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GSTR-9C is an annual GST reconciliation statement that underwent a major change in 2021. The Form GSTR-9C was earlier applicable to businesses with more than Rs.2 crore as annual turnover in a particular financial year. It required the audit of books and records of that year by a chartered accountant or a certified management accountant and their certification. These requirements are removed from the financial year 2020-21 onwards. Instead, Form GSTR-9C requires it to be self-certified by the businesses themselves.
This article provides complete details about the amendment of the provisions of the CGST Act, the format and the corresponding rules governing Form GSTR-9C.
5th July 2022
The CBIC has exempted GST-registered taxpayers with annual aggregate turnover up to Rs.2 crore in FY 21-22 from filing Form GSTR-9.
Businesses registered under the GST law having more than Rs.2 crore as annual aggregate turnover in a financial year had to get their books, represented by the annual financial statements, audited under Section 35(5) of the CGST Act.
After the conclusion of the GST audit by CA/CMA, the auditor had to sort out any deviations with the management, prepare a reconciliation statement between the audited financial statements and Form GSTR-9 (GST annual returns) filed by the business for a particular financial year.
The Form was known as GSTR-9C provided by Section 44 of the CGST Act, read with CGST Rule 80, and this form had to be certified by the same auditor or a CA/CMA eligible to do so. It had to be prepared for every GSTIN registered under a particular PAN. Once the certification was complete, the business had to file both Form GSTR-9 and Form GSTR-9C on the GST portal on or before the due date of 31st December of the year following that financial year.
The taxpayers can pay any additional liability reported in this form through Form DRC-03. They must select ― ’Reconciliation Statement’ from the drop-down provided in Form DRC-03 and pay towards such liability only through the electronic cash ledger.
The GST department considers the information reported in Form GSTR-9C to check for significant discrepancies in the taxpayer’s reporting and compliance. In turn, if it finds any such discrepancy that the taxpayer does not resolve, it can issue notice to the taxpayer.
The format of the erstwhile Form GSTR-9C was divided into two parts. Part-A contained the reconciliation statement with the mention of any differences. Part-B contained the certification by the auditor or CA/CMA.
Part-A was further divided into five parts as follows:
|Part-I||Basic details such as GSTIN, FY, Trade name and legal name, and any requirement of audit under any other law.|
|Part-II||Reconciliation between the turnover derived from the audited annual financial statement for a particular GSTIN and the turnover mentioned in Form GSTR-9 (GST annual returns).|
|Part-III||Reconciliation and differences, if any, between the GST-rate wise tax liability and payment as reported in Form GSTR-9 and derived from the audited financial statements for a particular GSTIN.|
|Part-IV||Reconciliation and differences, if any, between the input tax credit availed and used as reported in Form GSTR-9 and derived from the audited financial statements for a particular GSTIN.|
|Part-V||Auditor’s recommendation regarding any additional unreconciled liabilities.|
Part-B had two varieties for use. The auditor could use the first type or format for certifying the Form GSTR-9C himself. The second type or format could be used by a CA/CMA who did not perform the audit but certifies the Form GSTR-9C based on the auditor’s observations.
The Union Budget 2021 introduced two key changes in Sections 35 and 44 of the CGST Act. The government has removed Section 35(5) of the CGST Act. Further, Section 44 of the CGST Act stands amended. The changes in the Act were approved with the passing of the Finance Act, 2021.
Following are the changes in the CGST Act-
The GST Council reaffirmed these changes at the 43rd GST Council meeting held on 28th May 2021. The CBIC notified these changes on 30th July 2021 vide Central Tax notifications 29/2021 and 30/2021. It notified the applicability of Sections 110 and 111 of the Finance Act, 2021 that contained these amendments. Further, Rule 80(3) and Part-B of the CGST Rules have been amended to specify the threshold limit for applicability and bring changes to the format.
Accordingly, Form GSTR-9C applies to a taxpayer if the annual aggregate turnover limit for the relevant financial year is more than Rs.5 crore. The format of Form GSTR-9C has been modified to include FY 2020-21 and to support self-certification.
Form GSTR-9C continues to be exempted for input service distributors, taxpayers subject to TDS and TCS provisions, casual taxable persons and non-resident taxable persons. In addition to these, government departments and taxpayers with a total turnover less than or equal to Rs.5 crore are added to the exemption category.
Accordingly, Form GSTR-9C becomes applicable to taxpayers with an annual aggregate turnover for the relevant financial year being more than Rs.5 crore. These taxpayers are required to self certify or carry out a voluntary reconciliation statement without the need for audit and file it with the tax authority on or before 31st December of the year following the relevant financial year.
