1. Notification No.29/2021 – Central Tax Dt.30.07.2021 has been issued appointing 01.08.2021 as the date on which the provisions of Sections 110 and 111 of the Finance Act, 2021 shall come into force.
2. Section 110 and 111 of the Finance Act, 2021 are reproduced hereunder –
110. In section 35 of the Central Goods and Services Tax Act, sub-section (5) shall be omitted.
111. For section 44 of the Central Goods and Services Tax Act, the following section shall be substituted, namely:–
Annual return.
“44. Every registered person, other than 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 which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form 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.”.
21. Section 35(5) of the CGST Act which was omitted by Section 110 of the Finance Act is reproduced hereunder –
(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 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.]
2.2 The effect of the Notification No.29/2021 – Central Tax Dt.30.07.2021, appointing 01.08.2021 as the effective date, is that a registered person need not get his books of accounts audited by a Chartered Accountant or a Cost Accountant and consequently there is no requirement of submitting reconciliation statement in the Form GSTR-9C.
2.3. Now, the pertinent questions are –
(i) Is the omission of Section 35(5) applicable for the year 2020-21 for which audit report in Form GSTR-9 and GSTR-9C is required to be filed by 31.12.2021. Or
(ii) Is the omission applicable from 01.08.2021 i.e., date on which the provisions came into force. In such a case, the obligations on the part of tax payers are as under –
a. The tax payer has to submit audit report and reconciliation statement in GSTR-9 and GSTR-9C for the financial year 2020-21 by 31.12.2021 as per the existing provisions, duly certified by a Chartered Accountant or Cost Accountant.
b. The tax payer has to submit audit report and reconciliation statement in GSTR-9 and GSTR-9C for the period April 2021 to July 2021, duly certified by a Chartered Accountant or Cost Accountant.
c. For the period Aug 2021 to March 2022, the tax payer need not submit audit report and reconciliation statement in GSTR-9 and GSTR-9C duly certified by a Chartered Accountant or Cost Accountant. However, the tax payer has to submit self-certified GSTR-9 and GSTR-9C statement for the period Aug 2021 to March 2022.
2.4 Tax payers are not clear as to the applicability of the erstwhile Section 35(5) for the year 2020-21 and also for the period April 2021 to July 2021, since the effective date is notified as 01.08.2021. Clarification is required from the CBIC on the following points to clear the confusion in the minds of the tax payers –
(i) Whether certification is required for the financial year 2020-21.
(ii) Whether certification is required for the period April 2021 to July 2021.
(iii) As far as 2020-21 is concerned, if the certification is required, tax payers would get the same done as was done for previous years. No problem is anticipated.
(iv) As far as 2021-22 is concerned, it is practical and convenient if it is clarified that the certification is not required for the entire year. Since the effective date is notified as 01.08.2021, there is confusion as to whether certification is required for the period April 2021 to July 2021. Getting certification for part of the year is a cumbersome process, that involves bifurcation of the each and every data, reconciliation with annual accounts which are prepared for entire year etc. The effort to be put in by the tax payer gets doubled. Therefore, it is better, if it is clarified that the certification is required for the entire year 2021-22 or not required.
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