Understanding Part IV of GSTR 9C – Reconciliation of Input Tax Credit

The Central Goods and Service Tax Act, 2017 provides that an annual return in form GSTR 9C is required to be filed by every registered person whose turnover exceeds INR 2 crore in a financial year.

The most important part under Goods and Service Tax is dealing with availment of input tax credit. Part IV of GSTR 9C deals with the reconciliation of input tax credit between ITC availed as per audited Annual Financial Statement and ITC availed / claimed in the annual return filed in form GSTR 9. Current article would help to understand the said part IV of GSTR 9C.

PART IV – RECONCILIATION OF INPUT TAX CREDIT –

Broadly, part IV is divided into 5 sub-parts and the same is mentioned below –

Point No. 12 – Reconciliation of net input tax credit.

Point No. 13 – Reasons for un-reconciled difference in ITC.

Point No. 14 – Reconciliation of ITC declared in annual return (GSTR 9) with ITC availed on expenses as per audited annual financial statement or books of account.

Point No. 15 – Reason for un-reconciled difference in ITC.

Point No. 16 – Tax payable on the un-reconciled difference in ITC (due to reasons specified in 13 and 15 above).

Briefly describing all the above 5 parts of PART IV of GSTR 9C –

POINT NO. 12 – RECONCILIATION OF NET INPUT TAX CREDIT –

Point No. 12A – ITC availed as per audited Annual Financial Statement for the State / UT (For multi-GSTIN units under same PAN this should be derived from books of accounts) –

ITC availed (after giving reversal effect, if any) as per the audited Annual Financial Statement needs to be mentioned here. In case there is registration of multiple GSTIN for the same PAN, ITC for each individual GSTIN needs to be derived and mentioned here. In simple terms, in case of multiple GSTIN, ITC of each GSTIN needs to be derived separately and mentioned here.

It must be noted here that reference to audited Annual Financial Statement includes reference to books of accounts in case of the taxpayer having a presence over multiple states.

Point No. 12B – ITC booked in earlier Financial Years claimed in current Financial Year – Value of ITC which was booked in audited Annual Financial Statement in the earlier financial year, however, the same was availed in the ITC ledger in the current financial year i.e. the financial year for which the reconciliation statement is being filed, the value of such ITC needs to be mentioned here.

In simple terms, ITC booked in the earlier year in audited accounts and the same claimed in ITC ledger in the current year needs to be mentioned here.

It must be noted that the value of transitional credit which was booked in the earlier year but credit was availed during the financial year 2017-2018 must be included here.

Point No. 12C – ITC booked in current Financial Year to be claimed in subsequent Financial Year – Value of ITC which is booked in the current financial year in the audited Annual Financial Statement, however, the same has not been credited to the ITC ledger for the said financial year, the value of such ITC needs to be mentioned here.

In simple terms, ITC booked in the current year in audited accounts, however, the same would be claimed in ITC ledger is future year needs to be mentioned here.

Point No. 12D – ITC availed as per audited financial statements or books of account – Auto-populated value (12A + 12B – 12C) – This would be the net figure with which ITC claimed / availed in annual return in GSTR 9 would be compared.

Point No. 12E – ITC claimed in Annual Return (GSTR 9) – Value of ITC claimed in annual return (GSTR 9) at Table 7J needs to be mentioned here.

Point No. 12F – Un-reconciled ITC – Different between adjusted ITC availed as per audited financial statement or books of account (point no. 12D) and ITC claimed in annual return (GSTR 9) (point no. 12E) would be recorded here. This figure would be auto populated.

POINT NO. 13 – REASONS FOR UN-RECONCILED DIFFERENCE IN ITC –

In case there is a difference between ITC claimed in the annual return filed in form GSTR 9 and ITC as per audited Financial Statement, then, the reason for such difference needs to be mentioned here. In case point no. 12F is NIL i.e. there is no difference in ITC, point no. 13 would remain blank.

POINT NO. 14 – RECONCILIATION OF ITC DECLARED IN ANNUAL RETURN (GSTR 9) WITH ITC AVAILED ON EXPENSES AS PER AUDITED ANNUAL FINANCIAL STATEMENT OR BOOKS OF ACCOUNT –

Point No. 14A to Point No. 14Q – Expense wise bifurcation of ITC – Under this points ITC availed on various expenses as per audited annual financial statement or books of accounts needs to be bifurcated. Various sub-heads of expenses like purchases, freight / carriage, power and fuel, imported goods (including received from SEZs), rent and insurance, royalties, conveyance charges, bank charges, repair and maintenance etc. are mentioned, however, the same is only general list provided and taxpayer can add or delete any of these heads of expenses on which GST has been paid / payable.

Point No. 14R – Total amount of eligible ITC availed – Auto-populated – Total form Point No. 14A to Point No. 14Q.

Point No. 14S – ITC claimed in Annual Return (GSTR 9) – ITC claimed / availed in Annual Return filed in form GSTR 9. Figure from table 7J of GSTR 9 would be helpful.

POINT NO. 15 – REASON FOR UN-RECONCILED DIFFERENCE IN ITC –

In case there is a difference between ITC availed on various expenses as per point no. 14R and ITC availed in annual return as per point no. 14S, the reason for the said difference needs to be mentioned here.

POINT NO. 16 – TAX PAYABLE ON UN-RECONCILED DIFFERENCE IN ITC (DUE TO REASONS SPECIFIED IN 13 AND 15 ABOVE) –

Tax payable on account of reasons specified for the difference at the point no. 13 and point no. 15 should be mentioned here. Tax so payable needs to be appropriately bifurcated into central tax, state / UT tax, integrated tax, cess, interest and penalty.