Prologue
Governments run on taxpayers’ money. They have two major tasks – collect money from citizens by way of tax, and distribute it back to all citizens by way of governance services. While the Government may not be efficient in the task of distributing the money back to citizens, it is far more efficient at the task of collecting taxes, thanks to the law-abiding taxpayers who follow the laws, irrespective of how just or unjust the laws may be.
When we pay taxes to the Government, it runs its civil projects and provides other services to the citizens of the country. Under direct taxes, you pay tax because you earn more than the limits determined by the Government which it assumes is above the average income of the country. However, under indirect taxes such as Goods and Services Tax (GST), the registered taxpayers are mere ‘tax collectors’ as the tax is paid by their customers and clients which in turn, the registered taxpayer is expected to faithfully deposit the same with Government, after taking input credit for the tax, the taxpayers have paid themselves while purchasing goods and services for business use.
Until recently, the responsibility to collect taxes was of the Government, with taxpayers playing the supporting role. Taxpayers were responsible for merely collecting the taxes and paying the Government the taxes that were actually collected. However, after the recent changes in the tax laws, be it GST input tax credit rules, TCS on sale of goods, or TDS on purchases of goods, it seems the Government has become greedy, as these new laws mandate taxpayers to pay taxes, irrespective of whether the tax was collected or not. You are expected to keep a watch on each other, the people you deal with, whether they too are tax compliant or not, or else lose your money. This is new democracy!
Meanwhile, red-tapism doesn’t seem to be going away soon. With GST laws completing 4+ years, it’s high time the tax officers will begin with their roving scrutinies and enquiries. With the GST law being unclear most of the time, and being amended several hundred times, there’s no doubt that GST litigations are going to rise. The tax officers and the taxpayers will drag each other to court, and irrespective of tribunal/court’s decision, the taxpayer is always on the losing side, it’s only the quantum that is undecided, whether it will include – taxes, interest, penalties, late fees, litigation fees, experts’ fees, and most importantly, how much time and efforts, as the same is never considered and quantified.
GST Annual Returns
Under the Goods and services tax (GST) laws, apart from filing monthly/quarterly returns in Form GSTR-1 and GSTR-3B, taxpayers are expected to file an annual return in Form GSTR-9 and an annual reconciliation statement in Form GSTR-9C. GSTR-9 for FY 2020-21 applies to registered taxpayers with aggregate turnover exceeding INR 2 Crores. GSTR-9C for FY 2020-21 applies to registered taxpayers with aggregate turnover exceeding INR 5 Crores. The due date for filing the same has been extended and the same is now February 28, 2022. FY 2020-21 onwards, GSTR-9C can be self-certified i.e. GST audit and certificate from Chartered Accountant / Cost Accountant is no longer required, unlike in the prior years.
Filing of annual returns is an important task to avoid red-tapism. The tax officers act based on information available to them. While the taxpayers may have paid the taxes faithfully, information about various aspects does not reach the tax officers automatically. Annual returns are an opportunity for the taxpayers to reconcile their books with the returns and file an annual statement disclosing that they have paid all the taxes appropriately. This can help in reducing the tax notices and scrutinies. While annual returns are applicable above a certain threshold, you can still voluntarily file the GSTR-9 and GSTR-9C returns to hand over your reconciliations to tax officers and strengthen your tax compliance. You can also obtain certificates from Chartered Accountants or Cost Accountants concerning complex aspects such as aggregate turnover, tax credit availment etc. and attach them along with GSTR-9C. It is highly recommended that you take the help of a GST expert who will not only file more accurate annual returns but also recommend changes in documentation, day-to-day compliances and best accounting and reporting practices, to avoid mistakes and errors, before they are committed, instead of reconciling them later.
FAQs on GSTR-9
Query 1 – Who is not required to file GSTR-9?
Guidance – Following persons are not required to file GSTR-9 – an Input Service Distributor, a person paying tax under section 51 (TDS) or section 52 (TCS), a casual taxable person and a non-resident taxable person. Suppliers under the composition scheme are required to file GSTR-9A while a person paying tax under section 52 (TCS) is required to file GSTR-9B.
Query 2 – Which annual return must be filed if the taxpayer was earlier registered as composition taxpayer but later switched over to a regular taxpayer?
Guidance – In such case, the taxpayer should file GSTR-9A for the period registered as composition taxpayer, and for the remaining financial year, file GSTR-9.
