Clarification regarding Annual Returns and
Reconciliation Statement
The Government of India has
been receiving a number of representations regarding Annual Return (FORM GSTR-9
/ FORM GSTR-9A) and Reconciliation Statement (FORM GSTR-9C). In this regard the
following clarifications are issued for information of all stakeholders: -
a) Payment
of any unpaid tax: Section 73 of the CGST Act provides a unique opportunity of
self – correction to all taxpayers i.e. if a taxpayer has not paid, short paid
or has erroneously obtained/been granted refund or has wrongly availed or
utilized input tax credit then before the service of a notice by any tax
authority, the taxpayer may pay the amount of tax with interest. In such cases,
no penalty shall be leviable on such tax payer. Therefore, in cases where
some information has not been furnished in the statement of outward supplies
in FORM GSTR-1 or in the regular returns in FORM GSTR-3B, such
taxpayers may pay the tax with interest through FORM GST DRC-03 at
any time. In fact, the annual return provides an additional opportunity for
such taxpayers to declare the summary of supply against which payment of tax is
made.
b) Primary
data source for declaration in annual return: Time and again taxpayers
have been requesting as to what should be the primary source of data for filing
of the annual return and the reconciliation statement. There has been some
confusion over using FORM GSTR-1, FORM GSTR-3B or books of accounts
as the primary source of information. It is important to note that both FORM
GSTR-1 and FORM GSTR-3B serve different purposes. While, FORM
GSTR-1 is an account of details of outward supplies, FORM GSTR-3B is
where the summaries of all transactions are declared and payments are made.
Ideally, information in FORM GSTR-1, FORM GSTR-3B and books of
accounts should be synchronous and the values should match across different
forms and the books of accounts. If the same does not match, there can be
broadly two scenarios, either tax was not paid to the Government or tax was
paid in excess. In the first case, the same shall be declared in the annual
return and tax should be paid and in the latter all information may be declared
in the annual return and refund (if eligible) may be applied through FORM
GST RFD-01A. Further, no input tax credit can be reversed or availed through
the annual return. If taxpayers find themselves liable for reversing any input
tax credit, they may do the same through FORM GST DRC-03 separately.
c) Premise
of Table 8D of Annual Return: There appears to be some confusion
regarding declaration of input tax credit in Table 8 of the annual return. The
input tax credit which is declared / computed in Table 8D is basically credit
that was available to a taxpayer in his FORM GSTR-2A but was not
availed by him between July 2017 to March 2019. The deadline has already passed
and the taxpayer cannot avail such credit now. There is no question of lapsing
of any such credit, since this credit never entered the electronic credit
ledger of any taxpayer. Therefore, taxpayers need not be concerned about the
values reflected in this table. This is merely an information that the
Government needs for settlement purposes. Figures in Table 8A of FORM
GSTR-9 are auto-populated only for those FORM GSTR-1 which were
furnished by the corresponding suppliers by the due date. Thus, ITC on supplies
made during the financial year 2017-18, if reported beyond the said date by the
corresponding supplier, will not get auto-populated in said Table 8A. It may
also be noted that FORM GSTR-2A continues to be auto-populated on the
basis of the corresponding FORM GSTR-1 furnished by suppliers even
after the due date. In such cases there would be a mis-match between the
updated FORM GSTR-2A and the auto-populated information in Table 8A.
It is important to note that Table 8A of the annual returns is auto-populated
from FORM GSTR-2A as on 1st May, 2019.
d) Premise
of Table 8J of Annual Return: In the press release on annual return
issued earlier on 4th June 2019, it has already been clarified
that all credit of IGST paid at the time of imports between July 2017 to March
2019 may be declared in Table 6E. If the same is done properly by a taxpayer,
then Table 8I and 8J shall contain information on credit which was available to
the taxpayer and the taxpayer chose not to avail the same. The deadline has
already passed and the taxpayer cannot avail such credit now. There is no
question of lapsing of any such credit, since this credit never entered the
electronic credit ledger of any taxpayer. Therefore, taxpayers need not be
concerned about the values reflected in this table. This is information that
the Government needs for settlement purposes.
e) Difficulty
in reporting of information not reported in regular returns: There have
been a number of representations regarding non-availability of information in
Table16A or 18 of Annual return in FORM GSTR-9. It has been observed
that smaller taxpayers are facing a lot of challenge in reporting information
that was not being explicitly reported in their regular statement/returns (FORM
GSTR-1 and FORM GSTR-3B). Therefore, taxpayers are advised to declare
all such data / details (which are not part of their regular statement/returns)
to the best of their knowledge and records. This data is only for information
purposes and reasonable/explainable variations in the information reported in
these tables will not be viewed adversely.
