GSTR 9C is an annual reconciliation statement. This reconciliation statement may be in similar terms understood as conduction GST Audit. For Financial Year 2017-18, the due date for filing GSTR 9C has been extended to 30th November, 2019. This statement is required to be filed by those registered dealers whose aggregate turnover for the financial year exceeds Rs. 2 crores.
What is GST Audit?
As per sec 2(13), audit means the examination of records, returns and other documents maintained or furnished by a registered person under the GST Act or the rules made there under or under any other law for the time being in force.
Audit is basically conducted to verify the correctness of turnover declared, taxes paid, refund claimed, input tax credit availed and to assess compliance with the provisions of this Act or the rules made there under.
What is aggregate turnover?
As per sec 2(6), aggregate turnover is the aggregate value of all taxable supplies, exempt supplies, exports of goods or services or both and interstate supplies of person having the same Permanent Account number, to be computed on all India basis but excludes integrated tax central tax, state / union territory tax and cess. Value of inward supplies on which tax is payable on reverse charge basis is not included in aggregate turnover.
GSTR 9C –
GSTR 9C is divided into two sections – Part A – Reconciliation Statement and Part B – Certification.
Part A – Reconciliation Statement is divided into five parts. Namely –
Part I: Basic Details
This section contains details like Financial Year for which the return is to be filed, GSTN of the registered person, legal name and trade name of the registered person. Further, it is also required to be specified if the registered entity is liable to audit under any other Act like the Income Tax Act, Co-operative Societies Act, etc.
Part II: Reconciliation of turnover declared in audited Annual Financial Statement with turnover declared in Annual Return (GSTR 9)
This section contains 4 tables – Table 5, Table 6, Table 7 and Table 8. Table 5 requires reconciling of annual turnover as per audited financial statements and turnover as declared in annual return i.e. GSTR 9. For the purposes of reconciling both the turnovers’, there are numerous fields that require to be considered like certain details are disclosed for the purpose of maintaining books of accounts but not considered for filing annual return GSTR 9.
Firstly, we need to give turnover for the entire year as per audited financial statements. For Financial Year 2017-18, one has to consider that GST was implemented from July 17, thus turnover for period April 17 to June 17, will be considered here and then reduced later to arrive at annual turnover as per GSTR 9. Also, if the registered person has shifted from composition scheme to regular taxpayer, then turnover for period in which he was registered under composition scheme may also be reduced. In case of SEZ, supply to a DTA unit may also be reduced.
Further, we need to make adjustment for un billed revenue disclosed at the beginning and end of the FY, un adjusted advances at the beginning and end of the FY, credit notes issued after the end of FY but reflected in annual return, trade discounts not allowed under GST, credit notes not permissible under GST, adjustments on account of foreign fluctuations and any other adjustments to reconcile both turnover. Any difference thereon shall be identified here.
In Table 6, we need to give reasons for differences in annual turnover, if any, identified above.
Table 7 requires us to deduct the value of non-taxable turnover. The turnover arrived is taxable turnover. Thus, any details of nil rated, exempt, non-GST, zero rated supplies without payment of tax, outward supplies on which tax is payable under reverse charge by recipient may be declared here. Any difference arising on comparison with GSTR 9 may be identified here.
In Table 8, reasons for difference in taxable turnover identified in Table 7 above may be mentioned here.
Part III: Reconciliation of tax paid
This section consists of 3 tables – Table 9, Table 10 and Table 11. The purpose of this part is to identify if any additional tax is payable on reconciliation with audited financial statement. Table 9 requires rate wise summary of taxable value, tax value as per audited financial statement and its comparison with GSTR 9 annual return. Any un-reconciled amount may be identified here.
In Table 10, one needs to give reasons for difference identified in table 9 above.
In Table 11, any additional liability payable on account of differences mentioned above may be declared here. Such additional payable has to bifurcated rate wise along with interest, penalty and late fees.
Part IV: Reconciliation of Input Tax Credit (ITC)
This part is divided into 5 tables and gives reconciliation of input tax credit as per audited financial statement and annual return GSTR 9.
Table 12 requires details of total input tax credit availed as per audited financial statement, input tax credit of earlier FY claimed in current FY, input tax credit of current year claimed in next Financial Year and its comparison with annual return GSTR 9. Any difference is un-reconciled input tax credit.
In Table 13, one needs to give reasons for un-reconciled input tax credit identified above.
Table 14 requires bifurcation of total input tax credit availed into various heads like purchases, freight / carriage, power and fuel, imported goods (including purchases received from SEZ), royalties, etc. All such expenses on which GST is applicable may be declared here. Only those items on which GST has been claimed may be declared here. Any un-reconciled difference on comparison with annual return GSTR 9 may be identified here. Amount of eligible input tax credit out of the total available input tax credit may be declared in column 4 of Table 14. Any ineligible input tax credit or input tax credit reversed may be reduced while declaring such amount.
In Table 15, reasons for un-reconciled input tax credit identified in Table 14 above may be mentioned
Table 16 requires giving details of any tax payable due to un-reconciled input tax credit. Only amount tax payable into various tax heads like IGST, CGST, SGST, etc. is to be mentioned.
Part V: Auditor’s recommendation on additional liability due to non-reconciliation
Based details mentioned above of turnover and input tax credit, auditor has to identify if any additional tax payable on account of non-reconciliation. The same may also be verified by the auditor.
XYZ ltd has the following ledgers. Let us see against which table they may be mapped –
- Turnover for period April 17 to June 17 – it will be mapped at two sections – Table 4A and Table 4G.
- Foreign exchange fluctuations on exports – Table 4N
- Advances received and unadjusted at the beginning of the financial year – Table 4I
- Turnover when registered under composition scheme during the financial year – Table 4L
- Any revenue not billed at the end of the financial year – Table 4H
- Exempt supply – This will also be declared in two sections – Table 4A and Table 7B
- Outward supplies attracting reverse charge – This will again be declared in two sections – Table 4A and Table 7D
- Input tax credit on purchases – Table 12A and Table 14A
- Input tax credit availed on printing and stationery – Table 12A and 14L
- Input tax credit availed on bank charges – Table 12A and Table 14J
- Input tax credit on purchase of goods from SEZ – Table 12A and 14D.
Part B: Certification
This part has two types of certification. Part I of certification is to be certified in case where the same person has audited the books of accounts and GST Act. Part II of certification is to be certified where books of accounts audit and GST audit are conducted by two separate entities.
However, auditor has to certify only one part depending on the condition satisfied. If the GTSR 9C is to be certified by the same person who has done audit of accounts, one should certify under first part of this section.
If the person certifying GSTR 9C and person who has certified annual accounts are different, then Part II is to be certified.
Along with GSTR 9C, copy of audited financial statements i.e. balance sheet, profit and loss account, cash flow statement and other documents may be deemed necessary is also necessary to be uploaded for the period for which GSTR 9C is to be filed.
The draft of GSTR 9C seems to be simple, but the in depth verification that takes place is time consuming and complicated.
Ledger Mapping is one of the important factor in GSTR 9C Filing. You can automate or semi automate this process by opting for certain GST Filing Software like GSTHero. It can integrate within ERP’s like TALLY with the help of plugin and will help you in mapping ledgers within TALLY itself. It also provides various reports required for GSTR 9C filing In simplified format.
This article is sponsored post from Vivek Bandebuche. Vivek is marketing manager at GSTHero.com. This article is written and explained by CA. Sugandh Jain Parmar)