The following table summarises the threshold applicability of both annual returns and the reconciliation statement for FY 2020-21.
|Name of the Form||Applicability- AATO* limit for FY 2020-21||The due date for FY 2020-21|
|GSTR-9||> Rs.2 crore||31st December 2021|
|GSTR-9C||> Rs.5 crore|
*Annual aggregate turnover during FY 2020-21.
(Changes applicable for FY 2020-21 and onwards)
Changes in Part-A: Reconciliation statement is as follows:
|Reference to part and/or table no.||Particulars||Changes made|
|Part-II – Tables 5B to 5N||Reconciliation of the annual turnover as per the audited annual financial statement with the turnover as declared in Form GSTR-9||These tables are optional while filing GSTR-9C for FY 2020-21. If there are any adjustments, those can be done in Table 5O.|
|Part-III and Table no. 9||Reconciliation of GST rate-wise liability and the amount payable||A new row is inserted below ‘K’ -0.10% to now have ‘K-1’ for other GST rates not listed above it.|
|Part-III and Table no. 11||Any additional amount to be paid but not paid (on account of the reasons specified under Tables 6,8 and 10)||A new row ‘others’ is inserted below 0.10% to now have other GST rates not listed above it.|
|Part-IV- Tables 12B, 12C, and 14||Reconciliation of Input Tax Credit (ITC)||These tables are optional while filing GSTR-9C for FY 2020-21.|
|Auditor’s recommendation on any additional Liability due to non-reconciliation||Heading changed to “Additional Liability due to non-reconciliation”A new row ‘others’ is inserted below 0.10% to now have other GST rates not listed above it.|
|Verification||Verification of the registered person||Replaced by the following lines:I hereby solemnly affirm and declare that the information given herein above is true and correct, and nothing has been concealed therefrom. I am uploading the self-certified reconciliation statement in Form GSTR-9C. As applicable, I am also uploading other statements, including financial statements, profit and loss account and balance sheet, etc.|
|Instruction -serial no. 7||Part V – Additional Liability due to non-reconciliation||The wordings of the instruction are revised to remove references to the auditor and their recommendations, as follows:Part-V consists of the additional liability to be discharged by the taxpayer due to non-reconciliation of turnover or non-reconciliation of the input tax credit. Any refund that has been mistakenly considered and paid back to the government must also be declared in this table. Lastly, any other pending demand to be settled by the taxpayer has to be declared in this Table.|
Part-B – Certification has been entirely removed
No doubt that with the removal of the GST audit and certification by CA/CMA, compliance seems to have been simplified for taxpayers. On the flip side, the Finance Head’s of the taxpayer business will have added responsibility on their shoulders to report the figures in Forms GSTR-9 and GSTR-9C accurately.
With this move being notified for FY 2020-21, every CFO or Finance Head of the applicable company must first ensure that their teams are aligned with the changes in the format of GSTR-9 and GSTR-9C. They should arrange for awareness sessions for their teams to understand the implications of removing the requirement of GST audit and certification by a CA/CMA.
The government does not intend to reduce its verification measures with the removal of the GST audit. It may even increase the scrutiny procedures and impose penalties where it identifies any non-compliance or lapse in reporting. Businesses must notify any unreconciled figures as it is in Form GSTR-9C, without any omissions. Companies may refer to the opinions and observations made by the statutory auditors regarding GST compliance while preparing GSTR-9C.
There is always a fear of GST registrations getting suspended for significant discrepancies in data between GST returns – GSTR-1 versus GSTR-3B versus books and GSTR-3B versus GSTR-2A versus books. The GST law added this ground for the suspension of GST registration with effect from January 2021.
Hence, finance heads must have dedicated team members to perform these reconciliations before the deadline prescribed by the law for adjustments and corrections to GST data reported for a particular financial year. The deadline is due date for filing GSTR-1 and GSTR-3B of September of the year following the relevant financial year.
These actions allow the business to prepare and report accurate GST annual returns and reconciliation statements with lower chances of any GST demand notices. In turn, they can avoid paying any tax dues through Form DRC-03 later on, during or after filing GSTR-9 and GSTR-9C.
CFOs must set up robust systems in their organisations for annual GST reconciliation at the PAN-India level. Even though reporting is at GSTIN-level, the finance leaders must ensure data consistency in annual returns compared to the income tax returns, which can be achieved through automation and tech-enabled systems.
Clear GST software offers the ultimate solution to tackle your enterprise’s annual GST compliance, such as the yearly GST reconciliation due with the filing of September returns and the preparation and filing of GSTR-9 and GSTR-9C. Sign up and begin your GST-compliant journey with ease!