Query 3 – Is the taxpayer required to file GSTR-9 if registration has been cancelled before March 31? What if the application for cancellation remains pending as of March 31?
Guidance – Even if the taxpayer’s registration is cancelled, or application for cancellation is pending as of March 31, GSTR-9 should be filed providing details for the period during which the taxpayer was registered.
Query 4 – If a taxpayer has more than one GST Registration through a single PAN, then whether GSTR-9 is to be filed at the entity level or GSTIN wise?
Guidance – If a taxpayer has obtained multiple GST Registrations whether, in one state or more than one state, it shall be treated as a distinct person in respect of each such registration as per section 25(4) of the CGST Act. GSTR-9 should be filed separately for each such GSTIN.
Query 5 – What is the information sought in GSTR-9?
Guidance – GSTR-9 contains a total of 6 parts spread out within 19 Tables. Details required in each part is as below:
Part-I Basic information of taxpayer (Table 1 – 3), Part-II Details about turnover on which tax is to be paid (Table 4 – 5), Part-III Details of input tax credit (Table 6 – 8), Part-IV Details of tax paid and payable (Table 9), Part-V Details of transactions of current period reported in next period (Table 10 – 14), Part-VI Other information (Table 15 – 19).
Query 6 – What should be the source of information for filing GSTR-9?
Guidance – GSTR-9 is merely a compilation of data filed in GSTR-3B and GSTR-1. As per the instructions of the form GSTR-9, it is stated that information of outward supplies ‘may’ be derived from Form GSTR-1. Inward supplies, input tax credit and the net tax paid in cash are to be gathered from Form GSTR-3B. Value as per GSTR-3B and GSTR-1 must be reconciled. If there are any differences, the same must be adjusted in subsequent returns up to September of next year.
Query 7 – Can taxpayers add information that was missed to be reported in GSTR-3B or GSTR-1?
Guidance – GSTR-9 is a mere compilation of data filed in GSTR-3B and GSTR-1 and no other information can be incorporated in GSTR-9. GSTR-9 requires details from monthly/quarterly returns on an as-is basis. Even if a taxpayer has identified mistakes, still the same data must be reported in the annual return. The actual data present in the financial statements and the books of accounts are not to be considered.
Query 8 – What is the difference between legal name and trade name?
Guidance – Legal name is a name given by the laws which are generally found in PAN. A trade name is a name from which an entity is known generally brand name. E.g. ‘Maggi’ could be a trading name for Nestle with its legal name being ‘Nestle Limited’. Legal name and trade name are auto-populated from GST Registration in GSTR-9.
Query 9 – How to report Debit notes and credit notes related to an unregistered person?
Guidance – Unlike B2B supplies, debit notes and credit notes issued to unregistered persons are to be adjusted against outward supply and net supply is to be furnished in Table 4A. This applies to B2C transactions as well.
Query 10 – Whether supply made to a registered person (B2B) as required in Table 4B also includes outward supply on which tax is payable by the recipient on a reverse charge basis?
Guidance – No. Only outward supply made to the registered person on which tax is payable on a forwarding charge basis by the supplier should be reported in Table 4B. Outward supplies under reverse charge should be reported in Table 5C.
Query 11 – How to report stock transfer made to another branch situated in another state if both are registered?
Guidance – Since both branches are registered persons, these transactions are to be reported in supplies made to the registered person (B2B) Table 4B.
Query 12 – If Taxpayer has made two types of exports, one with payment of tax and the other without payment of tax, where should these transactions be reported?
Guidance – Export with payment of tax are expected to be reported in Table 4C and exports without payment of tax are expected to be reported in Table 5A.
Query 13 – What are deemed exports to be reported in Table 4E?
Guidance – As per Notification No. 48/2017-Central Tax dated October 18, 2017, supply of goods against advance authorization, supply of capital goods against EPCG authorization, supply of goods to EOU (export-oriented undertakings), supply of gold by bank/PSU specified in Notification No. 50/2017-Customs dated June 30, 2017, is considered as ‘Deemed Exports’.
Query 14 – Whether all advances on which tax is paid but subsequently got adjusted against invoices shall also be reported in Table 4F?
Guidance – No, only outstanding advances as of March 31 on which tax was paid but invoice not issued against the same are to be reported in Table 4F.
Query 15 – How are amendments made in supply to be reported in GSTR-9?
