The Goods and Services Tax (GST) was introduced in India on July 1, 2017, bringing a major change to the country’s tax system. By combining different state and central taxes into a single tax structure, GST has made the process simpler and removed tax duplication. Among the various GST compliance requirements, filing GSTR-9 and GSTR-9C is important for businesses that want to ensure transparency and meet their annual tax obligations.
GSTR-9 is an annual return that summarizes a business’s financial information. GSTR-9C, on the other hand, is a reconciliation statement that compares the data in GSTR-9 with the company’s audited financial statements.
This guide will explain the basics of these forms, why they are important, and how to file them so that your business can comply with GST laws.
What is GSTR-9?
GSTR-9 is an annual return that regular taxpayers must file under GST. It consolidates data from returns like GSTR-1 and GSTR-3B and provides an overall summary of sales, purchases, ITC claims, tax payments, Input Tax Credit (“ITC”), and adjustments made during the year. However, certain types of taxpayers, such as those under the composition scheme or non-resident taxable persons, do not need to file GSTR-9. It is mandatory for taxpayers to have a turnover of more than Rs.2 Crore in the previous year.
Sections in GSTR-9
Basic Details: This section includes your GSTIN, legal name, and trade name.
Supplies Information:
Outward Supplies: Includes details of sales, exports, and other taxable supplies.
Inward Supplies: Covers records of purchases, including those under reverse charge.
Input Tax Credit (“ITC”): Provides a breakdown of ITC claimed, reversed, or carried forward.
Tax Paid Details: Summarizes taxes paid under CGST, SGST, IGST, and cess.
Demands, Refunds, and Late Fees: Any tax refunds, demands raised, or late fees you’ve paid will be included here.
Why is GSTR-9 Important?
Filing GSTR-9 helps businesses reconcile their annual GST returns with their financial records. This ensures that any discrepancies are caught and corrected before they cause major issues. It also serves as a self-check to ensure that ITC claims and tax payments are accurate.
GSTR-9: Things to be kept in mind
Verify Pre-Filled Data: The system will automatically fill in some details from previous returns. Make sure everything is accurate.
Add Missing Details: Fill in any missing information and make necessary adjustments.
Reconcile Records: Double-check your GST data against your accounting records to ensure everything matches.
Pay Any Pending Taxes: If there are any taxes left to be paid, clear them.
Submit the Form: Finally, submit the form using either a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC).
What is GSTR-9C?
GSTR-9C is a reconciliation statement required for businesses with an annual turnover above ₹5 crore. It is used to ensure that the financial information in GSTR-9 matches the audited financial statements of the company. A Taxpayer, Chartered accountant, or Cost Accountant must certify GSTR-9C, ensuring that the numbers in the GST returns are accurate and match the financial records.
Key Sections in GSTR-9
Reconciliation Statement:
Turnover: Compares the turnover reported in GST returns with the financial statements.
Tax Liability: Verifies that the tax liability in GST returns matches the actual tax liability.
ITC Claimed: Compares the ITC claimed in GST returns with the books of accounts.
Certification: A Taxpayer, Chartered Accountant, or Cost Accountant certifies the reconciliation, confirming the data is correct.
Why is GSTR-9C Important?
Ensures Accuracy: It makes sure that the data in GST returns is consistent with the company’s financial records.
Promotes Transparency: It helps identify discrepancies and correct them.
How to File GSTR-9C
Collect Your Documents: Gather your audited financial statements, GST returns, and supporting documents.
Reconcile the Data: Compare the GST returns with the financial records and make sure they match.
Upload the Certified Form: Once certified, upload GSTR-9C to the GST portal.
File the Return: Complete the filing with DSC or EVC.
Key Considerations
Eligibility: GSTR-9 is mandatory for all regular taxpayers having a turnover of more than Rs.2 crore, and GSTR-9C is required for businesses with turnover over ₹5 crore.
