As the government and industry sailed through the first year of GST compliance, the time is now fast approaching to put the pieces together for year-end compliance for FY18 under the GST regime. The annual return under GST is to be filed in form GSTR 9, GSTR 9A and GSTR 9B by regular taxpayers, taxpayers taxable under the composition scheme and electronic commerce operators respectively. Form GSTR 9 provides for consolidation of monthly or quarterly GST returns, i.e., value of supplies, input tax credits availed and utilised, taxes paid etc. Most of the details need to be manually entered and one needs to reconcile input tax credit availed as per GSTR 3B (monthly summarised GST return), with the details of outward supplies filed by the suppliers and as appearing in the GSTR 2A of the recipient.
This is a tedious task as businesses will have to match every transaction with their suppliers’ returns and incur significant amounts of time and effort. Any difference in credits availed with supplier’s return may lead to issuance of notice by the GST authorities. Under GST, any registered taxable person whose turnover exceeds the threshold of `2 crore during the financial year is additionally required to furnish audited accounts along with a reconciliation statement in form GSTR 9C. GST audit may be undertaken by a chartered accountant or a cost accountant.
GSTR 9C has two parts. Part A provides for statement of reconciliation between GSTR-9 (annual return) and the financial statements. Part B provides the format of the certificate to be issued by the auditor conducting the GST audit. Given that this is the first time the industry is preparing for an annual statement and/or reconciliations under GST, many companies are worried on certain aspects.
One such aspect is that GSTR 9C requires an expense-wise input tax credit reconciliation as per financials, which is a tedious task. While the format allows addition and deletion of the sub-heads of expenses as per requirement, however, it would be a challenge for companies to bifurcate the same amongst different states. Also, one would need to take note of reporting certain transactions which may not find place in the financial statements, such as stock transfers, free-of-cost transactions between related parties, free samples, etc.
Amongst other challenges faced by the industry is the dilemma whether the threshold of Rs 2 crore is to be computed from July 2017 to March 2018—the period within the GST era—or from April 2017 to March 2018 as the law provides for turnover during the financial year. While the industry awaits a clarification on this issue, it is pertinent that it is issued soon. Another pain point for the industry is that one would need to file an audit report even in states where the turnover is nil or miniscule, since, for computing the threshold of Rs 2 crore, one has to look at the pan-India turnover of the entity.
Since GST was introduced from July 2017, reconciling figures of yearly financials, which is an annual statement, with the GST returns for nine months would be another task for companies.
The industry also has apprehensions on how the matching concept would work considering that even after 15 months of GST implementation, this has not become operational. The concept is new and has penal consequences for the recipient if the supplier fails to comply. Nevertheless, the industry is gearing up to meet the deadlines. Having said that, there are still a number of companies hoping for last minute relaxations or extension of deadlines by the government.
There is no option to file the annual return or audit report provided to the assessees so far at the GST portal, as the online utility is yet to be made available. Late filing of annual returns would attract a fee of Rs 100 per day till the day of filing, subject to a maximum of an amount calculated at a quarter per cent of turnover in the state or union territory. Non filing of audit report may attract a general penalty of Rs 25,000. Based on the extensive requirements, it is expected that the annual compliance activity could be laborious. Therefore, it is crucial that companies initiate the deployment of resources to meet the deadline in order to weather the storm.
Source :- Financialexpress.com