Section 35 (5) of the Central Goods and Service Tax Act, 2017 provides that every registered person whose aggregate turnover exceeds INR 2 Crore is required to submit a reconciliation statement along with the audited reports.
The Central Board of Indirect Taxes and Customs, vide notification no. 49/2018 – Central Tax dated 13th September, 2018, has introduced the format of the said reconciliation statement to be filed in FORM GSTR – 9C.
Under Part II of form GSTR – 9C reconciliation of turnover is covered and the same is briefly explained in the present article.
PART II – RECONCILIATION OF TURNOVER DECLARED IN AUDITED ANNUAL FINANCIAL STATEMENT WITH TURNOVER DECLARED IN ANNUAL RETURN (GSTR 9) –
Part II of GSTR-9C deals with the reconciliation of gross and taxable turnover and the same is sub-divided into 4 sub-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 sub-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 as per audited Annual Financial Statement needs to be mentioned here.
In case of multiple GSTIN (with same PAN), the entities need to derive their GSTIN wise turnover which is reflected in the financial statement for its reconciliation with the annual return. It must be noted that in case of multiple GSTIN reference to audited Annual Financial Statement includes reference to books of accounts.
Further it must be noted that the total turnover to be mentioned here would also include the export turnover.
Point No. 5B – Unbilled revenue at the beginning of Financial Year – Unbilled revenue which was recorded in the books of accounts on the basis of accrual system of accounting in the last financial year and was carried forward to the current financial year shall be declared here. In other words, when GST is payable during the financial year on such revenue (which was recognized earlier), the value of such revenue shall be declared here.
Point No. 5C – Unadjusted advances at the end of the Financial Year – Value of all the advances on which GST is paid, however, the same has not been included in the income in the audited Annual Financial Statement such value 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. It must be noted here that the value of deemed supply which is already part of turnover of 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 that had been issued after 31st March for supply accounted in current financial year and effect of such credit notes were reflected in the annual return filed in GSTR 9, 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, however, GST was payable on such trade discount since such trade discount was not permissible as per GST law, then, value of such trade discount needs to be mentioned here.
Point No. 5G – Turnover from April, 2017 to June, 2017 – Since the period covered in return is from 1st July, 2017 (the same being the date on which GST was made effective), turnover for the period from April to June, 2017 needs to be mentioned here so that the same can be reduced from the gross turnover.
Point No. 5H – Unbilled revenue at the end of the Financial Year – In case accrual system of accounting is followed and on the basis of the same unbilled revenue has been recorded in the books of accounts at the end of the Financial Year. Since revenue is recorded on the accrual basis, GST would not be payable on the same in the same financial year. Hence the value of such unbilled revenue needs to be mentioned here so that the same can be reduced from the gross turnover.
Point No. 5I – Unadjusted advances at the beginning of the Financial Year – Value of all such advances on which GST has not been paid, however, the same has been recognized as revenue in the audited Annual Financial Statement needs to be mentioned here.
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, however, such credit notes are not permissible in terms of section 34 of the Central Goods and Service Tax Act, 2017, the value of such credit notes 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 needs to be mentioned here. DTA units must have filed a bill of entry for the same.
Point No. 5L – Turnover for the period under composition scheme – In case the taxpayer had opted for composition scheme and later on opted out of the same, then, total turnover as per audited Financial Statement (as per point 5A above) would have included both turnover i.e. turnover when taxpayer was paying tax under composition scheme and turnover when taxpayer was paying tax under normal scheme. In such case, turnover for which GST was paid under composition scheme needs to be mentioned here.
Point No. 5M – Adjustments in a turnover under section 15 and rules thereunder – Section 15 of the Central Goods and Service Tax Act, 2017 deals with the value of taxable supply. Due to the provisions of section 15 and the rules made thereon, there are chances of difference between the taxable value and the invoice value. Difference between turnover reported in the Annual return in form GSTR 9 and turnover reported in the audited Annual Financial Statement due to the difference in the valuation of supplies needs to be mentioned here.
Point No. 5N – Adjustments in turnover due to foreign exchange fluctuations – Difference in turnover as per annual return in GSTR 9 and turnover in audited Annual Financial Statement on account of foreign exchange fluctuations needs to be mentioned here.
Point No. 5O – Adjustments in turnover due to reasons not listed above – Difference in turnover between annual return in GSTR 9 and audited Annual Financial Statement on account of any other reason, other than reason listed above, the same needs to be mentioned here.
Point No. 5P – Annual turnover after adjustments as above – Auto-populated – This would be the net adjusted annual turnover which would be compared with the annual turnover mentioned in return GSTR 9.
Point No. 5Q – Turnover as declared in Annual Return (GSTR 9) – Annual turnover as declared under GSTR 9 would be mentioned here. Figures from point no. 5N, 10 and 11 of GSTR 9 would be helpful.
Point No. 5R – Un-reconciled turnover (Q – P) – Auto-populated
POINT NO. 6 – REASONS FOR UN-RECONCILED DIFFERENCE IN ANNUAL GROSS TURNOVER
In case there is a difference between annual turnover declared in an audited Financial Statement (point no. 5P) and turnover as declared in the annual return in form GSTR 9 (point no. 5Q), then, the reason for such difference needs to be mentioned here.
POINT NO. 7 – RECONCILIATION OF TAXABLE TURNOVER
Point No. 7 provides for the reconciliation of taxable turnover, derived after deducting turnover on which GST is not payable or GST is not applicable, with the turnover as declared in annual return.
Point No. 7A – Annual turnover after adjustments (from 5P above) – Auto-populated – Net adjusted annual turnover as per point no. 5P above would be auto-populated here.
Point No. 7B – Value of Exempted, Nil rated, Non-GST supplies, No supply turnover – 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 – Turnover of zero rated supplies, which 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 to be mentioned should be net of debit notes, credit notes and amendments.
Point No. 7E – Taxable turnover as per adjustments – Auto-populated (A-B-C-D) – This would be the net taxable turnover figure which needs to be compared with the taxable turnover as declared in annual return (GSTR 9).
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 point no. 7E.
POINT NO. 8 – REASONS FOR UN-RECONCILED DIFFERENCE IN TAXABLE TURNOVER –
Reason for difference derived at point no. 7G (i.e. the difference between taxable turnover declared in annual return and taxable turnover derived at point no. 7E) needs to be provided here. In case there is no difference and the figure at point no. 7G is NIL, point no. 8 would remain blank.
In Next Article we will discuss Part III of GSTR – 9C Reconciliation of Tax Paid.
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