Annual returns in GSTR 9 - clarifications - GST - TRADE ADVISORY NO 06/2019 PCC/GST/POLICY

GOVERNMENT OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE OFFICE OF THE PRINCIPAL CHIEF COMMISSIONER OF CENTRAL TAX KARNATAKA ZONE, P.B.N0. 5400, C.R. BUILDING, QUEENS ROAD, BENGALURU-560001 C.N0 IV/16/210/2018 PrCCO-GST IV Dated:- 26.08.2019 TRADE ADVISORY NO 06/2019 PCC/GST/POLICY Sub:- Annual returns in GSTR 9 - clarifications - reg Attention of the Trade is invited to Section 44 of the CGST Act, 2017 and Rule 80 of the CGST Rules, 2017 wherein every registered person supplying taxable goods or services, or both shall furnish an annual return in Form GSTR 9 through the common portal. 2. The annual return for the financial year 2017-2018 which was originally required to be submitted by 3 1st December 2018 has been extended several times and is now required to be filed by 31st August 2019. Several clarifications were sought by the taxpayers on the manner of filing the GSTR 9 returns and the Central Board of Indirect Taxes has issued three clarificatory circulars on 04.06.2019 and 03.07.2019 taking note of the difficulties faced in filing the information in the various Tables of the GSTR 9. In order to assist the taxpayers, all the clarifications issued regarding the annual returns (GSTR 9) and the reconciliation statement (GSTR 9C) are summarized below. This will ensure qualitative filing of information by the taxpayers. 3. Primary data source for declaration in annual return: Time and again taxpayers have been requesting as to what should be the primary source of data for filing of the annual return and the reconciliation statement. There has been some confusion over using FORM GSTR-I, FORM GSTR-3B or books of accounts as the primary source of information. It is important to note that both FORM GSTR-I and FORM GSTR-3B serve different purposes. while, FORM GSTR-I is an account of details of outward supplies, FORM GSTR-3B is where the summaries of all transactions are declared and payments are made. Ideally, information in FORM GSTR-I, FORM GSTR-3B and books of accounts should be synchronous and the values should match across different forms and the books of accounts. If the same does not match, there can be broadly two scenarios, either tax was not paid to the Government or tax was paid in excess. In the first case, the same shall be declared in the annual return and tax should be paid and in the latter all information may be declared in the annual return and refund (if eligible) may be applied through FORM GST RFD-01A. Further, no input tax credit can be reversed or availed through the annual return. If taxpayers find themselves liable for reversing any input tax credit, they may do the same through FORM GST DRC-03 separately. 4. Mismatch in auto populated data: Many taxpayers have reported a mismatch between auto-populated data and the actual entry in their books of accounts or returns. One common challenge reported by taxpayer is in Table 4 of FORM GSTR-9 where details may have been missed in FORM GSTR-I but tax was already paid in FORM GSTR-3B and therefore taxpayers see a mismatch between auto-populated data and data in FORM GSTR-3B It may be noted that auto-population is a functionality provided to taxpayers for facilitation purposes, taxpayers shall report the data as per their books of account or returns filed during the financial year. 5. Outward supplies in Part Il and Part V: It may be noted that irrespective of when the supply was declared in FORM GSTR-I, the principle of declaring a supply in Pt. II or Pt. V is essentially driven by when was tax paid through FORM GSTR-3B in respect of such supplies. If the tax on such supply was paid through FORM GSTR-3B between July 2017 to March 2018 then such supply shall be declared in Pt. II If the particulars of the transactions for FY 2017-18 were declared in returns between April 2018 to March 2019 and if the tax was paid through FORM GSTR3B between April 2018 to March 2019, then such supply shall be declared in Pt. V of FORM GSTR-9. Such particulars may contain details of amendments furnished in Table 10 and Table 11 of FORM GSTR-1. Any additional outward supply which was not declared by the registered person in FORM GSTR-I and FORM GSTR-3B shall be declared in Pt. II of the FORM GSTR-9. Such additional liability shall be computed in Pt.IV and the gap between the tax payable and Paid through cash column of FORM GSTR-9 shall be paid through FORM DRC-03. 6. Details of Input Tax Credit in Part IV: Information contained in FORM GSTR- 2A as on 01.05.2019 shall be auto-populated in Table 8A of FORM GSTR-9. Some taxpayers have reported that figures of Input Tax Credit (ITC), as pre-populated in table 8A of Form GSTR-9, do not match with the figures as appearing in their Form GSTR-2A. Please note that this may happen due to following reasons: a. Figures in GSTR-2A are auto populated based on filed/ saved / submitted Form GSTR-I of the supplier taxpayer. But figures in table 8A of Form GSTR-9 are auto- populated only on the basis of filed GSTR-I by the supplier taxpayer. In case, Form GSTR -l is not filed by your supplier, then credit related to those invoices will not appear in table 8A of your Form GSTR-9. b. Figures in table 8A of Form GSTR 9 are auto populated only for those Form GSTR- I, which are filed by the supplier taxpayer by due date of its filing i.e. 30th April, 2019. Thus, ITC on supplies of the financial year 2017-18, if reported beyond 30th April, 2019, will not get auto-populated in table 8A of Form GSTR-9. c. In table 8A of Form GSTR-9, only latest values