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Though the mandatory requirement to furnish Reconciliation Statement (GSTR-9C) duly audited by the Practicing Chartered Accountant or Cost Accountant has omitted in the Budget 2021. CBIC clarifies that for financial year 2019-20, existing GST audit provisions shall continue. Therefore, GST Audit will be applicable for the financial year 2019-20. GST audit due date has been extended from 31st December 2020 to 31st March 2021 for financial year 2019-20.
In this article, we are discussing GST Audit in detail, its applicability, due date, late fees, and penalties.
It is the Reconciliation statement between annual return i.e. GSTR-9 and the audited financial statement of the taxpayer. This statement must be certified by the Chartered Accountant. The reconciliation statement is to be made to find out the differences in the audited annual accounts and all the GST returns filed by the taxpayer during the financial year. It will consist of gross and taxable turnover as per the Books reconciled with the respective figures as per the consolidation of all the GST returns for an FY. Hence, any differences arising from this reconciliation exercise will be reported here along with the reasons for the same.
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 organization as a whole.
Reconciliation statement has five different parts:-
Part-I: Basic Details:
This consists of financial year, GSTIN, Legal name and Trade name. The taxpayer must also mention if he is subject to audit under any other law.
Part-II: Reconciliation of turnover declared in the Audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9):
This involves reporting the gross and taxable turnover declared in the Annual return with the Audited Financial Statements. The Audited Financial statements are at a PAN level. This might require the breakup of the audited financial statements at GSTIN level for reporting in GSTR-9C.
Part-III: Reconciliation of tax paid:
This section requires GST rate-wise reporting of the tax liability as per the accounts and paid as reported in the GSTR-9 respectively with the differences thereof. Further, it requires the taxpayers to state the additional liability due to reconciled differences noticed upon reconciliation.
Part-IV: Reconciliation of Input Tax Credit (ITC):
This part consists of the reconciliation of input tax credit availed and utilized by taxpayers as reported in GSTR-9 and as reported in the Audited Financial Statement. Further, it needs a reporting of Expenses booked as per the Audited financial statement, with a breakup of eligible and ineligible ITC and reconciliation of the eligible ITC with that amount claimed as per GSTR-9. This declaration will be after considering the reversals of ITC claimed, if any.
Part-V: Auditor's recommendation on additional Liability due to non-reconciliation:
Here, the Auditor reports any tax liability identified through the reconciliation process and GST audit, pending for payment by the taxpayer. This can be non-reconciliation of turnover or ITC on account of:
Amount paid for supplies not included in the Annual Returns(GSTR-9)
Erroneous Refund to be paid back
ther outstanding demands to be settled(GSTR-9)
Lastly, the instructions to the format of GSTR-9C specify that an option will be given to taxpayers to settle taxes as recommended by the auditor at the end of the reconciliation statement.
The GSTR-9C can be certified by the same Chartered Accountant who conducted the GST audit or it can be also certified by any other Chartered Accountant who did not conduct the GST Audit for that particular GSTIN.
The difference between the both is that in case the Chartered Accountant certifying the GSTR-9C did not conduct the GST audit, he must have his opinion on the Books of Accounts audited by another Chartered Accountant in the reconciliation statement.
The format of GSTR-9C depends upon the person who certifies and who conducts the GST audit.
There is no specific provision regarding the late fees or penalty for not filling the GSTR-9C by the taxpayer. Therefore, a general penalty of Rs. 25000 is applicable to the taxpayer for not filling GSTR-9C.
For GST audit, taxpayers need to calculate the aggregate turnover for determining the audit threshold limit of Rs.2 crores or 5 crores (amended).
The aggregate turnover means the total of the following shall be considered as an aggregate turnover:-
Value of all taxable supplies of goods and services
Value of all Inter-state supplies
Value of all exempt supplies of goods and services
Value of all export of goods or services or both
Turnover would, therefore, include the following:
All taxable supplies other than supplies on which reverse charge is applicable.
Supplies between distinct entities (in different States or separate business verticals).
Goods supplied to job workers or on a principal to principal basis.
Export or zero rated supplies.
Goods received from a job worker on principal to principal basis.
Supplies of agents/ job workers on behalf of the principal.
Exempt supplies under GST: exempt via any notification, non-taxable supplies (like Diesel, Petrol, Liquor etc.)
Taxes other than those under GST
However, the following items would be excluded from Turnover:
Inward supplies on which taxes are paid under reverse charge
Taxes and cesses under Goods and Service Tax
Goods supplied for or received back u/s 143 (job work)
Interstate supply of services
Transactions which are neither supply of goods or service.
Supplies provided outside India or received outside India
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Click on the button below to check the detailed process of filing GSTR-9C through Web-GST.
How to file GSTR-9C