GST Annual Return and GST Audit explained

GST Annual Return and GST Audit explained
GSTR 9

GST Annual Return and GST Audit every business must know

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Every Registered Business under GST must be aware about GST Annual Return and GST Audit Requirement, as prescribed by Govt. and applicable for FY 2017-2018 with Due Date of 31st December, 2018.

As the deadline is nearing and considering the complexity and Detailed queries being raised by the Finance fraternity, We have summarised the Common Requirement, Procedure and solutions to major areas required to be covered under GST Audit and GST Annual Return.

After filing monthly/quarterly periodic returns by registered dealer under GST, a regular person has to even file an Annual Return which is quite detailed. it’s critical to start focusing on various compliances such as input and output reconciliations, preparation and filing of annual return and GST audit certification.

GSTR 9 (Annual Return)

GSTR 9 form is an annual return to be filed once in a year by the regular registered dealer under GST including Composition Dealer. Due Date for filing of GSTR 9 Annual Return for the Financial Year 2017-18 is 31st December, 2018.

It is Annual Return which reflects the Consolidated Summary of Supplies and GST liabilities reported by dealer in periodic monthly/quarterly return. Further, Detailed Reconciliation of Output, Input, Liabilities, Credits, Cash payment to be given.

Various Forms and Types of Annual Returns prescribed as below :

  • GSTR 9 should be filed by the regular taxpayers filing GSTR 1, GSTR 2, GSTR 3. GSTR 3B during the financial year. The GST annual return form- GSTR 9 for normal taxpayers is divided into 6 parts with 19 tables
    • Part-I

    Basic details of the taxpayer. This detail will be auto-populated.

    •  Part-II

    Details of Outward and Inward supplies declared during the financial year(FY). This detail must be picked up by consolidating summary from all GST returns filed in previous FY.

    • Part-II

    Details of ITC declared in returns filed during the FY. This will be summarised values picked up from all the GST returns filed in previous FY.

    • Part-II

    Details of tax paid as declared in returns filed during the FY.

    • Part-II

    Particulars of the transactions for the previous FY declared in returns of April to September of current FY or up to the date of filing of annual returns of previous FY whichever is earlier. Usually, the summary of amendment or omission entries belonging to previous FY but reported in Current FY would be segregated and declared here.

    • Part-II

    Other Information comprising details of:

    • -GST Demands and refunds,
    • HSN wise summary information of the quantity of goods supplied and received with its corresponding Tax details against each HSN code,
    • Late fees payable and paid details and
    • Segregation of inward supplies received from different categories of taxpayers like Composition dealers, deemed supply and goods supplied on approval basis

GSTR 9A (For Composition Dealers) : 

It is an annual return form to be filled only by the Dealer who has opted for Composition Scheme who were filling GSTR 4A during the year.

This form is divided into 5 parts with 17 tables which include basic details, details of outward and inward supplies declared, Details of tax paid and other information about particulars of demands and refunds etc.

GSTR 9B (For E-Commerce Operators) : 

It is an annual return form to be filled by the Registered Dealers who are E-Commerce operators and were filing GSTR 8 during the year.

GSTR 9C (For GST Audit eligible dealers) : 

For all the GST Registered dealers whose Turnover during the financial year exceeds Rs.2 Crore. All such dealers are also required to get their accounts audited y a chartered accountant or cost accountant. This statement is to be filled for every GSTIN separately and therefore there-can be several reports of GSTR-9C for same PAN.

This form is divided into mainly 2 parts-  

PART-A: RECONCILIATION STATEMENT

The figures in the audited financial statements are at PAN level. Hence, the turnover, Tax paid and ITC earned on a particular GSTIN( or State/UT) must be pulled out from the audited accounts of the organisation as a whole.

The Reconciliation Statement is divided into five parts as follows:

Part-I: Basic details:

Consists of FY, GSTIN, Legal Name and Trade Name. The taxpayer must also mention  if he is subject to audit under any other law

Part-II:

Reconciliation of turnover declared in the Audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9)-

This involves reporting the gross and taxable turnover declared in the Annual return with the Audited Financial Statements. One must note that mostly the Audited Financial statement is at a PAN level. This might require the breakup of the audited financial statement at GSTIN level for reporting in GSTR-9C.

Part-III: Reconciliation of tax paid- 

This section requires GST rate-wise reporting of the tax liability that arose in FY 2017-18 as per the accounts and paid as reported in the GSTR-9 respectively with the differences thereof. Further, it requires the taxpayers to state the additional liability due to unreconciled differences noticed upon reconciliation.

Part-IV: Reconciliation of Input Tax Credit (ITC)- 

This part consists the reconciliation of input tax credit availed and utilised by taxpayers as reported in GSTR-9 and as reported in the Audited Financial Statement. Further, it needs a reporting of Expenses booked as per the Audited Accounts, with a breakup of eligible and ineligible ITC and reconciliation of the eligible ITC with that amount claimed as per GSTR-9. This declaration will be after considering the reversals of ITC claimed, if any.

Part-V: Auditor’s recommendation on additional Liability due to non-reconciliation- 

Here, the Auditor must report any tax liability identified through the reconciliation exercise and GST audit, pending for payment by the taxpayer. This can be non-reconciliation of turnover or ITC on account of :

  • Amount paid for supplies not included in the Annual Returns(GSTR-9)
  • Erroneous Refund to be paid back
  • Other Outstanding demands to be settled

Lastly, the instructions to the format of GSTR-9C specify that an option will be given to taxpayers to settle taxes as recommended by the auditor at the end of the reconciliation statement.

PART-B: CERTIFICATION.

The GSTR-9C can be certified by the same CA who conducted the GST audit or it can be also certified by any other CA who did not conduct the GST Audit for that particular GSTIN.

The difference between both is that in case the CA certifying the GSTR-9C did not conduct the GST audit, he must have based an opinion on the Books of Accounts audited by another CA in the reconciliation statement. The format for certification report will vary depending on who the certifier is.

CONSEQUENCE OF FAILURE TO SUBMIT THE ANNUAL GST RETURN

Late fees for not filing the GSTR 9 within the due date is Rs. 100 per day per act up to a maximum of an amount calculated at a quarter percent of the taxpayer turnover in the state or union territory. Thus it is Rs 100 under CGST & 100 under SGST, the total penalty is Rs 200 per day of default. There is no late fee on IGST.

This return can only be filed once for a financial year. There is no option to revise this return.

However, this fee cannot be more than 0.25% of total turnover in the respective state/union territory

Person not required to file GSTR 9 Annual Return : Following persons are not required to file Annual Return (GSTR 9)

  • Casual Taxable Person
  • Non-Residential Taxable Person
  • Input Service Distributors
  • Person paying TDS under GST Act

For any assistance required with GST Return or GST Audit, feel free to reach us at info@indiakickstart.com / Whatsapp 9324242233

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