f) Information
in Table 5D (Exempted), Table 5E (Nil Rated) and Table 5F (Non-GST
Supply): It has been represented by various trade bodies/associations that
there appears to be some confusion over what values are to be entered in Table
5D,5E and 5F of FORM GSTR-9. Since, there is some overlap between supplies
that are classifiable as exempted and nil rated and since there is no tax
payable on such supplies, if there is a reasonable/explainable overlap of
information reported across these tables, such overlap will not be viewed
adversely. The other concern raised by
taxpayers is the inclusion of no supply in the category of Non-GST supplies in
Table 5F. For the purposes of reporting, non-GST supplies includes supply of
alcoholic liquor for human consumption, motor spirit (commonly known as
petrol), high speed diesel, aviation turbine fuel, petroleum crude and natural
gas and transactions specified in Schedule III of the CGST Act.
g) Reverse
charge in respect of Financial Year 2017-18 paid during Financial Year
2018-19: Many taxpayers have requested for clarification on the
appropriate column or table in which tax which was to be paid on reverse charge
basis for the FY 2017-18 but was paid during FY 2018-19. It may be noted that
since the payment was made during FY 2018-19, the input tax credit on such
payment of tax would have been availed in FY 2018-19 only. Therefore, such
details will not be declared in the annual return for the FY 2017-18 and will
be declared in the annual return for FY 2018-19. If there are any variations in
the calculation of turnover on account of this adjustment, the same may be
reported with reasons in the reconciliation statement (FORM GSTR-9C).
h) Role
of chartered accountant or a cost accountant in certifying reconciliation
statement: There are apprehensions that the chartered accountant or cost
accountant may go beyond the books of account in their recommendations
under FORM GSTR-9C. The GST Act is clear in this regard. With respect to
the reconciliation statement, their role is limited to reconciling the values
declared in annual return (FORM GSTR-9) with the audited annual accounts of the
taxpayer.
i) Turnover
for eligibility of filing of reconciliation statement: It may be noted that
the aggregate turnover i.e. the turnover of all the registrations having the
same Permanent Account Number is to be used for determining the requirement of
filing of reconciliation statement. Therefore, if there are two registrations
in two different States on the same PAN, say State A (with turnover of Rs. 1.2
Crore) and State B (with turnover of Rs. 1 Crore) they are both required to
file reconciliation statements individually for their registrations since their
aggregate turnover is greater than Rs. 2 Crore. The aggregate turnover for this
purpose shall be reckoned for the period July, 2017 to March, 2018.
j) Treatment
of Credit Notes / Debit Notes issued during FY 2018-19 for FY 2017-18: It
may be noted that no credit note which has a tax implication can be issued
after the month of September 2018 for any supply pertaining to FY 2017-18; a
financial/commercial credit note can, however, be issued. If the credit or
debit note for any supply was issued and declared in returns of FY 2018-19 and
the provision for the same has been made in the books of accounts for FY
2017-18, the same shall be declared in Pt. V of the annual return. Many
taxpayers have also represented that there is no provision in Pt. II of the
reconciliation statement for adjustment in turnover in lieu of debit notes
issued during FY 2018-19 although provision for the same was made in the books
of accounts for FY 2017-18. In such cases, they may adjust the same in Table 5O
of the reconciliation statement in FORM GSTR-9C.
k) Duplication
of information in Table 6B and 6H: Many taxpayers have represented about
duplication of information in Table 6B and 6H of the annual return. It may be
noted that the label in Table 6H clearly states that information declared in
Table 6H is exclusive of Table 6B. Therefore, information of such input tax
credit is to be declared in one of the rows only.
l) Reconciliation
of input tax credit availed on expenses: Table 14 of the reconciliation
statement calls for reconciliation of input tax credit availed on expenses with
input tax credit declared in the annual return. It may be noted that only those
expenses are to be reconciled where input tax credit has been availed. Further,
the list of expenses given in Table 14 is a representative list of heads under
which input tax credit may have been availed. The taxpayer has the option to
add any head of expenses.
All the taxpayers are requested to file their Annual Return (FORM GSTR-9
/ FORM GSTR-9A) and Reconciliation Statement (FORM GSTR-9C) well before the
last date of filing, i.e. 31st August, 2019.
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DSM/RM/PD
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