The year 2017 has been a remarkable year for the businesses since the nation’s biggest tax reform ONE NATION ONE TAX- GOODS AND SERVICE TAX has been implemented. The journey of this reform has its own ups & downs but still a milestone needs to be crossed named as GST Audit.
As per Section 35(5) of CGST Act, 2017,“Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant Accounts and other records and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.”
Further, as per Rule 80(3) of CGST Rules, 2017,“Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”
Further, the Government vide Notification No. 49/2018-CT dated 04/09/2019 has notified FORM GSTR-9C (Reconciliation Statement cum Certification by CA/CMA) which has been amended vide Notification No. 74/2018–CT dated 31/12/2018.
The Government vide Removal of Difficulty Order No. 01/2018-Central Tax dated 11th December,2018extended the due date for furnishing of FORM GSTR-9C for the FY 2017-2018 till 31st March 2019 which was further extended vide Removal of Difficulty Order No. 03/2018-Central Tax dated 31st December,2018 till 30th June 2019.
Since the arrival of the form, it has remain a debatable topic for various stakeholders. From the point of view of Government authorities this form inter-alia serves the purpose of reconciling the turnover of financial statements with the turnover declared in GST returns. This will help the government to know the reasons of variances and whether GST has been fully discharged by the businesses on their turnover. Moreover, this summarized statement opens up the routes for Government departments to send notices to the business which sooner or later will bring litigations in GST.
But if seen from the point of view of businesses there are mixed responses. Considering the quantum of information demanded in FORM GST-9C, some taxpayers see this as a deep trouble since they find it a cumbersome task as they have to devote more time for being compliant rather than focusing on improving their business. On the other hand, some businesses feels that it is necessary as the review of their books of accounts by a practicing Chartered Accountant/ Cost Accountant will help them in being more compliant and detection of mistakes/errors at earlier stage will help in safeguarding their businesses from penalty and interest at higher rate which could have been levied at the time of assessment by the GST department.
The information to be furnished in FORM GSTR-9C is required to be declared in two broad parts namely Part A and Part B which are as below:-
The Part A is reconciliation statement, reconciling the turnover declared in the audited financial statement with turnover declared in the annual return. The reason for difference and the tax if any payable on such difference is also required to be declared.
The Part B is a certification required to be given by a Chartered Accountant or Cost Accountant appointed by the registered person. Two form of certificates have been provided. The first form of certificate is applicable where the reconciliation statement is drawn up by the person who has conducted the audit like statutory auditor appointed under The Companies Act, 1956 who has drawn the reconciliation statement, the second form of certificate is applicable when the reconciliation statement is drawn by the person other than a person who has conducted the audit.
The GST Audit Certificate needs to be obtained for each GSTN number of the taxpayers. Taxpayers would hence need to identify the figures appearing in the audited financial statements, at each GSTIN level. This may be challenging task and even if such data is identified, its correctness needs to be verified with audited financial statements.
Further, instruction number 9 in the annual return in FORM GSTR-9 provides that the differential amount of tax, if any, noticed by the registered person can be paid at the time of preparing the annual return. The payment shall be made through form GST DRC-03. The said information about the payment shall also be provided by taxable person in the reconciliation statement.
Also, instruction number 2 to Form GSTR-9C makes it mandatory that the audit report can only be filed by the person who has filed form GSTR-1, form GSTR-3B and form GSTR-9. If these forms are not filed, the audit report cannot be uploaded on the portal.
The Government has recently provided the offline utility for filing of FORM GSTR-9C. Now, it needs to be seen that how successful the GSTN portal and government authorities will be in making the necessary arrangements for taxpayers for filing of smooth GSTR-9C.