Overview on GST Annual Return, Reconciliation of Statement & Audit

Overview on GST Annual Return, Reconciliation of Statement & AuditIn any taxation statute, periodical reporting to the tax authorities is the backbone of the tax structure, GST being no exception. Soon after the launch of GST at midnight on the 1st of July 2017 came into limelight the concept of GST Annual Return – consolidated summary of all the periodical returns filed during the Financial Year. The Government notified the format for filing annual return for both normal taxable person (GSTR-9) and composition taxable person (GSTR-9A) on the 4th of September 2018. No format for E-Commerce Operators (GSTR-9B) has been notified till date.  Reconciliation Statement and Certifcation – GSTR-9C was introduced vide CGST (10th Amendment) Rules, 2018: CBIC Notification No. 49/2018 Central Tax dated 13th September 2018. NOTE : The transactions for the period April-17 to June-17 are not to be included in GSTR-9 for FY 2017-18.


GSTR-9 – All the registered taxable persons under GST must file GSTR-9 form. GSTR-9 should be filed by the regular taxpayers filing GSTR-1, GSTR-2, GSTR-3. However, the following persons are not required to file GSTR-9 :

  • Casual Taxable Person
  • Input service distributors
  • Non-resident taxable persons
  • Persons paying TDS under section 51 or section 52 of GST Act.


GSTR-9A: GSTR-9A should be filed by the persons registered under composition scheme under GST.

GSTR-9B: GSTR-9B should be filed by the e-commerce operators who have filed GSTR-8 during the financial year.

GSTR-9C: GSTR-9C should be filed by the taxpayers whose annual turnover exceeds Rs. Two crores during the financial year. All such taxpayers are also required to get their accounts audited and file a copy of audited annual accounts and reconciliation statement of tax already paid and tax payable as per audited accounts along with GSTR-9C.




S No.


Description of Information Required



Basic details of the taxpayer



Details of Outward and Inward supplies



Details of ITC declared



Details of Tax paid



The summary of amendment or omission entries belonging to previous FY but reported in Current FY



GST Demands and refunds, HSN wise summary, Late fees payable and paid details etc.



The problem areas are that some additional information is sought in the annual return, which was not disclosed or captured in the periodic GSTR-3B and GSTR-1 returns. In particular following additional information is needed to be reported: –


  1. Table 6 of GSTR-9 requires the bifurcation of ITC availed into inputs, capital goods and input services. This information was never required in the GSTR-3B and hence might be challenging to identify and report within the given time.

  2. Table 8 of GSTR-9 requires reconciliation between the credit claimed in GSTR-3B and GSTR-2A available on GST portal. Again, due to system glitches and other compelling reasons, GSTR-2A was kept in abeyance. Accordingly, taxpayers did not bother about the ITC as appearing in the GSTR-2A. However, now this reconciliation is needed in Annual Return which is again a challenging task. Also, the treatment of mismatch in the ITC figures, which may be due to many reasons (which was appropriately dealt in the initially prescribed GSTR-2 forms), may cause unnecessary harassment to taxpayers in absence of proper reporting fields in summarized annual return forms.

  3. Table 18 of GSTR-9 requires HSN wise details of inward supplies. HSN wise detail of inward supplies was never required to be shown in GSTR-3B. Only HSN wise detail of outward supplies was required. This might lead to another difficulty for taxpayers.



  1. a) Part V of GSTR-9 requires taxpayers to provide details of adjustments/corrections made during April’18 to September’18 related to F.Y. 2017- 18.

  2. b) Inward supplies from composition registered taxable persons, deemed supply from job workers etc. are required to be reported separately.

  3. c) Input tax credit reversed and reclaimed in FY 2017-18 is needed to be separately reported in Table 6H of GSTR-9. For e.g. A tax payer is required to reverse the ITC if payment to the supplier is not made within 180 days. Subsequently, when the payment is made to the supplier, the said ITC is re-claimed. For the purpose of Annual return, such re-claimed credit of ITC needs to be identified and disclosed separately.