Guidance – Amendments in supply are expected to be reported in Table 4K, 4L, 5J, 5K, 10 and 11 depending on the nature of the transaction. E.g. If the value of the original B2B supply is INR 1,00,000 but which was reported as INR 10,000 in GSTR-1 and subsequently amended in the next GSTR-1 with the correct value, then INR 10,000 will be reported in Table 4B and INR 90,000 will be reported in Table 4K.
Query 16 – What information is to be provided in Tables 5 and 6?
Guidance – Details of outward supplies on which no tax is payable such as exports, SEZ supply with LUT or bond is to be reported in Table 5. Outward supplies on which the recipient is liable to pay tax on an RCM basis is also to be reported in Table 5.
Query 17 – What information is to be reported in Table 6?
Guidance – In Table 6, the Input tax credit availed in GSTR-3B filed for the year is auto-populated in Table 6A. Only the break up of such ITC has to be reported in Table 6B to 6H.
Query 18 – How to report ITC breakup in GSTR-9, as GSTR-3B doesn’t require ITC to be bifurcated into Input, Input service and capital goods whereas Table 6 requires such breakup?
Guidance – Form GSTR-9 was built based on original proposed returns GSTR-1, GSTR-2 and GSTR-3. GSTR-2 required ITC to be bifurcated into Input, Input service and Capital Goods. However, GSTR-2 has been dispensed off and is not required to be filed anymore. Thus, one will have to categorise ITC into Input, Input service and capital goods from books of account.
Query 19 – Whether ITC about the current year but claimed subsequently in GSTR-3B of April to September of next year, will be reported in Table 6?
Guidance – No. Only input tax credit claimed during the year in GSTR-3B is to be reported.
Query 20 – What information is to be provided in Any other ITC availed but not specified above in Table 6M?
Guidance – Table 6M include ITC claimed through Form ITC-01, ITC-02, and TRAN-III credit.
Query 21 – What is the scope of Table 7A – 7D?
Guidance – ITC reversed as per various rules in GSTR-3B filed for the year is to be reported in Table 7. As per proviso to section 16(2) of CGST Act read with Rule 37 of CGST Rules, the amount of ITC reversed on non-payment of the value of supply along with tax within a period of 180 days from the date of the invoice is to be reported in Table 7A. As per Rule 39, which deals with the procedure for distribution of input tax credit by Input Service Distributor (ISD), if any supplier gives a credit note to the ISD then the input tax credit is required to be reduced and apportioned to each recipient in the same ratio in which the input tax credit contained in the original invoice was distributed. This reduction is to be reported in Table 7B. As per Rule 42 if Input and Input service is used partly for business purposes and partly for non-business purposes or is used for effecting combined taxable and exempt supply, then input credit is to be reversed in Table 7C. As per Rule 43, reversal of input tax credit of capital goods is required when capital goods are used partly for business purposes and partly for non-business purposes or such capital goods are used for effecting taxable as well as exempt supply and the same is reported in Table 7D.
Query 22 – Whether ineligible ITC as reported in Table 4D of GSTR-3B is to be reported in Table 7E of GSTR-9?
Guidance – No, Net ITC as per GSTR-3B does not take into consideration ineligible ITC as reported in Table 4D of GSTR-3B. So the auto-populated figure of Net ITC in Table 6A of GSTR-9 will not contain ineligible ITC. Since the taxpayer has not availed of such ineligible ITC at all, there is no requirement to reverse it. However, if the taxpayer identifies certain ITC to be ineligible at the time of filing GSTR-9 then such amount is to be reported in Table 7E of GSTR-9.
Query 23 – How is the ITC auto-populated in Table 8A of GSTR-9?
Guidance – Table 3 of GSTR-2A contains details of inward supplies received from a registered person other than supplies attracting reverse charge and Table 5 of GSTR-2A contains details of Debit Note/Credit Note received during the current period. Table 8A contains the net total of the above two tables of GSTR-2A
Query 24 – What is the objective of Table 8?
Guidance – Table 8 calculates ITC deemed to lapse during the year which is the sum of – 1) Difference of ITC as per GSTR-2A and ITC availed which may be due to ITC received but not claimed (Table 8E) or ineligible to claim (Table 8F). 2) Difference of IGST paid on imports and IGST credit availed. The total ITC lapsed is only informative and it does not have any impact on the Electronic credit ledger. If there is any input tax credit available in GSTR-2A but the taxpayer has not claimed it but claimed during April-September next year, such credit is to be reported in Table 8C. This ITC will not form part of the total ITC to lapse.
