GSTR 9C - Reconciliation statement and certification

GSTR-9C is a form for annual GST reconciliation statement filed by applicable taxpayers. Every registered person whose aggregate turnover during a financial year exceeds Rs.5 crore rupees must file this form. The introduction of GSTR-9C aims to enhance transparency and accountability within the GST framework, thereby reducing discrepancies and tax evasion. Accurate filing of this form is crucial for businesses to remain compliant with GST regulations and avoid penalties.

What is the GSTR-9C?

The GSTR-9C is a critical reconciliation statement under the Goods and Services Tax (GST) regime in India. It serves as an annual audit report mandated for taxpayers whose aggregate turnover exceeds the specified threshold. This statement reconciles the figures declared in the GSTR-9 (annual return) with the audited annual financial statement of the taxpayer. The GSTR-9C is an audit form introduced on September 13, 2018. It must be filed annually by taxpayers whose turnover exceeds 2 crores and requires certification by a Chartered Accountant (CA). Essentially, it serves as a reconciliation statement between the annual returns submitted in GSTR-9 and the taxpayer’s audited financial statements.

GSTR-9C applicability

GSTR 9C is applicable to taxpayers who are required to have their accounts audited under GST law. This form is a reconciliation statement between the financial statements and the annual returns filed in GSTR-9. It must be prepared and certified by a Chartered Accountant or a Cost Accountant, ensuring the accuracy of the information provided. The GST audit requirement applies to taxpayers whose annual aggregate turnover exceeds Rs. 2 crores in a specific financial year. These taxpayers must submit GSTR 9C along with their audited financial statements and other relevant documents to comply with GST regulations.

Who is required to file GSTR-9C?

The GSTR-9C must be filed by all registered taxpayers whose annual turnover exceeds Rs. 5 crores during the financial year. This requirement ensures that larger businesses undergo a comprehensive audit, promoting accuracy and compliance with GST laws. The responsibility of filing GSTR-9C lies with the taxpayer, but it must be certified by a Chartered Accountant (CA) or a Cost Accountant. This certification process involves a detailed examination of the taxpayer's records and the reconciliation of the data reported in the GSTR-9 with the audited financial statements.

Not only does this apply to regular taxpayers, but specific categories of businesses such as e-commerce operators and taxpayers under the composition scheme are also mandated to file GSTR-9C if they surpass the turnover threshold. For e-commerce operators, the compliance requirement includes the turnover generated through the platform by third-party sellers. Taxpayers under the composition scheme, who pay tax at a fixed rate on turnover, must also adhere to this filing requirement once they exceed the prescribed limit.

Filing GSTR-9C ensures that discrepancies between GST returns and audited accounts are identified and rectified. It acts as a self-assessment tool, allowing businesses to maintain transparency in their financial reporting. Non-compliance or inaccuracies in the filing can attract significant penalties, making it imperative for eligible businesses to adhere strictly to the filing requirements.

When to file GSTR-9C?

• Filing Deadline: GSTR-9C must be filed annually, due by 31st December following the financial year (e.g., for FY 2022-23, the due date is 31st December 2023).
• Reconciliation Statement: Prepare a reconciliation statement between GSTR-9 returns and audited financial statements.
• CA Certification: The statement must be certified by a Chartered Accountant (CA) or Cost Accountant.
• Timely Preparation: Start preparation well in advance to compile necessary documents and data.
• Penalties for Delays: Late filing results in penalties and complications. Therefore, businesses must plan their GST return filing activities to meet the GSTR-9C deadline efficiently.
• Efficient Planning: Plan filing activities in advance, maintain regular communication with the auditor, and keep financial records updated throughout the year.

What is the due date for GSTR-9C?

The due date for filing the GSTR-9C is 31st December following the end of the financial year. For example, for the financial year 2022-23, the GSTR-9C must be filed by 31st December 2023. This timeline aligns with the annual return filing, GSTR-9, and provides businesses with ample time to prepare and reconcile their financial records.

Meeting the due date is critical to avoid penalties and ensure compliance with GST regulations. The reconciliation process involves verifying the data reported in GSTR-9 with the audited financial statements, which requires detailed scrutiny and certification by a Chartered Accountant or Cost Accountant. Early preparation and regular maintenance of financial records can facilitate timely filing.

Businesses should maintain open communication with their auditors to ensure all necessary documents and data are accurately compiled well before the deadline. The penalties for late filing can be substantial, including late fees and potential scrutiny from tax authorities, making timely compliance essential.

Proactive planning and organisation are key to meeting the GSTR-9C due date. Businesses should integrate GST compliance into their regular financial management practices to streamline the annual filing process and ensure all requirements are met without unnecessary stress or last-minute rush..

GSTR-9C turnover limit

The GSTR-9C must be filed by taxpayers whose annual turnover exceeds ₹2 crores in a financial year. This threshold, known as the GST registration limit, applies to businesses registered under GST, whether they are regular taxpayers, composition taxpayers (after opting out), or those undergoing voluntary registration. If the turnover crosses ₹2 crores, filing GSTR-9C, along with the GSTR-9, becomes mandatory. The form includes a reconciliation statement between the GSTR-9 filed returns and the audited financial statements. It must also be certified by a Chartered Accountant (CA) or Cost Accountant. The turnover limit for filing GSTR-9C is subject to revisions by the government..

