Essential Guidelines for Accurate Filing of GSTR-9 and GSTR-9C: Safeguard Measure for GST Departmental Audits

Essential Guidelines for Accurate Filing of GSTR-9 and GSTR-9C: Safeguard Measure for GST Departmental Audits

6 out of 10 GST taxpayers have completed their “GST Departmental Audit”. Followed by various observations like GSTR-2A reconciliation issues, Input tax credit availed from non-genuine taxpayer or registration canceled vendor, ITC reversals on account of Credit notes appearing in GSTR-2A, mismatch in Outward supplies vis a vis E-way bill issued, Wrong classification of goods, etc. After implementation of GST from Jul, 2017, many significant process, systems as well as skillsets have been changed to accustom with the GST provisions. In accordance with following with legal provisions one has to be assured about no GST departmental audit quires will be raised say after 2`3 years on them. Accordingly, taxpayers must be careful while filling GSTR-9 and GSTR-9C i.e. Annual returns/statement to avoid such queries and 100% tension free post filling of annual returns.

Filing GSTR-9 and GSTR-9C, which are annual return and reconciliation statement, requires meticulous attention to detail to ensure compliance and avoid penalties. Here are key points to consider while filing these forms:

A) GSTR-9 (Annual Return)

1. Accurate Reporting of Transactions: Ensure that all outward and inward supplies, including advances received or paid, have been accurately reported. Double-check the figures with your monthly/quarterly GSTR-1 and GSTR-3B filings along with your financial statements. Most of the times taxpayer fail to identify and report the transactions that have resulted as supply booked in credit side of expenditures. Accordingly, detailed analysis for the credit side of the expenditures is required to be carried out.

2. Reconciliation of Input Tax Credit (ITC): Reconcile ITC claimed in GSTR-3B with the ITC available in GSTR-2B/2A. Any discrepancies should be addressed and corrected before filing. Taxpayers also extended the verification for status for filling of GSTR-3B returns by respective vendors for which ITC has been availed.

Further, payment status for ITC availed invoices has been maintained for understanding whether any ITC has been availed for invoice not paid within 180 days from the date of invoice. This aspect also to be verified from creditors aging mentioned in financial statements to understand the expected reversals.

Calculate ITC reversals as per rule 42 and 43 on exempt supplies. This point mainly highlighted in GST departmental audits and department has asking huge amount for reversals. These incidences can be avoided by timely identifying common credits and appropriate reversals in returns.

3. Details of Debit/Credit Notes: Properly report any debit or credit notes issued or received during the financial year. This is crucial for accurate tax liability computation. Detailed reconciliation for credit note reflecting in GSTR-2A has to be carried out as in most GST departmental audits this point has been taken up by the department.

4. Turnover Reporting: Ensure the turnover details match with the audited financial statements. This includes reporting zero-rated, nil-rated, exempted, and non-GST supplies correctly. Also, non-GST supplies also to be reported correctly either in to applicable table of GSTR-9 or in reconciliation statement.

5. Late Fees and Penalties: Pay attention to the late fees and penalties applicable for delays in filing GSTR-1 & GSTR-3B. Late fees for GSTR-3B has been computed by GST portal in subsequent GSTR-3B return however, late fees for GSTR-1 comes to understand in GST departmental audit to taxpayers.

6. Amendments and Adjustments: Incorporate any amendments or adjustments made during the year in the annual return. This includes corrections for any errors identified after the initial filing of GSTR-1 and GSTR-3B. Appropriate backup and details kept in place for future reference.

7. Review and Validation: Perform a thorough review of all the details before submission. Use available tools and software for validation checks to minimize errors. Also take a help of external professional review for 100% compliant to the provisions.

B. GSTR-9C (Reconciliation Statement)

1. Reconciliation of Turnover: Reconcile the turnover declared in the audited financial statements with the turnover declared in GSTR-9. Identify and explain any discrepancies.
2. Tax Paid and Payable: Reconcile the tax paid as per GSTR-9 with the tax payable as per the audited financial statements. Make necessary analysis/payment if there are differences.
3. Reverse Charge Liability: Detailed review and verification of financial statements for any additional reverse charge liability which required to be paid. Generally, reverse charge liability can be mostly identified from related party transactions where import of services involved by GST officials.
4. ITC Reconciliation: Reconcile ITC availed and utilized as per the audited financial statements with the ITC as per GSTR-9. Any differences should be thoroughly explained and justified. Also, pending ITC which will be subsequently availed by the company to be reviewed and reported correctly in respective Tables of GSTR-9 & 9C.
5. Verification of Expenses and ITC: Cross-check major expenses and ensure that the corresponding ITC has been correctly availed and reported. Also, verify any ITC eligibility w.r.t ineligible expenses if any.
6. Adjustments for Previous Financial Year: Ensure that all adjustments pertaining to the previous financial year but reported in the current financial year are accurately accounted for and appropriately considered in GSTR-9C reconciliation statements.
7. Submission Timeline: GSTR-9C should be submitted along with GSTR-9. Ensure both forms are filed within the due date to avoid penalties. 

C. Current GST Departmental Audit Notices Major issues:

1. Input Tax Credit (ITC) for Non-Genuine Taxpayers: Verify the authenticity of the suppliers from whom ITC has been claimed. Ensure all suppliers are registered and compliant with GST regulations. Conduct due diligence to avoid claiming ITC from non-genuine or fraudulent entities while filing GSTR-9 & 9C.
2. Registration Cancellations: Monitor any notifications regarding the cancellation of GST registrations of suppliers. If a supplier’s registration is canceled, review and adjust the ITC claimed accordingly. Unfortunately, there is no as such mechanism for get notified for cancellation of GST registrations of suppliers.
3. E-Way Bill Reconciliation: Ensure that all transactions involving the movement of goods are supported by valid E-way bills. Reconcile E-way bills with the sales and purchase records to ensure consistency and compliance. Taxpayer has to carried E-way bill reconciliation with outward supplies well before filing GSTR-9 & 9C. 

D. General Guidelines

• Documentation: Maintain proper documentation and records to support the details filed in GSTR-9 and GSTR-9C. This includes invoices, credit/debit notes and bank statements.
• Professional Assistance: Consider seeking assistance from GST professionals or consultants, especially if your business has complex transactions.
• Stay Updated: Keep yourself updated with any changes in the GST laws and filing requirements. Refer to the latest notifications and circulars issued by the GST authorities.
• Software Tools: Use reliable GST compliance software to automate and simplify the filing process, reducing the risk of manual errors.

By paying careful attention to these details, taxpayers can ensure accurate and compliant filing of GSTR-9 and GSTR-9C, thereby avoiding potential issues with GST authorities in their GST departmental Audits.