have been auto-populated based on filed Form GSTR-I, taking into account all the amendments made, if any. d. In table 8A of Form GSTR-9, ITC related to all such invoices have been excluded in which place of supply lies in supplier's taxpayers State, instead of State of the receiver taxpayer. These figures will be shown in Form GSTR-2A of the recipient. For example if a taxpayer of State A visits State B and stays in a hotel in State B, the tax paid by him to the hotel in State B will appear in his Form GSTR-2A, but the same will not be reflected in table 8A of GSTR-9. e. The Figures in table 8A of Form GSTR-9 do not contain ITC for the period during which the recipient taxpayer was under composition scheme. f. Input tax credit on inward supplies shall be declared from April 2018 to March 2019 in Table 8C of FORM GSTR-9. g. Many taxpayers have represented that Table 8 has no row to fill in credit of IGST paid at the time of import of goods but availed in the return of April 2018 to March 2019. Due to this, there are apprehensions that credit which was availed between April 2018 to March 2019 but not reported in the annual return may lapse. For this particular entry, taxpayers are advised to fill in their entire credit availed on import of goods from July 2017 to March 2019 in Table 6(E) of FORM GSTR-9 itself. If the same is done properly by a taxpayer, then Table 81 and 8J shall contain information on credit which was available to the taxpayer and the taxpayer chose not to avail the same. The deadline has already passed and the taxpayer cannot avail such credit now. There is no question of lapsing of any such credit, since this credit never entered the electronic credit ledger of any taxpayer. Therefore, taxpayers need not be concerned about the values reflected in this table. This is information that the Government needs for settlement purposes. 7. Premise of Table 8D of Annual Return: There appears to be some confusion regarding declaration of input tax credit in Table 8 of the annual return. The input tax credit which is declared / computed in Table 8D is basically credit that was available to a taxpayer in his FORM GSTR-2A but was not availed by him between July 2017 to March 2019. The deadline has already passed and the taxpayer cannot avail such credit now. There is no question of lapsing of any such credit, since this credit never entered the electronic credit ledger of any taxpayer. Therefore, taxpayers need not be concerned about the values reflected in this table. This is merely an information that the Government needs for settlement purposes. Figures in Table 8A of FORM GSTR-9 are auto-populated only for those FORM GSTR-I which were furnished by the corresponding suppliers by the due date. Thus, ITC on supplies made during the financial year 2017-18, if reported beyond the said date by the corresponding supplier, will not get auto-populated in said Table 8A. It may also be noted that FORM GSTR-2A continues to be auto-populated on the basis of the corresponding FORM GSTR-I furnished by suppliers even after the due date. In such cases there would be a mis-match between the updated FORM GSTR-2A and the auto-populated information in Table 8A. It is important to note that Table 8A of the annual returns is auto populated from FORM GSTR-2A as on 1st May, 2019. 8. Payment of any unpaid tax: Section 73 of the CGST Act provides a unique opportunity of self- correction to all taxpayers i.e. if a taxpayer has not paid, short paid or has erroneously obtained/been granted refund or has wrongly availed or utilized input tax credit then before the service of a notice by any tax authority, the taxpayer may pay the amount of tax with interest. In such cases, no penalty shall be leviable on such tax payer. Therefore, in cases where some information has not been furnished in the statement of outward supplies in FORM GSTR-I or in the regular returns in FORM GSTR-3B, such taxpayers may pay the tax with interest through FORM GST DRC-03 at any time. In fact, the annual return provides an additional opportunity for such taxpayers to declare the summary of supply against which payment of tax is made. Payments made through FORM DRC-03 for any supplies relating to period between July 2017 to March 2018 will not be accounted for in FORM GSTR-9 but shall be reported during reconciliation in FORM GSTR-9C. 9. Difficulty in reporting of information not reported in regular returns: There have been a number of representations regarding non-availability of information in Tablel 6A or 18 of Annual return in FORM GSTR-9. It has been observed that smaller taxpayers are facing a lot of challenge in reporting information that was not being explicitly reported in their regular statement/returns (FORM GSTR-I and FORM GSTR-3B). Therefore, taxpayers are advised to declare all such data / details (which are not part of their regular statement/returns) to the best of their knowledge and records. This data is only for information purposes and reasonable/explainable variations in the information reported in these tables will not be viewed adversely. 