Article explains Important measures/work required before filing or Preparing Form GSTR 9C, Modus Operandi of Filing Form GSTR 9C and alsd Contains Draft Format of management representation letter on GST Audit, draft format for GST Audit Acceptance Letter and draft format of GST Audit Appointment Letter.
As of today, 30th June 2019 is last date for GSTR 9C filing (unless any further notification comes in) , it is reconciliation statement Audited by a Cost or Chartered Accountant between “GSTR 9 filed by you and “Audited Annual Financial Statements -2017-18”
1. Give appointment letter to CA or CWA at earliest for each state wise. (Suggested Appointment letter is attached herewith)
2. CA has to generate UDIN number at their portal
3. This appointment should contain Management Representation along with terms of appointment. (MRL is also attached)
4. CAs may take specimen from ICAI Guidance Note + “Guidance Note on Reports or certificates for Special Purposes -Revised 2016” (Acceptance Letter is attached)
5. If you have more GSTN with same PAN number then you are required to suitable split your “Profit & Loss A/c” in all states GSTN wise.
6. The turnover filled in GSTR 3B/GSTR 1 & GSTR 9 of each state must be in equal amount with the splitted Audited Financial Statement.
7. Further, you have to break figures from 1-4-2017 to 30-06-2017 & 1-7-2017 to 31-03-2018 to know the GST Financial Turnover.
8. Also take that turnover from books which is exempted to GST or Zero rated without payment of GST because that is required to match your turnover with GSTR 9 and Audited Books of Accounts.
9. Take care at Part II 5 B & C needs figures as at c/d 30-6-2017 or c/f 1-7-2017 it is not for 1-4-2017 i.e. Unbilled revenue or Unadjusted advance as at beginning/end of Financial Year here in GSTR 9C – Financial Year means 1-7-2017 to 31-03-2018.
10. A concept has been used in 9C i.e. “ITC availed in Audited Annual Financial Statement” it means that ITC which you have created in Audited Books of Accounts, do not get confused with ITC availed in Books, what is this, actually ITC you have availed in 3B or GSTR 9 only for GST point of view, this terminology is only used for reconciliation purposes between ITC in books & ITC in GSTR 9.
11. ITC c/f through TRAN 1 from era before GST i.e. ITC c/f from 30-6-2017.
12. Point No. 14 is very important – “Reconciliation of ITC declared in Annual Return (GSTR9) with ITC availed on expenses as per audited Annual Financial Statement or books of account” – here you have to inform for several expenses booked in Finance Books which may contain GST component and you have to inform how much GST was there and how much you used then it creates liability if you have used more ITC than it is available in books.(For example if on office assets purchased you have capitalized in books including GST amount and also shown in ITC in GSTR 9 then you can not take both benefits of Depreciation as well ITC, like wise you have booked Purchases of material including ITC and also claiming ITC in GSTR 9 then both Income Tax benefit and ITC benefit can not be availed simultaneously)
1. Very first upgrade MS Office to 16 because Json Utility of GSTR 9C is only opening on Excel 16.
2. Download Offline tool of GSTR 9C by GSTN. (Offline utility is attached herewith)
3. Then filled it and create JSON file.
4. Then up load at website of particular state.
5. Get Hard copy of CA/CWA certified copy i.e. Part (B) i & ii as per facts
6. Attach Audited Balance Sheet
7. Attach Audited Profit & Loss or Income Expenditure A/c
8. Other Attachments – Like Trial Balance of Each State certified by management
9. Hard copy of GSTR 9
10. Any other supports as you desire as per the need of Return
I hope above tips are important to understand GSTR 9C.
Suggested format of Draft letter of management representation to be obtained from the client in respect of each registered person separately viz., State wise / GSTIN wise (suitable modifications may be made as required)**
Sub: Draft Letter of Management Representation – GST Audit for the financial year ended March 31, 2018
With reference to the audit conducted by you / your firm*, and as required under the provisions of Section 35(5) and Section 44(2) of the Goods And Service Tax Act, 2017 (In short “GST Act”) read with rule 80(3) of the Goods and Service Tax Rules (In short “GST Rules, 2017”) for the financial year ended March 31, 2018 we acknowledge our responsibility for the maintenance of books of accounts, related documents, relevant registers in accordance with the requirements of the GST laws and as per the recognized accounting standards and practices as issued by the ICAI.