What is the late fee or penalty for the late filing of GSTR-9C?

According to section 125 of the CGST and SGST Acts of 2017, there is a general penalty of Rs. 25,000 for non-compliance. Since no specific penalty has been prescribed for the late filing of GSTR-9C, this general penalty would apply to those who fail to submit the form on time. It’s important to file GSTR-9C within the stipulated deadline to avoid this penalty and ensure compliance with GST regulations.

What are the documents required to be submitted along with GSTR 9C?

Here are some of the documents required to be submitted along with GSTR 9C:

• Audited financial statements: Include the balance sheet, profit and loss statement, and any other financial statements for the relevant financial year.
• Reconciliation statement: A detailed reconciliation statement of the turnover, tax paid, and input tax credit claimed, comparing the audited financial statements with the GST returns filed.
• Certified copy of GSTR-9: The annual return (GSTR-9) filed for the same financial year must be attached.
• Certificate by chartered accountant or cost accountant: A certification confirming the accuracy of the information provided, signed by a chartered accountant or cost accountant.

What’s the importance of GSTR-9C?

The taxpayer must prepare the GST Reconciliation Statement, detailing any discrepancies between sales, tax, or input tax credit reported in GST returns and audited accounts. These differences should be clearly reported along with the reasons for them. This statement serves as a crucial document for GST authorities, providing a basis to verify the accuracy of the GST returns filed by the taxpayer. It acts as a self-certification tool, ensuring that any inconsistencies are addressed and explained, thereby aiding in the accurate assessment and compliance of GST filings.

Contents and format of GSTR-9C

GSTR-9C consists of two main sections:

Part-A – Reconciliation Statement

This part contains tax-related information and is divided into five sections:

1. Fiscal Year: Specifies the year of assessment.
2. GSTIN & Legal Details: Includes the GSTIN, legal name, and trade name of the taxpayer.
3. Audit Liability: Indicates whether the taxpayer is required to undergo an audit.
4. Turnover Reconciliation: Compares the turnover declared in the audited financial statements with that in GSTR-9 (Annual Return).
5. Liability & ITC Reconciliation:
   • Reconciles the outstanding liabilities by tax rate.
   • Compares the Input Tax Credit (ITC) as per books with the ITC declared in the Annual Return.
   • Includes auditor’s recommendations for additional liabilities arising from discrepancies in ITC or turnover.

Part-B – Auditor Certification

This section is a certificate from a Chartered Accountant, completed after the GSTR-9 audit. It includes:

• Audit Certification: Confirms the form was completed based on the auditor’s review.
• Audit Report: Contains the auditor’s findings and recommendations.

What has changed in GSTR-9C format and filing?

Here are the changes made to the format and filing procedure:

• Verification by registered taxpayers has been added, and CA/CMA certification has been removed.
• Taxpayers must file GST returns for all months of the financial year in GSTR-1, GSTR-3B, and GSTR-9.
• At the end of this return, taxpayers will have the option to pay any additional liability declared through FORM DRC-03. In FORM DRC-03, taxpayers should select ‘Reconciliation Statement’ from the drop-down menu. Note that such liability must be paid through the electronic cash ledger only.
• For a detailed analysis of revised tables in the GSTR-9C format, visit our page “Revised GSTR-9C from FY 20-21 onwards.”
• The older format of Part-B: Certification (No longer applicable)

Previously, GSTR-9C needed to be certified by the same CA who conducted the GST audit or any other CA who did not conduct the GST audit for that particular GSTIN. This requirement has been removed from FY 2020-21 onwards.

Difference between GSTR-9 and GSTR-9C

What is the step by step process to file GSTR 9C?

Here's the step-by-step guide for filing GSTR 9C:

1. Maintain records: Keep detailed books of accounts and other required documents under GST law and other relevant laws.
2. Prepare financial statements: Based on your records, prepare the following annual financial statements:
   • Balance Sheet
   • Profit & Loss Account
   • Income & Expenditure Account
   • Cash Flow Statement (if applicable)
   • Note: These statements should be at the PAN level.
3. Audit financial statements: Get these statements audited under applicable laws (e.g., Income Tax Law, Companies Act). If audited under other laws, GST audit may not be required separately.
4. GST audit: If not audited under other laws, get the statements audited under GST law. GSTR 9C instructions state that audit at PAN level is usually sufficient, and a GSTIN level audit is generally not needed.
5. Reconcile details: Collect GSTIN-wise details on turnover, ITC, tax paid, etc. Reconcile these with GSTR-9 in Part A of GSTR-9C and report any discrepancies.
6. Certification: Have Part B of GSTR-9C certified by a CA or CMA.
7. Audit and certification: Part B of GSTR-9C serves as both audit and certification. No separate audit report format is provided under the law.
8.  Upload documents: Submit GSTR-9, GSTR-9C, and audited annual financial statements on the common portal by the end of December of the subsequent financial year (the deadline has been extended to 31st March 2019).

Conclusion

In conclusion, the GSTR-9C is a critical component of the GST compliance framework for businesses with substantial turnover. Accurate and timely filing of this reconciliation statement is essential to avoid penalties and ensure compliance. The detailed nature of the GSTR-9C requires meticulous record-keeping and proactive planning throughout the financial year.