KEY CHALLENGES IN ANNUAL RETURN

1
692

KEY CHALLENGES IN ANNUAL RETURN

In its 31st meeting, the GST Council announced a New Year bonanza by extending the FY 2017-18 GST annual return due date to June 30th, 2019. This will only partially benefits taxpayers; however, as there are still many unresolved issues surrounding GST’s audit and annual return process.

Taxpayers in India have been tangled up over some of the specific calculations and provisions, and we are highlighting major issues in the light of two crucial milestones of the GST journey.

Financial Year 2017-18 will now be nine months:

 In form GSTR-9, the annual return form, and GSTR-9C, its reconciliation statement, the term “Financial Year” has been used several times. GST authorities have excluded April ’17 – June ’17 period figures so that FY 2017-18 comprises only nine months (from July ’17 – March ’18).

Businesses will have to pay due care to include financial figures correctly while populating information from accounting records into annual returns.

Annual returns to be filed with information from GSTR-1 returns:

 Since the inception of GST, GSTR-3B vs. GSTR-1 mismatches has been the primary reason for issuance of departmental notices. The number of mismatches in annual return filings is now likely to increase, as taxpayers are required to file GSTR-9 from information previously filled in GSTR-1 returns.

Businesses will have to enforce a robust mechanism for pulling data correctly from GSTR-1 returns, rather than erroneously pulling it from GSTR-3B returns.

No space for amendments or correction of mistakes:

 Many businesses had been expecting a column in GSTR-9 where they could amend or correct information already submitted in the monthly quarterly returns. Much to their disappointment, however, no space has been provided for them to make corrections.

Splitting the total amount of the input tax credit:

 In Table 6 of GSTR-9, a taxpayer must split up the total amount of their Input Tax Credit (ITC) into inputs, capital goods, and input services.

Since this bifurcation was not required in GSTR-3B returns, taxpayers will now have to compute the amounts owed from the accounting records.

Some few things to consider in respect of output liability:

 With the Above discussion on the Form and its complexity, now we should also concentrate on filling up the GSTR-9

a) We need to consider the figures filed in GSTR-3B only and we should not confuse ourselves from the figures entered in GSTR-1

b) Turnover as per books and declared in GSTR-3B of 17-18 and 18-19 to be compared

c) The Turnover of 17-18 disclosed in GSTR-3B of 18-19 to be disclosed in Table 10 and Table 11

d) The taxes considered in GSTR-3B of 18-19 on above figures disclosed in Table 10 and Table 11 to be disclosed in Table 14

e) Balance turnover of 17-18 to be disclosed in Table 4 and 5

f) The Taxes payable on Table 4 figures to be disclosed in Table 9

g) Taxes payable on turnover not disclosed in 17-18 and 18-19 should be paid through DRC-03 and there will be same difference in Table 9 between taxes payable and taxes paid auto-populated.

Some few things to consider in respect of ITC:

With the above discussion on the Form and its complexity, now we should also concentrate few things in respect of Reconciliation of ITC to ease the job –

a) Details of ITC pertaining to 17-18 claimed in 18-19 through GSTR-3B needs to be mentioned at 8(C)

b) Only one figure mentioned above will decide the difference calculated at 8(D)

c) As per the clarification issued, GSTR-2A figure is only indicative and not required to reverse the ITC claimed at the time of filing Annual Return or Audit Report.

d) Out of the figures of GSTR-2A find the amounts which has not been claim even though eligible and which are inadmissible and enter in 8(E) and 8(F)

e) Actual difference will be 8(D) – 8(E) – 8(F)

f) If the difference as above is positive (+) it only indicates that dealer has claimed less ITC than available.

g) If the difference as above is negative (-) it indicates that dealer has claimed excess ITC than reported in GSTR-2A and follow-up with dealer and collection of documents to support ITC claim to be carried out, may be,  after submission of GSTR-9.

h) We are not required to go beyond the ITC claimed pertaining to 17-18 in GSTR-3B filed for 17-18 and 18-19 and if ITC as per books is not claimed it cannot be claimed now.

 Without discussion on the Form and its complexity, now we should concentrate on filling up the GSTR-9 and few things in respect of ITC to ease the job

a) Details of ITC claimed during 17-18 and 18-19 through GSTR-3B only needs to be given irrespective of ITC as per books.

b) Table 6 consists of the ITC claimed during 17-18 through GSTR-3B only and bifurcation of the same only needs to be given.

c) ITC claimed pertaining to 17-18 claimed during 18-19 through GSTR-3B will be reflected in Table 13

d) ITC reversed pertaining to 17-18 during 18-19 through GSTR-3B will be reflected in Table 12

e) Table 7 consist of the ITC reversed during 17-18 through GSTR-3B only AND

f) ITC of 17-18 to be reversed but not reversed during 17-18 or 18-19 through GSTR-3B to be added in Table 7 and the same should be paid through DRC-03.

Apart from the above, there are numerous issues taxpayers can face based on the specific nature of the business, IT system in place, availability of manpower etc. Thus, taxpayers should start working on annual GST return as soon as possible in order to execute the job well before the due date.

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here