GST AUDIT, GSTR – 9C RECONCILIATION STATEMENT

Businesses with GST registration must aim to be clear on compliances, results, returns, accounts. To avoid any sort of litigation in the process one largely opts for Audits (whether mandatorily or voluntarily). Ebizfiling has worked on this article with the objective to clear your facts on GST annual audit, Form GSTR 9C and its applicability.

Applicability of GST Annual Audit

If the annual turnover of a registered taxpayer is more than Rs. 2 crores in a financial year, he is required to get his accounts audited by a Chartered Accountant or a Cost Accountant every year.

A financial year covers the 12-month period beginning from April of the calendar year to March of the next calendar year.

Audit under GST involves examination of records, returns and other documents maintained by a GST registered person. The form to be filed is GSTR-9C

What is GSTR-9C?

GSTR-9C is a statement of reconciliation between:

• The Annual returns filed in GSTR-9 for a Financial Year, 2017-18 and
• the figures as per Audited Annual Financial statements of the taxpayer.

GSTR-9C is required to be certified by the CA. One can consider it to be similar to that of a tax audit report under the Income Tax act. It consists of gross and taxable turnover as per the Books reconciled with the respective figures according to the consolidation of all the GST returns for an FY. Any differences arising from this reconciliation exercise will be reported along with the reasons for the same.

Who must prepare & submit GSTR-9C?

GSTR-9C must be prepared and certified by a Chartered Accountant or a Cost Accountant. It must be filed on the GST portal or through facilitation center by the taxpayer along with other documents such as the copy of the Audited Accounts and Annual returns in GSTR-9.

This is applicable to all those taxpayers who get their Annual Accounts audited under the GST laws. Audit applies to those registered persons whose annual aggregate turnover exceeds Rs 2 crores in that FY, here being FY 2017-18.

Due Date for GSTR-9C

The due date for GSTR-9 is the same as the deadline for submission of GSTR-9C. Hence, the GSTR-9C must be filed on or before 31st December of the year subsequent to the relevant FY under audit.

Importance of GSTR-9C?

A Chartered accountant or cost accountant prepares a GST Reconciliation statement. Any differences between the details reported in all the GST return and the audited accounts must be reported by the CA with the reasons for the differences. Also, this statement acts as a base for the GST authorities to verify the correctness of the GST returns filed by the taxpayers. This is because the CA has to certify any additional liability arising out of the reconciliation exercise and GST audit in GSTR-9C.

Contents of the GSTR-9C?

The GSTR-9C consists of two main 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
• Part-II: Reconciliation of turnover declared in the Audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9)
• Part-III: Reconciliation of tax paid
• Part-IV: Reconciliation of Input Tax Credit (ITC)
  Part-V: Auditor’s recommendation on additional Liability due to non-reconciliation

Part-B: Certification

The GSTR-9C can be certified by the same CA who conducted the GST audit or it can be also by any other CA. The format of Part-B for certification report will vary depending on who the certifier is.

Suggested Read: Audit under Goods and service Act