This letter is provided to you in connection with the conduct of audit by you / your firm* under the GST Laws, and for the purpose of carrying out the attest function in GSTR 9C based on our letter of engagement dated ……… and your acceptance letter dated ……….. We confirm to the best of our knowledge and belief that:
I. Place of Business
a) We do not have other place of business inside the State other than those stated in the Registration Certificate (please ensure that each distinct person is registered separately). We confirm that each of the places of business stated in the said Registration Certificate is duly registered under the GST Laws within the State.
II. Outward Supply
a) We have not affected any supply of goods or services or both from places other than those declared in the certificate of registration and the returns filed from time to time. All kinds (inter-State and intra-State) of supplies / supply returns* including sale of assets, if any, have been duly classified and properly accounted for in the Outward Supply Register or duly recorded in the appropriate books of accounts. They have been properly reflected in the returns filed under the GST laws.
b) The Classification of data in respect of B2B and B2C outward supplies have been correctly classified and accounted in our Returns.
c) The Deemed supply transactions viz., supplies to Related Parties or supplies between distinct entities / distinct persons * are valued as per Valuation Rules.
III. Inward Supply
a) We have not affected any intra-State, inter-State inward supplies or imports into the State other than those declared in GSTR 9 and GSTR 9C and the returns filed as prescribed. All inward supplies of goods and / or services / inward supply returns including inward supplies of assets, if any, have been duly classified and properly accounted in the relevant register/s. They have been properly reflected in the returns filed from time to time.
IV. Transitional Credits
a) We have claimed transitional credits as per the provisions of the GST laws.
b) We confirm that the goods cleared to / by / from * Job workers by way of stock transfers, sale on approvals and supplies to agents have been reconciled with the transactions as declared in Books of Accounts. We have reconciled the data of Trans-1 / Trans-2 with the data as declared in Books of Accounts.
c) We confirm having complied with the provisions of Section 171 of the CGST Act in respect of Anti-profiteering.
a) We confirm that we have issued the E-way bill /Delivery note as per the provisions of the GST law.
b) We confirm that we have obtained the statutory Forms / declarations like LUT, etc from the GST Authority as per the provisions of the GST law.
c) During the year, appeals, if any, are filed against the Demand order / Refund Rejected Order* mainly on the ground of …. and the matter is pending hearing / adjudication* before the appropriate authority.
d) The Entries in Electronic Liability Ledger, Electronic Credit ledger and Electronic Cash Ledger for the financial year are reconciled with the transactions in Returns and the Books of Accounts.
e) We have issued the Self-Invoice and payment vouchers in respect of transactions that are liable to tax on reverse charge in case of inward supplies effected from unregistered suppliers.
f) We have maintained relevant records in respect of goods sent to / received from job workers and correctly accounted for those transactions. We confirm that all goods sent to job workers have been received back within the timelines prescribed.
g) We have not raised any tax invoices or supply bills other than the series reported in the supply ledgers. However, in respect of deemed supply, Advances, the Invoice series differ and are duly accounted.
h) We confirm we have maintained appropriate stock records as required under the GST laws.
i) We have issued only ONE ORIGINAL Tax Invoice / Bill of Supply / Debit Note or credit Note as the case may be, and all other copies are marked as DUPLICATE /
j) We have prepared the monthly returns based on the books of accounts maintained. The copies of the returns filed with the authorities were submitted / furnished to you for the purpose of your GST audit.
k) We confirm that the relevant registers relating to Form ____________________etc have not been produced to you for your verification and report.
a) We have classified the goods/Services supplied by our concern and charged the rate of tax, in accordance with the applicable schedules and/ or notifications/ Advance Rulings etc., under the GST Act 2017.
b) We confirm that we have correctly classified the activities as supply of goods and / or supply of services as per Second Schedule of GST law.
c) The turnovers of inward and outward supplies relating to classification of goods and / or services based on HSN affected by us and as shown on the invoices, books and records and in the financial statement are correct.
d) During the year, application for Advance Ruling has been sought and the same is pending before the Authority.
a) We understand that reconciliation of data provided to you based on the books and records, returns, relevant registers etc., have been matched with financials and relevant returns filed by us from time to time in terms of the GST laws. We reiterate and confirm that in respect of auditors appointed by us to carry out the attest function under the GST Laws in respect of other States / Union Territories have been provided the relevant data from the very same books and records maintained by us. We confirm that the inward and outward supplies including non-GST transactions, deemed supplies (transactions without consideration) and such other transactions have been duly consolidated and matched with the financials.
b) We confirm that we have internally derived the turnover from the Audited financial statement in case of Multi GSTIN units under same PAN and reconciled the total turnover as arrived in 5A of Form GSTR 9C.
c) We have taken adequate care to reconcile the data with books, records and financial statements in respect of the first quarter of the financial year 2017-18 since; such data relates to the erstwhile indirect tax laws.
