Annual Audit (GSTR-9C) for FY 2019-20

January 24, 2021 caAdmin0

Like every taxation law, provisions for Annual GST Audit has been inserted there in GST laws viz. CGST Act 2017 and respective State/UT GST Acts.

Section 44(2) of CGST Act 2017 read with Section 35(5) of said Act, provides that where a registered person has turnover in a financial year exceeds the prescribed threshhold limit, it is mandatory to file a Reconciliation Statement in Form GSTR-9C along with Annual Return for the said financial year.

In this article, we will go through the provisions of GSTR-9C.

Legal Background

Section 44(2) provides that :

Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

And, Section 35(5) provides that:

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.

In GST Laws, it requires Reconciliation Statement (“Audit Report”) to be filed along with Annual Return.

Form to file Reconciliation Statement (“Audit Report”)

Rule 80 (3) of CGST Rules 2017, prescribed the “Form” to be filed as Reconciliation Statement. As per said Rule, a reconciliation statement shall be filed in FORM GSTR-9C.

The said FORM GSTR-9C shall be certified by a chartered accountant or a cost accountant.

Who is required to file Reconciliation Statement (“Audit Report”)

Rule 80 (3) of CGST Rules 2017, prescribed the threshhold limt, where the person having turnover exceeding such limit are required to file Reconciliation Statement in Form GSTR-9C.

As per said Rule:-

Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronicallythrough the common portal either directly or througha Facilitation Centre notified by the Commissioner.

However, for FY 2019-20, the threshhold limit for filing GSTR-9C has been enhanced from earlier Rs 2 Crores to Rs 5 Crores.

There are some exceptions where it is not required to file Reconciliation Statement (GSTR-9C). As per proviso to Section 35(5), provisions for filing of GSTR-9C not applicable for 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-Generalof India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

Due date to file GSTR-9C

Particularly, no due date prescribed for filing GSTR-9C. However, if we read the provisions of Section 44(2) along with Section 35(5) (both reproduced above), GSTR-9C shall be filed along with Annual Return for the said financial Year.

Had the returns filed through paper mode, it would be easier to say that Annual Return and GSTR-9C must be filed altogether on or before due date of Annual Return.

Refer Annual Return (GSTR-9) FY 2019-20 for due dates for GSTR-9.

However, in computerised mode, there are some confusions among taxpayers that what if Annual Return filed on or before due date, but GSTR-9C filed after the due date of Annual Return. GST Portal provides two different windows for filing of Annual Return and GSTR-9C. So, both the forms may filed on different dates, however, annual return must be filed earlier than GSTR-9C, i.e. GSTR-9C can be filed only after filing of Annual Return.

In case GSTR-9C filed after due date, there is no late fee prescribed in law.

What if a person has registration in multiple States/UTs

There may be cases where multiple GSTINs (State-wise) registrations exist on the same PAN. This is common for persons / entities with presence over multiple States. Such persons / entities, will have to internally derive their ITC for each individual GSTIN and declare the same here.

Such persons / entities, will have to internally derive their GSTIN wise details regarding turnover, tax, ITC etc. and declare the same in Form GSTR-9C for each registration.

In Form GSTR-9C, any reference to audited Annual Financial Statement includes reference to books of accounts in case of persons / entities having presence over multiple States.

What is the late fee or penalty in case GSTR-9C not filed by due date of Annual Return

As the GSTR-9C is a part of Annual Return, so there is no separate late fee prescribed in GST Laws.

However, because the GST portal provides two different windows for Annual Return and GSTR-9C, taxpayers generally assume both these forms as independent forms. So, it is very common question that why there is no late fee for GSTR-9C.

Further, where a taxpayer is required to file GSTR-9C and it is not filed by due date, he may be levied with penalty under section 125 of CGST Act and under respective State/UT Act.

Section 125 provides for penalty of Rs 50000/- (i.e. 25000/- under CGST Act plus Rs 25000/- under respective State Act). However, this penalty is not an automatic charge for late filing of GSTR-9C. It may be charged by tax officer by issuing Show Cause Notice.

Relaxations on reporting in FORM GSTR-9C

Form GSTR-9C is a comprehensive form which requires proper books of accounts with tagging of GST Status on each entry in such books of account. It is somehow difficult for professionals to prepare GSTR-9C on the basis of improper books of accounts. Due to difficulties being faced by professionals for filing the form, some relaxations are provided for FY 2019-20 in Form GSTR-9C, where some of reporting points are made optional.

Followings are reporting relaxations (point wise) for FY 2019-20:-

Table 5(B) : Unbilled revenue at the beginning of Financial Year