Filing Deadlines: The due date for both forms is usually December 31 of the following financial year, although the deadline may be extended.
Penalties:
GSTR-9: The minimum is Rs 100 under CGST & 100 under SGST i.e. Total Penalty is Rs 200 per day. The Maximum penalty can be 0.25 % of the taxpayer turnover.
GSTR-9C: Section 125 of CGST Act, 2017 states a penalty of up to Rs 25,000/- for not getting the accounts audited
Accuracy is Critical: These forms cannot be amended after submission, so it’s crucial to verify all information before filing.
Seek Professional Help: Consulting a Chartered accountant or Cost Accountant, especially for GSTR-9C, can help ensure accurate and timely filing.
Hardships faced in GSTR 9 and GSTR 9C
Mismatch Between GSTR 8A, GSTR 2A, and GSTR 2B – GSTR 2A reflects ITC pertaining to the respective months. Whereas GSTR 2B is frozen each month after the 14th of the next month, and GSTR 8A is the annual statement containing details of aggregate ITC pertaining to the financial year. Ideally, all three of these returns showed common data at the time of filing of GSTR 9 and GSTR 9C; however, due to technical glitches, there have often been mismatches in the data reflected in these statements. Therefore, it is highly important to reconcile ITC details as per these returns with ITC details as per the taxpayer to ensure correct compliance.
Unreflected ITC – Often, inward supplies made by the taxpayer are not reflected in GSTR 2B/ GSTR 2A due to the non-filing of GSTR 1 by the suppliers. Therefore, it is important to ensure that suppliers comply with GST provisions and file their GST Returns in a timely manner.
Improper Accounting – GSTR 9 requires bifurcation of all ITC among the following:
Inputs
Input Services
Capital Goods
To ensure the correct bifurcation, taxpayers need to ensure proper accounting at the source to identify ITC among the three.
HSN Summaries – GSTR 9 requires HSN summaries of both inward and outward supplies. This requires comprehensive data maintenance to ensure proper bifurcation of HSN summaries of sales and purchases. While most accounting software maintains the HSN of outward supplies, the same cannot be said for inward supplies. As a relief against the same, reporting the HSN summary for inward supplies is not yet mandatory. However, it is advisable for taxpayers to maintain proper HSN summaries for both inward and outward supplies.
Accounting Adjustments – A few accounting entries, such as unbilled revenue, customer advances, etc., may cause a mismatch in annual turnover as per GST returns filed and books of accounts. While filing GSTR 9C, it is highly important for the taxpayer to be aware of adjustments causing differences in supplies as per GST returns and books of account to avoid obstacles in filing the annual returns.
Reversal of ITC: The GST law has laid down multiple provisions requiring the reversal of ITC, which was available during the year. However, these are often missed by the taxpayer. GSTR 9 provides an opportunity for the taxpayer to correct the wrongs and avoid undue penalties. Some of such scenarios are as follows:
Sale of capital goods
Non-payment to suppliers within 6 months
Issue of credit notes by suppliers
Taxpayers being engaged in both taxable and exempt supply
Therefore, one should review the ITC availed during the years, along with appropriate reconciliations, to ensure bona fide compliance with the GST law. If the taxpayer has availed of inappropriate ITC, they can reverse it while filing the annual returns.
Conclusion
GSTR-9 and GSTR-9C are vital for staying compliant with GST regulations. GSTR-9 summarizes your annual transactions, while GSTR-9C ensures that your returns match the audited financial statements. By filing these forms on time, businesses can avoid penalties, build credibility with tax authorities, and maintain proper compliance with GST laws. Following the filing process carefully will make tax obligations easier and reduce the risk of mistakes. Professional help can further simplify the process and ensure everything is done correctly.
At Mercurius, we assist our clients in complying with the GST regime, including filing GST returns, assessments, and GST audits. If you have any questions or would like to know more about GSTR-9C, please contact us.
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