RCM.
4. Lack of Integration for DRC-03 (Additional Tax Payment) Details: The annual return process allows taxpayers to revisit previous self-assessments and make necessary corrections, including discharging additional tax liabilities. This often involves filing payments through Form DRC-03 via the GST portal. While the portal now permits selecting “Annual Return” as a reason during DRC-03 filing, the GSTR-9 form does not capture or provide a field to report the ARN (Acknowledgement Reference Number) of the DRC-03 payment.
Unlike earlier indirect tax regimes (Service Tax, Excise, VAT) where taxpayers could report challan details, this gap results in an incomplete reflection of reconciled liabilities.
5. Table 8 ITC Mismatch due to Non-Consideration of Reversals of ITC in Table 7: In GSTR-9 compares the ITC claimed in GSTR 2B with that reported in Table 6. However, it does not account for reversals or credits adjusted in Table 7 (e.g., ITC reversed due to non-fulfillment of conditions under Section 16). This causes inflated positive mismatches, triggering compliance notices.
The issue has intensified post October 2023, with the introduction of the reversal and re-credit mechanism where eligible ITC is parked temporarily when conditions are unmet. Because Table 8 derives from Table 6B (pre-reversal data), it fails to reflect this critical adjustment.
6. Complex ITC Classification and Data Requirements: GSTR-9 requires taxpayers to classify all ITC into inputs, input services, and capital goods. GSTR-9C demands even more granular breakdowns into minor subcategories. Many taxpayers face challenges in segregating this data accurately, given the complexity of ERP systems and mismatched ledger structures, leading to increased manual intervention, delays, and filing gaps.
7. GST Rate Tables Affect Accuracy: Relevant to sectors like real estate, Notification 03/2019-CT introduced special rates (1.5% and 7.5%) effective from April 2019. Despite this, these rates are still missing from the rate tables in GSTR-9C, even in filings for FY 2024-25. This omission distorts analysis of applicable tax rates and related compliance for developers and builders.
Conclusion
GSTR-9 and GSTR-9C are designed as annual closure tools under GST, intended to reconcile outward supplies, inward supplies, and ITC claimed. Despite their vital role in ensuring system integrity, technical deficiencies, ambiguous instructions, and portal limitations continue to frustrate taxpayers and tax professionals.
Addressing these concerns requires concerted efforts from policy makers and GSTN — incorporating clear guidelines, enhanced portal functionalities, and better integration. Only then will the promise of transparent, simplified, and accurate annual reconciliation truly come to fruition for all stakeholders.
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