GSTR 9C is an annual audit form applicable to all registered taxpayers having a turnover above 5 crore in a particular financial year. Until FY 20-21, it included a reconciliation statement for a particular financial year to be filed by taxpayers on or before 31st December after being certified by CAs/CMA. However, from 30th July 2021, the government has notified the removal of GST audit and certification done by CA/CMA, and hence, can be self-certified from FY 20-21 by the taxpayers.
Read more about Form GSTR 9C.
GSTR 9C Non-Applicability:
The form is applicable to all the registered taxpayers except the following:
- Casual taxable person
- Input Service Distributor (ISD)
- Non-resident taxable persons
- Tax collector
- Tax deductor
- Taxpayers under Composition Scheme
- Government departments
- Taxpayers with a total turnover less than or equal to Rs.5 crore
Changes Related to GSTR 9C Self-Certification
As per the Finance Act – 2021, a proposal was released to omit certification by CA by amending Section 35(5) of the CGST Act. The changes were recommended in the Union Budget 2021 and were approved in the Finance Act. In the 43rd GST Council Meeting, the finance ministry reaffirmed suggested changes in furnishing of the reconciliation statement in order to simplify the compliance requirement. These changes suggested that taxpayers would be able to self-certify the reconciliation statement in GSTR 9C instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21. Amendments in sections 35 and 44 of CGST Act made through Finance Act, 2021.
The CBIC notified these changes vide GST Notification 29/2021 stating: “w.e.f. 1st August 2021, section 35(5) of the CGST Act which mandated the certification of GSTR-9C by the Chartered Accountant or a Cost Accountant is substituted by Sec 44 of the CGST Act which requires a self-certified reconciliation statement in place of an audit report.”
Further, Rule 80(3) and Part-B of the CGST Rules has been amended to specify the threshold limit for applicability. Accordingly, form GSTR-9C applies to a taxpayer if the annual aggregate turnover limit for the relevant financial year is more than Rs.5 crore. The format of form GSTR-9C has been modified to include FY 2020-21 and to support self-certification.
Impact of the GSTR 9C Self-Certification
Since the GST Audit and certification by the CA/CMA has been removed, the onus of GSTR 9C now falls on the CFO and Finance Heads. The onus of accuracy now falls on their head. So what is the impact of this change and how should you be ready for the same:
1. Absence of ‘Maker – Checker’
Now that there is no person of authority checking the statement before filing it officially, it is thus advisable to ensure that the taxpayers get an appropriate review and audit so as to have a security that their compliance is in order and they will be safe from any departmental audit complications.
2. Risk on Taxpayers
Now that the finance ministry has ordered self-certification, there is an enormous risk and responsibility on taxpayers and companies. Hence, the finance heads and CFOs must first ensure that their team is completely trained on the changes in the format of GSTR 9 and 9C. It becomes apparent to understand the implications of wrong-filing and risks involved.
3. Departmental Audit
Now, the validity of Departmental Audit under Section 65 of the CGST Act, 2017 cannot be questioned since the GST Audit by a Chartered Accountant has been removed. It will therefore be convenient for the department to raise concerns and queries to the taxpayers directly.
It is apparent that government does not intend to reduce the monitoring, but the onus of responsibility is shifting more towards the taxpayers than on any third party. The departmental audits may lead to increase in scrutiny procedures and penalties, if any discrepancies are found.
4. Invoking extended period of limitation
The Department might try to capitalize the absence of Auditor Certification to invoke an extended period of limitation for issuing Show Cause Notice (SCN).
Precautions to be taken by the taxpayers
As the onus of accuracy now falls on the taxpayers, it becomes important for taxpayers to take care of the following:
1 Full and proper disclosure
All the data reported should be provided in proper table under relevant description. Wherever possible, ensure all optional fields are filled and the taxpayers provide full and proper information. Businesses must report any unreconciled figures as it is in Form GSTR 9C.
2. Clerical errors
Once filed, GSTR 9 and GSTR 9C cannot be revised. If any clerical errors are made, ensure the same is intimated in writing to the Departmental Officer at the earliest. There is always room for discrepancies in data between GST returns – GSTR-1 versus GSTR-3B versus purchase registers and GSTR-3B versus GSTR-2A versus purchase registers. Hence, proper attention must be paid to ensure these discrepancies are reconciled before filing returns.
