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Whether GSTR-9C Self-Certification Really a Good Step?
The Finance Act of 2021 implemented amendments to the CGST Act, eliminating the need to provide a CA-certified Reconciliation Statement in GSTR 9C. GST Taxpayers with a revenue / sale receipt more than INR 5 CR in the last FY are needed to submit Form GSTR-9C on a self-certification basis. This applicable change is applicable from FY 20-21 onwards. Moreover, GSTR Form GSTR-9C will be amended to help self-certification by the GST taxpayer.
Taxpayers are no longer obliged to have their Reconciliation Statement approved by a CA/CWA. Moreover, taxpayers with a revenue of up to Rs. 2 crores have the option of not filing GSTR 9. (Annual Return). These changes will take effect on August 1, 2021.
Prior to the foregoing modifications, taxpayers with a turnover of more than Rs. 5 crore had to file a Reconciliation Statement in GSTR 9C that was certified by a CA/CWA.. We attempt to explore the context and examine the ramifications of current changes in this piece.
What is GSTR-9?
GSTR-9 is an annual return that must be filed by registered taxpayers with a previous fiscal year turnover of more than Rs. 2 crores. Outward supplies, tax liabilities, input tax credit claimed, refund claimed, and tax paid within the financial year are all included. The deadline is the 31st of December of the year after the financial year in question. But the following taxpayers are exempted from filing GSTR-9:
- Input Service Distributors
- Casual Taxable Person
- Taxpayer covered under section 51 & 52
- Non-Resident Taxable Person
Below summarises the limit applicability of annual returns & GSTR 9 & 9C Reconciliation statement for FY 2020-21.
| Kind of the Form | Applicability- Tourover limit for FY 2020-21 | Deadline for FY 2020-21 |
|---|---|---|
| Form - GSTR-9 | > Rs.2 crore | 31st December 2021 |
| Form -GSTR-9C | > Rs.5 crore |
*Applicable Annual turnover during FY 2020-21.
Summarised table of changes to Form GSTR-9C
(apllicable Changes for FY 2020-21 & onwards)
- Part-A: Reconciliation statement
- Part-B – Certification has been entirely removed - CFO or Finance Head’s responsibility towards self-certified GSTR-9C
These steps enable the company to prepare and report proper GST annual returns and reconciliation statements, reducing the risk of receiving GST demand notices. As a result, they can avoid paying any tax liabilities by completing Form DRC-03 at a later date, either during or after filing GSTR-9 and GSTR-9C.
Annual GST reconciliation at the PAN-India level requires CFOs to put up robust processes in their organisations. Even if GSTIN-level reporting is required, finance leaders must assure data consistency in annual filings when compared to income tax returns, which can be accomplished through automation and technology-enabled processes.
Why were these changes required?
The GST Act has now been in effect for four years. Although there are various advantages to this new taxes system, there is a need to work actively to ease compliance.
Compliance must be simplified because it is an expensive endeavour in terms of money, time, and energy. Taxpayers are already required to file GSTR-1, GSTR-3B, and other forms on quarterly/ a monthly basis, depending on type of their business. They will have to spend a lot of money on it because professional services are required to manage compliance. It was a demand across industry to make this time-consuming and non-business task less expensive.
When we look at GSTR-9 in relation to this context,
Changes have been done in this direction as we can be seen. GSTR-9 is now only necessary for taxpayers with a turnover of more than Rs. 2 crores, whereas GSTR-9C is required for taxpayers with a turnover of more than Rs. 5 crores. The necessity for CA certification on the Reconciliation Statement was recently abolished and simplifying compliance.
In the 43rd GST Council met to consider various ways for combatting Covid and restoring enterprises. In addition, the council stated that Annual Filing should be simplified. It also suggested changing the CGST Act to facilitate the filing of GSTR-9C on a self-certification basis, which has now been adopted through notifications.
Point to be taken care while found Mismatch in GST tax Credits!
The Dept is using deep analytics technologies that are included into the GSTN system, and the best strategies for avoiding all or most of the issues associated with the GST Notice! You need to do to safeguard your business from loads of problems after taking care the below issues.
- Make sure you submit your response on time, and that you use the Tabulated Approach.
- Prepare ITC reconciliation at the monthly/yearly, vendor, and invoice levels.
- Ensure that GSTR 2A vs GSTR 3B vs ITC Register vs GSTR 8A vs GSTR 9 vs GSTR 9C are properly reconciled. Reconciliation should be done at the EWB level in some circumstances, depending on your specific scenario.
- Calculate ITC eligibility based on Vendor Registration Status (active or cancelled), as well as Return Filing Trend. On the Principle of the Protective Model, it is usually a good idea to check and validate whether Vendor GSTN is aadhar linked.
- Officers have also been known to request proof of whether or not the payment to the vendor was made within 180 days, as well as HSN / SAC confirmation.
- Some GST officials may also request the Stock Register, Job Work Register, Vendor Register, Production Register, and Good Received Note in addition to the ITC Register, so keep them on hand at all times to be safe.
- RCM Reconciliation and RCM Compliance Verification, as well as Credit Note Reconciliation, are rather common nowadays.
- The Officer may also request a sample copy of the invoice at the monthly level, as well as vendor-by-vendor.
- To vouch for the content of the Tax Invoice, the Officer will ask you to present a suitable number of invoices. He or she may also request that the information be backed up using EWB mapping.
- GSTR 3B Back-Up Calculation Sheet
- Accumulated ITC, Ineligible ITC, Non-Reversal of ITC in the event of Exempted and RCM Supplies, Cancellation of EWB, and Proof of Delivery of Goods are all things to be concerned about.
Conclusion:
- While this is a positive move, there are certain downsides that must be addressed. This action will undoubtedly provide compliance relief to a large number of taxpayers, but it will also increase the risk of intentional and unintentional misstatements / errors in annual files, necessitating higher departmental scrutiny and, as a result, increased enforcement burden.
- On the other hand, it will provide possibilities for litigation experts to manage their clients' inspection notices and represent them in front of the department. As a result, the professional will have more opportunities to display their talents and attract more customers.
- As a result, it should be emphasised that the majority of taxpayers are unfamiliar with the requirements of annual files, requiring expert assistance. We have yet to see whether the benefits of the move outweigh the drawbacks for various stakeholders.
- RJA has a lot of knowledge in both litigation and advising work. He has represented a number of clients in front of the IRS. In Rajput Jain & Associates, Chartered Accountants, he is actively involved in advise related to GSTR-9 filing, how to produce GSTR-9C, and other GST problems. RJA is a well-known GST Consultants in Delhi that helps clients turn their issues into solutions.
Notes : Important issue in filling GST Audit Filling Form 9C under the GST
