GSTR 9 and 9C – Optional to Mandatory reporting in FY 2021-22

The Goods and Services Tax (GST) regime, introduced in India on 1st July 2017, has revolutionized the way businesses pay taxes. The GST system aims to create a single, unified market for goods and services across India, replacing the complex tax structure that existed prior to its implementation. The GST Returns are a key component of the GST system and are used by businesses to report their tax liability to the government. In this article, we will discuss the recent changes in the reporting of GSTR 9 and 9C, from optional to mandatory in the financial year 2021-22.

Short Glimpse

Goods and Services Tax (GST) has been one of the most significant tax reforms in India. GST was implemented on July 1, 2017, replacing multiple indirect taxes levied by the central and state governments. Under GST, every registered taxpayer is required to file their returns and comply with the various rules and regulations set by the government. Two essential returns that taxpayers must file under GST.

Let us first have some basic understanding of both of these Returns in detail so that we could have a better understanding of the reason as to why the reporting of GSTR has been changed from optional to mandatory in the financial year 2021-22.

What is GSTR 9?

GSTR 9 is an annual return that must be filed by all regular taxpayers registered under GST. It provides a summary of the outward and inward supplies made during the financial year and the taxes paid. It also contains information related to Input Tax Credit (ITC) claimed, ITC reversed, and ITC refunded.

GSTR 9 is an annual return form that is filed by registered taxpayers who have opted for the regular scheme. It is a consolidation of all the monthly or quarterly returns that the taxpayer has filed during the financial year. GSTR 9 contains details of sales, purchases, and tax paid during the year. The form is divided into six parts, each requiring specific information related to the taxpayer’s business.

Who needs to file GSTR 9?

Every taxpayer registered under GST, except for those registered under the composition scheme, must file GSTR 9. The following are the categories of taxpayers who must file GSTR 9:

• Regular taxpayers whose annual turnover exceeds Rs. 2 crores in a financial year.
• Casual taxpayers and non-resident taxpayers.
• Input service distributors (ISDs)
• Those who were previously registered under the Goods and Services Tax (GST) but have since surrendered their registration.

What is GSTR 9C?

GSTR 9C is a reconciliation statement that must be filed along with GSTR 9. It is mandatory for taxpayers whose annual turnover exceeds Rs. 5 crores in a financial year. GSTR 9C reconciles the information provided in GSTR 9 with the audited annual financial statements of the taxpayer. The reconciliation statement helps to ensure that the information provided in GSTR 9 is accurate and complete.

GSTR 9C contains a reconciliation of the taxpayer’s turnover, tax paid, and ITC claimed in the financial year with the audited annual financial statements of the business. It is certified by a Chartered Accountant or a cost accountant, and it is mandatory for taxpayers to file GSTR 9C along with GSTR 9.

Who needs to file GSTR 9C?

The following categories of taxpayers must file GSTR 9C:

• Taxpayers whose annual turnover exceeds Rs. 5 crores in a financial year.
• Those who are required to get their accounts audited under any law.

The due date for filing GSTR 9 and GSTR 9C

The due date for filing GSTR for a financial year is December 31st of the subsequent financial year. However, the due date for filing GSTR 9 and GSTR 9C for the financial year 2019-20 has been extended to March 31, 2021, due to the COVID-19 pandemic.

Legal Window can assist you with the filing of your GST yearly return by simply following a few simple procedures, while also giving the finest service, quick delivery, and ensuring the greatest level of customer satisfaction. For GST Annual Return, please contact our team at 072407-51000 or [email protected]. 

GSTR 9 and 9C – Optional to Mandatory reporting in FY 2021-22

In the 45th GST Council meeting held on September 17, 2021, the government announced that the filing of GSTR-9 and GSTR-9C will be made mandatory for all taxpayers for FY 2020-21. The decision was taken to improve compliance and ensure that all taxpayers report their transactions correctly. The government also emphasized that the taxpayers should file their returns on time and avoids any last-minute rush.

The reporting of GSTR 9 and 9C was optional in the previous financial year, i.e., 2020-21. However, the Central Board of Indirect Taxes and Customs (CBIC) has made it mandatory for all registered taxpayers to file GSTR 9 and 9C for the financial year 2021-22. The decision was taken to increase transparency in the GST system.

Impact of Mandatory Reporting of GSTR 9 and 9C

The mandatory reporting of GSTR 9 and 9C will have a significant impact on businesses. Firstly, businesses will need to ensure that they maintain accurate records of their transactions throughout the financial year to facilitate the preparation of GSTR 9 and 9C. This will require businesses to invest in robust accounting and record-keeping systems to ensure compliance with the GST regime.

Secondly, the mandatory reporting of GSTR 9 and 9C will increase the workload for businesses, especially those with a turnover of over Rs. 2 crore. These businesses will need to engage the services of a chartered accountant or cost accountant to prepare and certify their GSTR 9C.

Lastly, the mandatory reporting of GSTR 9 and 9C will improve the transparency and accountability of businesses, as they will need to provide a detailed reconciliation of their turnover, tax paid, and ITC claimed. This will enable the government to identify any discrepancies in the tax returns and take appropriate action to ensure compliance with the GST regime.

Some key Pre-requisites regarding GSTR 9 and 9C

The following are some key Pre-requisites regarding GSTR 9 and 9C:

• Accounting books are completed.
• In the event of multi-state GSTINs, a state-by-state trial balance should be extracted, and the total of all states should be tallied with turnover/input tax credit (‘ITC’) as per financials.
• Transactional level reconciliation of GSTR 1 against GSTR 3B vs. books of accounts from the outside.
• Transactional level reconciliation of GSTR 2B versus GSTR 3B vs. books of accounts from an inside perspective.
• To track reporting of external and inward supply transactions (along with modifications) in GSTR 1/ GSTR 3B from April 2022 to October 2022 tax periods submitted till 30 November 2022.
• Extract data of ITC related to FY 2020-21 availed in FY 2021-22 for reporting in GSTR 9C.
• Outward supply information should be compiled by HSN. 6 digits HSN for taxpayers having revenue of more than INR 5 crore. 4 digit HSN for all B2B supplies made by taxpayers with a turnover of less than INR 5 crore).
• A GST rate-by-rate breakdown of turnover and liabilities stated in GSTR 9 should be generated (along-with RCM transactions).
• To validate GST data from the Income Tax Website.

Penalties for non-filing or late filing of GSTR 9 and 9C

Non-filing or late filing of GSTR 9 and GSTR 9C can attract penalties. The penalty for non-filing or late filing of GSTR 9 is Rs. 200 per day of delay, subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant financial year. The penalty for non-filing or late filing of GSTR 9C is Rs. 100 per day of delay, subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant financial year.

Takeaway

In conclusion, the mandatory reporting of GSTR 9 and 9C for the financial year 2021-22 is a significant development in the GST regime. It is a step towards improving compliance and increasing transparency in the system. While businesses may face increased workload and compliance costs, they will benefit from improved record-keeping practices and enhanced transparency. The government, too, will benefit from a better understanding of the tax liabilities of registered taxpayers, enabling it to take appropriate action to ensure compliance with the GST regime.