VIII. Input Tax Credit
a) We have paid CGST / SGST and IGST as per GST laws. In case of wrong payment or wrong declaration, we have repaid the correct taxes and claimed refund of the wrong payment of taxes.
b) We confirm that we have not availed input tax credits in respect of inward supplies affected by us where we have not paid the supplier within a period of 180 days in terms of proviso to Section 16(2) of the CGST Act. In such of those cases where we have availed input tax credits we confirm we have reversed such credits incorrectly availed together with interest.
c) None of the goods on which we have claimed input credit are subsequently lost or destroyed or disposed of by way of gift, free samples, etc., requiring reversal of input credit and we understand the responsibility of preservation of various documents under the GST Act.
d) We confirm that we have not taken any input tax credit in respect of goods/Services restricted in terms of Section 17(5) of the CGST Act
e) We confirm that we have availed input tax credits in line with the law laid down in terms of Section 49 of the CGST Act.
f) In respect of inward supplies of goods and / or services we confirm we have not expensed the taxes and claimed input tax credit of the very same transactions.
g) During the year, we have not affected any inward supplies from unregistered persons other than those supported by valid self-purchase bills / Payment Vouchers declared in GSTR 9C and the returns filed. Input tax credit for GST paid / payable on Inward supplies affected from such unregistered suppliers (up to 12th October 2017) has been availed in terms of the GST laws.
h) We have claimed input tax credit on the following basis on fulfilment of the relevant conditions stipulated under the relevant provisions of the GST laws
i) We confirm that input tax credit availed by us are in respect of use in course or furtherance of business.
j) We are in possession of all the original tax invoices of inward / outward supplies. We confirm having produced such original invoices for your verification during the course of your audit proceedings. We reiterate that we have availed input tax credits based on such original invoices relating to inward supplies.
k) We have verified the calculations for reversal of credits as applicable under rule 37, 42 and 43 as at the end of the year.
a) The accounting policies adopted by us are set out and elaborated in Notes to Accounts attached to the financial statements.
b) None of the business premises were a subject matter of inspection by GST Department Officers during the year.
c) We confirm that we have adhered to the provisions relating to time of supply of goods and time of supply of services in terms of Section 12 and Section 13 of the GST Act, We confirm we have furnished to you / your firm a policy document in respect of time and place of supply of goods and / or services.
d) We confirm and reiterate that while we have our books and records in compliance with the applicable statutes. We are in/not in a position to furnish the State-wise financial Statements for review / audit purposes.
e) In respect of certain transactions on which the valuation Rules stand applicable under the GST laws we confirm that such transactions have been recorded in the books and records appropriately while reiterating that such valuations would not stand to scrutiny under other Statutes.
f) We have noted the observations made in by you / your firm during the course of your audit and we hereby confirm that we shall be solely responsible for the impact, if any, on our tax liability by virtue of such observations.
g) We certify that the following statements, among others, submitted to you to be true and correct:
i) Statement of monthly summaries of outward supplies and Inward supplies (with tax analysis);
ii) Statement of debit note and credit note as also journal entries (with tax analysis);
iii) Statement of goods received inside the State and sent outside the State;
iv) Outward Supplies and Inward supplies of fixed assets;
v) Details of Other income / Miscellaneous income;
vi) Details of expenses on which input tax credit is claimed together with tax analysis thereof;
vii) Reconciliation of outward supply and Inward supply with ledger.
The word “certify” or “true and correct “indicate absolute level of assurance expected to be provided by the practitioner on the subject matter. Absolute assurance indicates that a practitioner has performed procedures considered appropriate to reduce the engagement risk to zero.
Partner / Proprietor / Director / Authorized Signatory
*Strike out whichever is not applicable
**Attention of the readers is invited to the fact that the suggested format of the management representation is only illustrative. There could be several issues that may not have been covered in the same which may warrant suitable inclusions or exclusions or may even warrant issue of a separate management representation / certificate. The reader is required to make suitable modifications / corrections in respect of the format suggested supra based on the facts and surrounding circumstances of each case under audit.
—————-Name and address of the entity——————–
Sub: Our appointment as GST Auditors* (Joint Auditors*) under Section 35(5) and Section 44(2) of the CGST Act read with Rule 80(3) of the CGST Rules [read with the corresponding provisions of the State / Union Territory Goods and Services Tax Acts] to certify the Reconciliation Statement in GSTR 9-C prepared for the financial year ended 31st March 2018
Ref: Your appointment letter dated ………………… / GSTIN:
We are in receipt of your appointment letter dated ……., in relation to the captioned matter.