Any additional liability arising out of any error/omission in GSTR-1 and GSTR-3B cannot be paid at the time of filing annual return. This is the major drawback as tax payers were expecting to rectify all inadvertent mistakes at the time of filing the annual return, GST being a new concept for all.


GSTR-9 due date is on or before 31st December of the subsequent financial year. For instance, for FY 2017-18, the due date for filing GSTR-9 is 31st December 2018.

Recent Update: Due date for filing GSTR-9, GSTR-9A and GSTR-9C is extended till 31st March 2019 by CBIC for FY 2017-18. The utility for GST audit might be soon available.


Late fees for not filing the GSTR-9 within the due date is Rs. 100 per day per act up to a maximum of an amount calculated at a quarter percent of the taxpayer’s turnover in the state or union territory. Thus, it is Rs 100 under CGST & 100 under SGST i.e. the total penalty is Rs 200 per day of default. There is no late fee on IGST.



Reconciliation Statement and GST Audit (GSTR-9C)

Section 35(5) read with Section 44 and Rule 80(3) of Goods and Services Tax (GST) Laws provides that every registered person, whose aggregate turnover during a financial year exceeds two crore rupees, is required to get his/her accounts audited by a practising Chartered Accountant/Cost Accountant. The copy of audited annual accounts and a reconciliation statement, duly certified, in Form GSTR-9C must be submitted.

Meaning of ‘Aggregate Turnover’ Under GST Law

This is very important to note here that for GST Audit the term ‘aggregate turnover’ is not the same as is understood generally in the context of Tax Audit or Statutory Audit under Companies Act. In the context of GST law, the term ‘aggregate turnover’ is to be understood as defined in Section 2(6) of the CGST Act. Under GST law ‘aggregate turnover’ includes among others-

  • Sale price of capital goods disposed of as such or after use
  • Value of goods sent on stock transfer to branch etc.
  • Sale price of goods returned after a period of 6 months
  • Continuous supply of goods or services
  • Unadjusted Advances at the beginning/end of financial year
  • Discounts accounted for in audited financial statements but not permissible under GST laws
  • Supply of goods between principal and agent


  • Deemed supply under GST Act but not considered as Turnover in accounts, for example, Supply to Job Worker (if goods not received back within 365 days), Goods sent on approval (if not supplied within 180 days) etc.

There can be many other situations where turnover can be different for GST purpose and accounting/income tax purpose. The requirement of GST Audit is to be determined accordingly. A registered taxable person may not be required to get its accounts audited under section 44AB of the Income Tax Act as his turnover may be below Rs. One Crore for the purpose of Income Tax, still he may be required to get his accounts audited under GST law.


For example, a registered taxable person has a turnover of sales of Rs. 85 lacs during the Financial Year 2017-18 and accordingly he is not required to be audited under section 44AB of the Income Tax Act. However, the registered taxable person has disposed of a capital asset for Rs. 116 lacs during the F.Y. 17-18. The total ‘aggregate turnover’ for GST purpose is therefore Rs. 201 lacs and accordingly, he is liable for GST Audit under section 35(5) as the aggregate turnover exceeds Rs. Two Crores.

Further, the aggregate turnover will be calculated for the entity (as a whole) against a single PAN for the entire F.Y. 2017-18 although GST came into effect from 01.07.2017. If the entity is liable to be audited, separate reconciliation statement and audit report is required to be submitted against each registration irrespective of aggregate turnover pertaining to that registration.



Part A of Form GSTR-9C

Part A of the Form GSTR-9C consists of reconciliation. This reconciliation is basically a journey starting from the turnover/ITC as per audited books of account and ending at the turnover/ITC as disclosed in the Annual Return by making necessary inclusions/exclusions to the turnover/ITC as per books of accounts. Any mismatch between turnover/ITC as per accounts and as per Annual Return is to be reported along with reasons thereof. The auditor is required to compute the additional tax payable due to un-reconciled taxable turnover/ITC.

