Changes in GSTR-9C from FY 2020-21

Form GSTR-9C is an annual GST reconciliation statement that compares the turnover, tax liability and input tax credit (ITC) reported in GSTR-9 with the figures in the audited annual financial statements for each GSTIN. With effect from FY 2020-21, the GST audit by a CA/CMA and their certification in GSTR-9C has been removed. Since then, taxpayers must self-certify the GSTR-9C reconciliation, subject to a revised applicability threshold of more than Rs 5 crore in annual aggregate turnover.

Key Takeaways

• The need for a GST audit by CA/CMA stands removed for FY 2020-21 and any later financial years.
• Every applicable taxpayer must submit a self-certified reconciliation statement by reconciling values between the audited financial statements and the annual returns.
• Some taxpayers may be exempted from complying with the annual return and reconciliation statement requirement through the CBIC notification.
• Section 44 shall not apply to any central government or state government departments already subject to audit by the Comptroller and Auditor-General of India (CAG).

Applicability of GSTR-9C

GSTR-9C is applicable where the Annual Aggregate Turnover (AATO) for the relevant financial year exceeds Rs 5 crore, computed at PAN level across all GST registrations.

GSTR-9C is not required for 

1. Input Service Distributors (ISD)
2. TDS deductors
3. TCS collectors
4. Casual taxable persons
5. Non-resident taxable persons
6. Government departments
7. Taxpayers with turnover up to Rs 5 crore

GSTR-9C Format

Part-A was further divided into five parts as follows:

Part-B is where the authorised signatory has to self certify the form GSTR-9C to proceed for submission. 

Changes introduced by the Union Budget 2021 and notifications

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.

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.

Applicability of Form GSTR-9 & GSTR-9C from FY 2020-21 onwards

The following table summarises the threshold applicability of both annual returns and the reconciliation statement for FY 2020-21.

The due date for filing Form GSTR-9C for FY 2024-25 is 31st December 2025.

Summarised table of changes to Form GSTR-9C

(Changes applicable for FY 2020-21 and onwards)

Changes in Part-A: Reconciliation statement is as follows:

Part-B – Certification has been entirely removed 

CFO or Finance Head’s responsibility towards self-certified GSTR-9C

The Finance Head’s of the business have added responsibility to report the figures in Forms GSTR-9 and GSTR-9C accurately. 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 chance 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/2B 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 October of the year following the relevant financial year (The law prescribes deadline of 30th November of following year or annual return filing date whichever is earlier). 

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 October returns and the preparation and filing of GSTR-9 and GSTR-9C. Sign up and begin your GST-compliant journey with ease!