3. Mapping tax positions and impact of changes in the law:
GST law has seen numerous amendments since its introduction in 2017. With numerous notifications, circulars, orders and advisories etc, it becomes important that clarifications etc if any provided through press releases are understood properly and complied with.
4. Preparing Assessment Dossier:
Annual GST Reconciliation at PAN level becomes an important exercise when accuracy of GST filing is in question. It is advisable to audit all the past returns- GSTR 1 and GSTR 3B and prepare a recon statement and get this audited by your statutory auditor to avoid any complications. Post the audit, all the relevant details/documents need to be compiled at the GSTIN level.
With IRIS Sapphire’s new and advanced reconciliation, the compliance and recon process becomes easy, quick, and out of the ordinary. IRIS Sapphire frees you from the burden of manually matching your data with suppliers’ data, as you can bulk upload all your invoices across GSTINs and the smart reconciliation module automatically matches your purchase data with GSTR 2A from the portal to give you well-bucketed mismatch results. Review the mismatches and take corrective action. You can even connect with your vendors from the portal itself and ask for rectifications. In addition to this, you can further go for user-triggered Advanced Reconciliation, which runs deeper algorithms to find matches across Financial Years, use fuzzy logic to contravene certain characters from invoice no. match criteria and also compare invoices based on values.
IRIS Sapphire GST Reconciliation module has been built considering the requirements of various industries such as manufacturing, pharmaceuticals, automobiles etc., and has market-tested logics to reconcile the buyer-supplier data across various parameters to reduce manual intervention.
How does IRIS Sapphire help with GSTR 9?
- One-click download of GSTR 1, 2A, and 3B data
- Reports on Tables 6, 10, 11, 13, 17 and 18 helps in auto-population
- In-built audit trail at an invoice level for each entry (Invoice-wise, month-wise and section-wise bifurcation of all values)
- One-click GSTR-9 data upload for all GSTINs
- Need not wait for year-end, you can get all reports at the end of any month
- A checklist of periods for which you have fetched data from GSTN. This is available return-wise for GSTR 1, 2A and 3B
- Comparison between IRIS auto-calculated data and GSTN auto-calculated data
- Quick reports on differences between GSTR-2A and Table 8 of GSTR-9
What are the consequences of non-filing of GSTR 9C except the general penalty of Rs.25000?
Ans. There is no other express penalty provision for GSTR 9C.
Is there any change in late fee provisions or penal provisions for moving to self-certification from CA certification in GSTR 9C?
Ans. For now, there is no change, however, the late fee provision is expected for GSTR 9C as well.
Is there any change in reporting requirement in Form GSTR 9C as compared to erstwhile GSTR 9C filed for 2019-20 except the certification part?
Ans. There is no change except Residual Entry in Tax Rates as “Others” to specify any other rate. And all optional details of FY19-20 have been retained ‘optional’.
Do we have to file GSTR 9 and 9C together? What are the disadvantages of filing them separately?
Ans. It is important to file both together to ensure that no items are missed like – Turnover and Input Tax. Reconciliation with a balance is critical before GSTR 9. GSTR 9C should be ideally clean and there should be no difference between 9 & 9C Data.
There is no amendment in any of the penalty sections or audit sections. So, all the provisions which are applicable earlier are applicable now, so per se, there is no express change in responsibilities of the Company?
Ans. The Penalty Provision and Late Filing Provision is expected to be announced. Further, the change in Certification is critical as it could serve as a ground for invoking an extended period under Section 74 by the department which will have a minimum penalty of 15% (before SCN) and 25% (after SCN) and 50% (after OiO – Order). Thus, it is critical to disclose all the information to limit the SCN exposure only under Section 73.
If we have filed GSTR-9 on/before the due date but belated filed GSTR 9C, what will be the late filing fee?
Ans. There is no Late Filing Fee as of now but it is expected to be notified. Only General Penalty of Rs. 25,000 is applicable.
Is certification mandatory for taxpayers with turnover above 5 crore?
Ans. Yes, as long as the Aggregate Turnover is more than 5 crore, GSTR 9C is mandatory and hence self-certification is mandatory.
While filing GSTR-9 & 9C we have to cross-check with the sales invoice vs E-invoice?
Ans. Yes. That will bring out any non-compliance with the e-invoicing provisions.