Even if not mandatory, why taxpayers with turnover not exceeding Rs. 2 Crore must file the Annual Return in GSTR- 9


Even if not mandatory, why taxpayers with turnover not exceeding Rs. 2 Crore must file the Annual Return in GSTR- 9

In view of the problem & issues faced by small taxpayers, GST council has introduced various measures to ease the compliance burden of the MSME sector. One such measure was announced by way relaxation to taxpayer having turnover less than RS. 2 cr. From filing annual return. This was announced vide press release dated 20 September 2019, as under:

“Relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19 as under:

  1. waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods; and
  2. filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crores made optional for the said tax periods.”

Correspondingly to give effect to the same, notification no. 47/2019-Central Tax dated 9 October 2019, has been issued by the Central Board or Indirect Taxes and Customs (CBIC) on 09-Oct-19. The relevant abstract of the notification is as under:

“In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules) before the due date, as the class of registered persons who shall, in respect of financial years 2017-18 and 2018-19, follow the special procedure such that the said persons shall have the option to furnish the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the said rules: Provided that the said return shall be deemed to be furnished on the due date if it has not been furnished before the due date.”

It must be noted that from the notification issued by the CBIC, it appears that in case those taxpayers whose aggregate turnover does not exceed Rs. 2 crores & who do not furnish returns within due date it shall be deemed that their returns are furnished within due date.

It may be noted that Annual return in form GSTR-9 is required to be filed by every registered person (other than an Input Service Distributor, the person paying tax under section 51 or 52, a casual taxable person and a non-resident taxable person) for every financial year.

There are numerous issues which emerges out of this.

The portal will complete the GSTR9 on the basis of auto populated data appearing and assume it to be final and file the returns accordingly. It will mean that for the tax payers whose turnover is less than the specified limit of Rs. 2 Cr, all the data appearing in GSTR9 based on GSTR1 and GSTR3B filed during the year shall be deemed to final. As a result, the taxpayers may not get any chance to rectify the errors that might have crept in at the time of filing of GSTR1/ GSTR3B. In case there is any sort of mismatch between the input credit available as per GSTR2A vis-à-vis GSTR3B, taxpayers will not be having any remedy to correct it.

One must note that non-filing of GSTR annual returns may lead to mismatch in the turnover as reported in Income Tax returns vis-à-vis turnover as reported in GST.  This may lead to a departmental enquiry seeking reasons for difference in turnover.

The taxpayer in all such cases needs to decide whether to file an annual return or not even if there is a waiver by way of above notification.

The requirements has to be based on the basis of whether there is a difference between figures as reported in GSTR-1 vis a vis GSTR-3B vis-à-vis Financials statement on the basis of which income tax return will be filed,

Almost in all the cases wherein the turnover is less than Rs. 2 Crores, there are some issues here and there which need reconciliation and corrections. As a result, it will be mandatory for the taxpayers to file annual return even though there is immunity from filing it.