10. Information in Table 5D (Exempted), Table 5E (Nil Rated) and Table 5F (Non- GST Supply): It has been represented by various trade bodies/associations that there appears to be some confusion over what values are to be entered in Table 5D,5E and 5F of FORM GSTR-9. Since, there is some overlap between supplies that are classifiable as exempted and nil rated and since there is no tax payable on such supplies, if there is a reasonable/explainable overlap of information reported across these tables, such overlap will not be viewed adversely. The other concern raised by taxpayers is the inclusion of no supply in the category of Non- GST supplies in Table 5F. For the purposes of reporting, non-GST supplies includes supply of alcoholic liquor for human consumption, motor spirit (commonly known as petrol), high speed diesel, aviation turbine fuel, petroleum crude and natural gas and transactions specified in Schedule 111 of the CGST Act. 11. Reverse charge in respect of Financial Year 2017-18 paid during Financial Year 201819: Many taxpayers have requested for clarification on the appropriate column or table in which tax which was to be paid on reverse charge basis for the FY 2017-18 but was paid during FY 2018-19. It may be noted that since the payment was made during FY 2018-19, the input tax credit on such payment of tax would have been availed in FY 2018-19 only. Therefore, such details will not be declared in the annual return for the FY 2017-18 and will be declared in the annual return for FY 2018-19. If there are any variations in the calculation of turnover on account of this adjustment, the same may be reported with reasons in the reconciliation statement (FORM GSTR-9C). 12. Role of chartered accountant or a cost accountant in certifying reconciliation statement: There are apprehensions that the chartered accountant or cost accountant may go beyond the books of account in their recommendations under FORM GSTR-9C. The GST Act is clear in this regard. With respect to the reconciliation statement, their role is limited to reconciling the values declared in annual return (FORM GSTR-9) with the audited annual accounts of the taxpayer. 13. Turnover for eligibility of filing of reconciliation statement: It may be noted that the aggregate turnover i.e. the turnover of all the registrations having the same Permanent Account Number is to be used for determining the requirement of filing of reconciliation statement. Therefore, if there are two registrations in two different States on the same PAN, say State A (with turnover of ₹ 1.2 Crore) and State B (with turnover of ₹ 1 Crore) they are both required to file reconciliation statements individually for their registrations since their aggregate turnover is greater than ₹ 2 Crore. The aggregate turnover for this purpose shall be reckoned for the period July, 2017 to March, 2018. 14. Treatment of Credit Notes / Debit Notes issued during FY 2018-19 for FY 2017- 18: It may be noted that no credit note which has a tax implication can be issued after the month of September 2018 for any supply pertaining to FY 2017-18; a financial/commercial credit note can, however, be issued. If the credit or debit note for any supply was issued and declared in returns of FY 2018-19 and the provision for the same has been made in the books of accounts for FY 2017-18, the same shall be declared in Pt. V of the annual return. Many taxpayers have also represented that there is no provision in Pt. Il of the reconciliation statement for adjustment in turnover in lieu of debit notes issued during FY 2018-19 although provision for the same was made in the books of accounts for FY 2017-18. In such cases, they may adjust the same in Table 50 of the reconciliation statement in FORM GSTR-9C. 15. Duplication of information in Table 6B and 6H: Many taxpayers have represented about duplication of information in Table 6B and 6H of the annual return. It may be noted that the label in Table 61-1 clearly states that information declared in Table 6H is exclusive of Table 6B. Therefore, information of such input tax credit is to be declared in one of the rows only. 16. Reconciliation of input tax credit availed on expenses: Table 14 of the reconciliation statement calls for reconciliation of input tax credit availed on expenses with input tax credit declared in the annual return. It may be noted that only those expenses are to be reconciled where input tax credit has been availed. Further, the list of expenses given in Table 14 is a representative list of heads under which input tax credit may have been availed. The taxpayer has the option to add any head of expenses. 17. Filing GSTR 9: While filing Form GSTR 9 'Proceed to File' button will be enabled only if 'Compute Liability' is clicked. This button is meant for computation of late fees only. Please note Form GSTR 9 once filed cannot be revised. 18. Issues in filing the Form GSTR 9C: a. Turnover for filing Form GSTR- 9C: Form GSTR-9C is to be filed by all those taxpayers whose aggregate turnover has exceeded ₹ 2 crore in a financial year. Turnover of complete year i.e. from 1st April, 2017 to 3 1 st March, 2018 has to be taken into account for calculating the turnover. For example, if a taxpayer has a turnover of ₹ 2.1 Cr for the period 1st April, 2017 to 31st March, 2018 and a turnover of ₹ 1.9 Cr for the period 1st July, 2017 to 31st March, 2018, then the taxpayer is required to file form GSTR- 9C. b. User getting error message while using Excel version: It is advised to use Microsoft excel version higher than 2007 while preparing Form GSTR 9C. c. Providing Membership Number by Auditor: While filing Part B of Form GSTR-9C, Auditors are advised to give their membership number without prefixing '0' in their membership number. If membership number is '016', then auditor should enter ' 16' on the aforesaid part in the membership number field not '016'. 19. All Trade Associations are requested to circulate the contents of this Trade Notice to their members, goods and service providers in particular and trade in general. (D. P. Nagendra Kdniar) Principal Chief Commissioner