Query 25 – What is the scope of Table 10 to 13?
Guidance – Table 10 to 13 plays an important role in GSTR-9. Any changes in supply, made through Amendments, credit note or debit notes during the year, reported in GSTR-1 of April to September of next year, is to be reported in Table 10 if the same is increasing in value of supply, and in Table 11, if resulting in a reduction in the value of supply. In case of invoices or notes, issued during the year but completely reported in GSTR 1 of next year for the first time, such invoices will also be reported in Tables 10 and 11. Similarly, if any input tax credit belongs to the year but has been claimed in GSTR-3B of April to September next year, the same is to be reported in Tables 12 and 13.
Query 26 – How to report GST Refund is claimed before March, but sanctioned in April, in Table 15?
Guidance – GST Refund claimed during the year is to be reported in Table 15A. If the refund is sanctioned after March, then the same is not to be reported. Non-GST refund claims and demand are not to be reported in Table 15.
Query 27 – If a notice has been received from the tax officer that there is a difference between GSTR-1 vs GSTR-3B / GSTR-3B vs GSTR-2A, should such differences be reported in total demand of tax in Table 15E?
Guidance – No, only tax demands for which an order has been issued has to be reported in Table 15E. Details of mere notices seeking reconciliation should not be reported.
FAQs on GSTR-9C
Query 28 – Should the supply of alcohol for human consumption be included in determining the threshold limit?
Guidance – The definition of aggregate turnover includes exempt supply as well as non-taxable supply. Exempt turnover includes supply that attracts a nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6. Non-taxable supply is supply that is not leviable to tax under GST Act.
Section 9(1) excludes alcoholic liquor for human consumption from the levy of GST. Thus, it is a non-taxable supply and must be included in aggregate turnover.
Query 29 – Should stock transfers/ cross charges between branches located in the same or different states be included in aggregate turnover?
Guidance – Section 2(6) defines aggregate turnover to include inter-state supplies of a person having the same PAN. Thus, stock transfers/cross charges of services provided from a branch located in one State to a branch located in another state will be included in the aggregate turnover of the branch supplying the goods/services. However, aggregate turnover shall not include stock transfers effected within the same state having a single GSTIN for determining the threshold limit. Where more than one GSTINs has been taken for branches located in the same state, then such branch transfers shall be included for computing threshold limit.
Query 30 – Will a registered person exclusively deal in exempted supplies exceeding the threshold required to file GSTR-9C?
Guidance – Yes, aggregate turnover includes even exempted supplies.
Query 31 – What are the documents to be enclosed along with GSTR-9C?
Guidance – As per section 35(5), a copy of audited accounts and such other documents in such form and manner as may be prescribed ought to be submitted along with GSTR-9C. No documents other than audited annual accounts have been prescribed in Rule 80(3).
Query 32 – What is the turnover to be declared in Table 5A of GSTR-9C?
Guidance – Table 5A requires the turnover as per the audited Annual Financial Statement for the GSTIN to be reported. In case of multiple GSTINs, GSTIN wise turnover must be derived and declared in respective GSTR-9C. Turnover must purely flow from the ‘audited annual financial statements’ even if such turnover consists of adjustments/revenue recognition on account of a requirement of an Accounting Standard.
Query 33 – What details are to be provided in Table 5B?
Guidance – Table 5B requires the addition of unbilled revenue at the beginning of the financial year. Unbilled revenue recorded in the books of accounts following the accrual system for which the invoice is issued under GST law in the current period is required to be declared in Table 5B.
Query 34 – Should the registered person disclose details of notice pay recovery from employees or incentives received from suppliers in GSTR-9C?
Guidance – If a taxpayer has considered the notice pay recovered from employees as a taxable supply and has not disclosed the same as an income in the Profit and Loss account, it would be reported under Table 5O of GSTR-9C. Similarly, incentives/ rebate received from suppliers is considered as a supply under GST and should be considered taxable supply and reported in Table 5O.
Query 35 – How to report ITC booked in earlier financial years claimed in the current financial year in Table 12B?
Guidance – The details for 12B of GSTR-9C should be drawn from the amount as reported in Table 12C of GSTR-9C of the previous financial year.
Query 36 – How to report ITC accounted in books during the year and not claimed in returns during the year, but claimed in the next year?
Guidance – Such ITC must be reported in Table 12C of GSTR-9C. This credit can also relate to goods that are in transit at the close of the financial year and which are received in the next year.