We are pleased to confirm our acceptance and our understanding of this engagement, by means of this letter.
1. The Management is responsible for compliances with the GST laws, comprising the Union Territory Goods and Services Tax / Central Goods and Services Tax / State Goods and Services Tax Act, 2017* and Integrated Goods and Services Tax Act, 2017 and the respective rules framed there under, and for the preparation of the GSTR 9CGSTR GSTR 9C in compliance of those laws.
2. The responsibility of the Management also includes the maintenance of adequate accounting records and internal controls for safeguarding of the assets of the Entity / Firm / Company* and for preventing and detecting fraud or other irregularities. As part of our audit process, we will request from the Management written confirmation concerning representations made to us in connection with the audit.
3. Our responsibility is to audit the particulars included in the GSTR 9C to ensure that they are free of any material mis-statement.
4. Our audit will be conducted in accordance with the auditing standards generally accepted in India and in line with the requirements under the GST laws. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the relevant GSTR 9C is free of material mis-statements. An audit includes examination on a test basis, using the concept of materiality, evidence supporting the amounts and disclosures in GSTR 9C. The audit may also include assessing the accounting principles used and significant estimates made by the Management in the presentation of financial statements.
5. In addition, we will consider, solely for the purpose of planning of our audit and determining the nature, timing, and extent of our audit procedures, the enterprise’s internal control. This consideration will not be sufficient to enable us to provide assurance on internal control or to identify all reportable conditions.
6. Having regard to the test nature of an audit, persuasive rather than conclusive nature of audit evidence, together with inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements, resulting from fraud, and to a lesser extent error, if either exists, may remain undetected.
7. As required by auditing standards generally accepted in India, we will make specific inquiries of Management about the representations contained in the financial statements and other reports as may be applicable and the effectiveness of internal control over financial reporting. Auditing standards generally accepted in India also require that, at the conclusion of the audit, we obtain representation letters from certain members of management about these matters. The responses to those inquiries, the written representations, and the results of our audit tests comprise the evidential matter we will rely upon in forming an opinion on the GSTR 9C or other reports. Owing to the importance of Management’s representations to an effective audit and review, the enterprise agrees liability and costs relating to our services under this letter attributable to any misrepresentations by Management. Management is responsible for providing us with all financial records and related information / documents on a timely basis, and its failure to do so may cause us to delay our report, modify our procedures, or even terminate our engagement.
8. The working papers prepared in conjunction with our audits are the property of our Firm, constitute confidential information and will be retained by us in accordance with our Firm’s policies and procedures. However, we acknowledge that the details or data received from you for preparation of these working papers are / is confidential information of the enterprise and will not be disclosed by us to any third party, except as set out in paragraph 9 below or when required by legislation, without the prior written consent from the Company.
9. In accordance with the Statement on Peer Review issued by the Institute of Chartered Accountants of India, our attest services may be subject to a peer review to be conducted by an independent reviewer who can inspect, examine or take abstract of our work papers including those provided by you.
10. If these arrangements are acceptable, please sign one copy of this letter and return it to us. We very much appreciate the opportunity to serve you and would be pleased to furnish any additional information you may request concerning our responsibilities and functions. We trust that our association will be a long and mutually beneficial one.
* Strike out whichever is not applicable and make suitable changes on a case to case basis
ABC and Co.,
Sub: Appointment of GST Auditors (Joint Auditors) under Section 35(5) and Section 44(2) of the CGST Act read with Rule 80(3) of the CGST Rules [read with the corresponding provisions of the State / Union Territory Goods and Services Tax Acts] for the previous year ending on 31st March 2018
We are pleased to inform you that vide Resolution of the Board of Directors dated ….. * you* / your firm* have* / has* been appointed GST Auditors / Joint GST Auditors of our Firm* / Company* (other entities viz., Trust), carrying the business under the name and style as (Name of the client and address and GSTIN) for conducting the audit under Section 35(5) and Section 44(2) of the CGST Act read with Rule 80(3) of the CGST Rules [read with the corresponding provisions of the State / Union Territory Goods and Services Tax Acts] for the previous year ending on 31st March 2018.
The remuneration for conducting the said audit is fixed at Rs…………. All applicable taxes, out of pocket expenses such as travelling, conveyance etc., shall be extra, at actuals.
Kindly confirm your acceptance for the above appointment.
[Name and designation]
* Strike out whichever is not applicable and make suitable changes on a case to case basis