CHANGES IN ANNUAL RETURN PROVISIONS (W.E.F. 1.8.2021)

[Dr. Sanjiv Agarwal]

Till now, every assessee was required to file annual return in Form GSTR-9 along with duly audited reconciliation statement of sales, purchases and ITC in Form GSTR 9C by a practising chartered accountant or a cost accountant.

The existing provision for annual return and audit are as follows:

Section 35 (5)

Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.

Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

Section 44

(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.

Provided that the Commissioner may, on the recommendations of the Council and for reasons to be recorded in writing, by notification, extend the time limit for furnishing the annual return for such class of registered persons as may be specified therein:

Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.

(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

Explanation.- For the purposes of this section, it is hereby declared that the annual return for the period from the 1st July, 2017 to the 31st March, 2018 shall be furnished on or before the 7 [31st January, 2020] and the annual return for the period from the 1st April, 2018 to the 31st March, 2019 shall be furnished on or before the 31st March, 2020.

Amendment made by Finance Act, 2021

Finance Act, 2021 has omitted the requirement of audit by a Chartered / Cost accountant for all taxpayers and only self certified Form 9C would be a sufficient compliance in case of specified taxpayers.

Effective date for section 110 and 111 of Finance Act, 2021

1. Finance Act, 2021 had amended section 35(5) and 44 of CGST Act, 2017 by section 110 and 111 respectively:

• Section 35(5) on mandatory requirement of audit of annual return and reconciliation statement was omitted.

• Section 44 of CGST Act, 2017 on annual return was substituted to remove mandatory requirement of furnishing a reconciliation statement duly audited by specified professionals and to provide for filing of annual return on self certification basis. Commissioner was also empowered to exempt any class of taxpayers from such requirements.          

2. These amendments have been notified to come into force w.e.f. 1^st day of August, 2021.

(Source: Notification No. 29/2021-Central Tax dated 30.07.2021)

CBIC Notifications

CBIC has issued new Notification Nos. 29, 30 & 31, all dated 30^th July, 2021 notifying effective date of 01.08.2021 for section 110 and 111 of Finance Act, 2021. Other amendments include requirement of furnishing annual return in Form GSTR 9, 9A and 9B, exemption to taxpayers from filing annual return, change in Form GSTR 9C  making it self-certifiable by taxable person and exemption from filing annual return for FY 2020-2021.

Not only this, the requirement to file annual return has been done away with in case of taxpayers with turnover of upto to ₹ 2 crore. However, if a taxpayer wants to file annual return, it will be optional for taxpayers to file or forgo the filing of annual return. Since no audit is required now, part B of the Form GSTR 9C has been omitted. With this, there will be more onus on the taxpayer itself for authentication of figures and compliances. This change shall be applicable for FY 2020-21 and onwards.

GSTG Annual Return at a Glance

As on 01.08.2021

Section 44 & Rule 80 Annual Return:
Form	Form 9	Form 9A	Form 9B	Form 9C
Which form to be used by whom (Turnover ₹ 2 crore  to ₹ 5 crore)	Registered person (not exempt), ISD, casual taxable person, TCS/TDS person, non-residents	Composition Dealer	E-commerce collecting tax (TCS)	-
Exemption from filing annual return	Turnover upto ₹ 2 crore in FY	-	-	-
Filing of annual return between ₹ 2 crore – 5  crore	Yes	Yes	Yes	Yes
Self certified reconciliation (if turnover is > ₹ 5 crore)	-	-	-	All eligible taxpayers
Last date for FY 2020-21	31.12.2021	31.12.2021	31.12.2021	31.12.2021
How	Electronically on Portal  or notified facilitation centre	Electronically on Portal  or notified facilitation centre	Electronically on Portal  or notified facilitation centre	Electronically on Portal  or notified facilitation centre

Annual Return (CGST Rules, 2017)

1. Rule 80 of CGST Rules, 2017 has been substituted by CGST (6^th Amendment) Rules, 2021 w.e.f. 01.08.2021, consequent upon new section 44 being made applicable from 01.08.2021.
2. All specified persons shall be required to file annual return u/s 44 of the CGST Act, 2017 in Form GSTR-9 on or before 31^st December following the end of relevant financial year.
3.  Specified persons include registered persons (other than exempt), input service distributor, persons deducting tax (TDS) or collecting Tax (TCS), casual taxable person and non -resident taxable persons.
4. Annual return shall be filed electronically through common portal directly or through notified Facilitation Centre.
5. Persons paying tax u/s 10 (Composition dealers) shall file annual return in Form GSTR 9A.
6. E-commerce operators required to collect tax at source (TCS) shall file annual statement as per section 52 (5) in Form GSTR-9B.
7. Specified persons as above whose aggregate turnover during a financial year exceeds ₹ 5 crore shall also furnish a self-certified reconciliation statement in Form GSTR 9C alongwith annual return on or before 31^st December following the end of relevant financial year electronically on common portal or through a notified facilitation centre.
8. Enabling amendments have also been made in Form GSTR 9 and GSTR 9C.

(Source: Notification No. 30/2021-Central Tax dated 30.07.2021)

Exemption from filing of annual returns

1. Exemption has been provided to registered persons under GST law from filing of annual return for the financial year 2020-21
2. Exemption shall be available to those persons whose aggregate turnover in FY is upto Rs. two crore only
3. This exemption has been provided by Commissioner on the recommendations of GST Council in terms of new section 44.
4. This exemption is effective from 01.08.2021.

(Source: Notification No. 31/2021-Central Tax dated 30.07.2021)

These change are effective from 1.8.2021 and shall apply in relation to financial year 2020-21 and onwards.