The reconciliation statement of taxpayers pertaining to a particular financial year must be filed in Form GSTR 9C. It is the form of the statement of reconciliation between the Annual Returns in GSTR-9 and the figures mentioned in the Audited Financial Statements of the taxpayer. Given that, this CA certified form must be filed during the filing of Annual Returns in GSTR-9 and the Audited Financial Statements. The obligation can either be completed through the GST portal or a Facilitation Centre.
What is a Reconciliation Statement?
It is the independent verification of a reconciliation statement of document which is intended to facilitate the accuracy of the balance in the accounts of a company, added with the purpose of clarifying the differences between the two versions of the account.The GST reconciliation statement, fomulated by the Chartered Accountant or Cost Accountant. Wherein any differences between the details reported in the GST returns and the Audited Accounts must be reported along with the cause of such deduction. Such a commitment is enforced to certify any additional liability resulting out of the reconciliation exercise and GST audit in GSTR-9C.
The Purpose of GST Reconciliation
Reconciliation under GST is given, which can be attributed to the following factors:
- To claim Input Tax Credit (ITC) the Taxpayer will only be able to claim it if their invoice is present as a part of their 2A data or vendor data. Considering this, the taxpayers are necessitated to perform reconciliation on the areas where there is a mismatch between the ITC and 2A data.
- The taxpayer should perform a reconciliation to ensure the correctness of the declaration made in the form of monthly and quarterly returns and to avoid duplications.
Apart from this, the provision caters to the following circumstances:
- Claiming the eligible ITC against any invoice rose during the previous year.
- Apportionment of ITC associated with the previous year.
- Declaration of CDN’s issued against any invoices raised during the previous year.
- Filing of amendments to the information furnished in the returns filed during the previous year.
- Making amendments to the information reported in the GST returns for taxpayers who have opted for the composition scheme.
Applicability of GST Audit
GSTR 9C is applicable to taxpayers who are required to obtain or get their annual GST audit of their accounts. It must be prepared and certified by a Chartered Accountant or Cost Accountant.
GST Audit: Taxpayers with an annual aggregate turnover of above Rs. 2 crores in a particular financial year qualifies for a tax audit.
Form GSTR 9C should be filed within the 31st of December every year for the particular previous financial year, which is the same as that of Form GSTR 9. For the attention of the taxpayers, the due date of filing this return for the Financial Year of 2017-18 has been extended to the 31st of March, 2019.
Contents of the Form GSTR-9C
GSTR-9C is divided into the following parts:
- Part A: Reconciliation Statement
- Part B: Certification
Part A: Reconciliation Statement
Part A of the form is further divided into five sections. Here’s an overview:
Part-I -basic details: Includes details of Legal Name, Trade Name and Financial Year, Here, the taxpayer is required to specify whether he/she is liable for audit under any other prevailing laws.
Part II – reconciliation of declared turnover: These parts induce for the reporting of the gross and taxable turnover declared in the Annual Return with the Audited Financial Statements. It may be noted that the Audited Financial statement is at a PAN level is in a normal cases. Such a scenario should mandate the need of breaking up of the Audited Financial Statement at GSTIN level for reporting in GSTR-9C.
Part III – reconciliation of tax paid: The tax liability of the previous year and the payments (as reported in GSTR-9) with the differences thereof should be specified rate-wise. It mandates the taxpayers to state the additional liability due to unreconciled differences noticed upon reconciliation.
Part IV- reconciliation of Input Tax Credit (ITC): Part IV entails the reconciliation of Input Tax Credit (ITC) claimed and utilized by the taxpayers (as reported in GSTR-9 and the Audited Financial Statement). This must be supported with a report of the expenses booked in accordance with the audited accounts, which includes a breakup of eligible and ineligible ITC and reconciliation of the eligible ITC.
Part V – recommendation of the auditor on additional liability due to non-reconciliation: The concluding part of the reconciliation statement mandates the auditor to report any tax liability identified through the reconciliation exercise and GST audit, the payment of which remains to be paid by the taxpayer.
Part B: Certification
Form GSTR 9C necessitate the certification of a chartered or cost accountant. Part B of the form caters to this purpose. The certification can either be done by a CA who had conducted the audit or another person of a similar designation. With respect to the latter, the concerned personnel should base an opinion on the Books of Accounts audited by another CA in the reconciliation statement.
Penal Consequences for Non-Filing GST Audit
Penal charge of Rs. 200 per day of default (100 each for SGST and CGST) if the Taxpayers do not meet the obligation prescribed under this provision of this act. This will be an addition to the interest at the rate of 18% per annum, which will be calculated from the outstanding tax amount.