Is Self-Certification in GSTR-9C Really a Welcome Step?

The Finance Act, 2021, introduced amendments in the CGST Act to do away with the requirement of filing CA certified Reconciliation Statement in GSTR 9C.

As per the amendments, now the taxpayers are not required to get the Reconciliation Statement certified by CA/CWA. Additionally, the taxpayers with turnover of up to Rs. 2 crores have option not to file GSTR 9 (Annual Return). These amendments will be in force w.e.f. 1st August 2021.

Pre the above changes, taxpayers with a turnover of more than Rs. 5 crores were required to file CA/CWA certified Reconciliation Statement in GSTR 9C.

In this article, we attempt to understand the background and analyze the implications of recent changes.

What is GSTR-9?

GSTR-9 is an annual return to be filed by registered taxpayers having turnover more than Rs. 2 Crores in previous financial year. It contains details like outward supplies, tax liability and input tax credit availed, refund claimed and tax paid during the financial year. The due date is 31st December of the year following the particular financial year. However, following class of taxpayers do not need to file GSTR-9:

What is GSTR-9C?

Every registered person whose aggregate turnover is more than Rs. 5 crores shall furnish a copy of audited financial statement and reconciliation statement in GTSR-9C. It is basically GST Audit. GSTR-9C is a statement of reconciliation between the annual returns in GSTR-9 filed during the year and the figures as per audited financial statements under the provisions of Income Tax Act. Any difference arising is reported here along with the reasons for such difference

Why were these changes required?

It has been four years since the GST Act came into force. Although there are huge benefits of this new form of taxation, but there is the need to actively work towards simplifying compliances.

Compliance needs to be simplified as it is a costly affair both in terms of cost, time & energy. Already the taxpayers are required to file GSTR-1, GSTR-3B (and others depending on nature of business) on a monthly/quarterly basis. They have to incur significant costs for the same as professional services are required for managing compliance. There was a demand across sectors to make this non-business task less expensive and time-consuming.

When we look at GSTR9 in this context, we can see that changes in this direction have been made. Now only the taxpayers with turnover of above Rs. 2 crores are required to furnish GSTR-9, whereas GSTR-9C is furnished by taxpayers with turnover of above Rs. 5 crores. Recently, the requirement of CA certification on Reconciliation Statement has been removed, making compliance simpler.

The 43rd GST council was held on 28th May 2021 wherein various measures for combating Covid and reviving businesses were discussed. Along with this, the council expressed the need to simplify Annual Filing. It also recommended amending CGST Act to allow the filing of GSTR-9C on Self certification basis, which the notifications have now implemented.

Conclusion:

Although this is a welcome step, its disadvantages also need to be acknowledged. This step is bound to provide compliance level relief to number of taxpayers, however it would increase the risk of intentional as well as unintentional misstatements / errors in the annual filings, calling for increase in departmental scrutiny and hence, increased burden on the enforcement groups.

But on the flip side, it will create a number of opportunities to the litigation professionals as well to handle the scrutiny notices of their clients & represent the latter in front of department. As a result, it will provide more avenues to the professional to showcase their skills & garner more clients.

Hence, it should be noted that most of the taxpayers are not very well versed with the requirements of Annual filings, and professional help for the same is required. We are yet to see whether the merits of the move outweigh the demerits or not to the different stakeholders.

Authored by CA Rahul Pareva, assisted by Vrinda Sharma & Ashish Sharma
For any queries and suggestions, reach us at info@manishanilgupta.com

About the Author & Firm

CA Rahul Pareva possesses many years of experience in litigation and advisory matters. He has been representing number of clients before Tax Authorities. He is actively involved in advisory related to filing of GSTR-9, how to prepare GSTR-9C and other GST matters in Manish Anil Gupta & Co. Chartered Accountants. MAG is renowned GST Consultants in Delhi where clients complexities are transformed into solutions.