Part B of Form GSTR-9C

Part B of the Form GSTR-9C consists of Certification / Audit Report. Reconciliation Statement and Audit Report is to be submitted either by the Statutory Auditor/Income Tax Auditor or by any other Practising Chartered Accountant or Cost Accountant if the accounts are already audited under any other law.

However, where the registered taxable person is not required to be audited under Income Tax Act, but covered under GST Audit, then in such cases, it is not clear as to who will conduct the GST Audit because the format of Certification attached with GSTR-9C presumes that accounts are already audited under any other law. Therefore, in such a case, undoubtedly a separate GST Audit is required to be done. However, clarification on this by way of an amendment in the Rules and Form of Audit Report is expected shortly.





  1. a) Where the Accounts Are Already Audited Under Any Other Law

In case the accounts of the registered taxable person are already audited under any other law, such as Companies Act and/or Income Tax Act, the scope of the GST audit will be limited to the examination and verification of the statement of particulars contained in Part A of the form GSTR-9C. The GST auditor is required to report that particulars contained in the Part A are true and correct. Therefore, the GST auditor will have to examine the authenticity of the figures given in the Part A. Since the accounts are already audited, the GST auditor is not required to repeat all those audit procedures once again. He can however extend his scope depending upon his findings/observations.

Further he has to examine only those accounts/documents which have a bearing on the information required to be certified. This is basically collection of information from various ledgers/returns/documents and examination to establish their authenticity and correctness.

  1. b) Where the Accounts Are Not Audited Under Any Other Law

This situation is not properly covered by the format of the Audit Report, i.e. Part-B currently. As already mentioned, a registered taxable person may not be required to get its accounts audited under Income Tax Act, but still he may be required to be audited under GST law due to the difference in the meaning of the term ‘Aggregate Turnover’ for income tax and GST. In a layman’s language, on reading of the certification in Part-B it appears that the present format presumes that accounts are already audited under any other law. Hence, this remains under ambiguity as of now and the clearance of doubt is expected shortly.



So far as the scope of audit is concerned in this case, it appears that the GST auditor will have to conduct the audit of the accounts in a similar way as is conducted in case of Tax Audit or Statutory Audit. Here his examination will not be limited to the particulars contained in Part A only. He will have to conduct the audit by applying the generally accepted audit procedures which are applicable for any other audit. Although he may not be required to express his opinion as to whether the financial statements give a true and fair view of the state of affairs of the registered taxable person, still he will have to use his professional skills and expertise and apply such tests as the circumstances of the case may require. Auditor should study and refer the “Technical Guide on Annual Return & GST Audit” for better clarity.

Part-B of the Form GSTR-9C which consists of Certification appears to be less a format of audit report but more a certificate that the particulars given in Form 9C are true and correct. Although it’s called as GST audit, in fact it is a combination of Certificate and Report. In a nutshell, it can be said that the GST auditor must be very careful while giving his report in Part B of form GSTR-9C. He is responsible for the factual accuracy of the figures contained in Part A i.e. the reconciliation statement. If he is not satisfied with the accuracy of the figures, he must report it by way of notes in his Audit Report in Part B.






The introduction of GST Audit has opened a new avenue of practice for Chartered Accountants. The law is new and it will take some time for things to settle down. This article does not deal with legal interpretations and rulings and does not contain answers to all the problems that might arise in the day-to-day audit work. In such cases, the GST auditor may have to apply his mind judiciously, keeping in view the intent behind the law, principles and policies. The Government has imposed their trust and confidence on us and based on our observations/report, departmental officers are going to take decisions. There is no doubt that this audit will result in more proper and timely compliance of law thereby benefiting the society in general and the tax payers and the Government in particular. We need to be thorough and familiar with the provisions of the GST Act and Rules made there under, Notifications and Circulars issued from time to time to have a fair and reasonable knowledge of the law and the updated pronouncements. Now this is on us to live upto the expectations of the Government and discharge the responsibilities assigned to us in accordance with the spirit of the law. So, this is a challenging opportunity for the budding chartered accountants.







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