GST Auditors! Don't Miss These Checkpoints While Filing GSTR 9C

GSTR 9C is an annual reconciliation statement to be filed by every registered person whose aggregate turnover for a financial year exceeds Rupees 2 crores (Section 35(5) read with Rule 80).

The due date for GSTR 9C for FY 2017-18 is 30th November, 2019 which has been constantly revised due to the complexities of the form.

In this article, let us understand certain GSTR 9C check points in detail with examples that will assist in simplifying GSTR 9C. However, one must understand that GSTR 9C is only a reconciliation statement of amounts and figures disclosed in the books of accounts.

1. Applicability of GSTR 9C - 

As mentioned above, GSTR 9C is applicable to those registered persons whose aggregate annual turnover exceeds INR 2 crores. Aggregate turnover is the aggregate value of all taxable values, exempt supplies, export of goods or services or both, inter-state supplies of the person having the same PAN (on all India basis), but excludes inward supplies liable to reverse charge, central tax, State tax, Union territory tax, integrated tax and cess.

It is critical to determine applicability of GSTR 9C. Any error may result in non-compliance of the same.

Note - For FY17-18, to determine aggregate turnover, period to be considered is July 2017 to March 2018.

Example 1 - 

ABC Ltd is having the following mentioned turnover in FY 2017-18.

Unit details	Taxable Turnover	Exempt Turnover	GST Audit Required?
Unit 1 of ABC Ltd - Maharashtra	Rs. 1.5 crores	Rs. 0.75 crores	Yes
Unit 2 of ABC Ltd - Gujarat	Rs. 10 lakhs	Rs. 80 Lakhs	Yes
Unit 3 of ABC Ltd - Karnataka	Rs. 0	Rs. 0	Yes

Example 2 - 

XYZ Ltd is having the following turnover for FY 17-18.

Particulars	Taxable Value	GST Audit Required?
Sale of Alcoholic Liquor for Human Consumption	Rs 1.90 crore	Yes
Rent from Commercial Property	Rs. 25 Lakhs

2. Classification of turnover in Table 5 - 

Table 5 requires reconciliation of turnover as per audited financial statements with that declared as per GSTR 9. There are certain incomes that form part of financial statements but are not reported in GST. One must be careful while classifying and reconciling income under various heads as required under GSTR 9C.

Example 3 - 

Mr. A is providing Custom House Agent Services. Let us see how his services will appear in GSTR 9C -

(in Rs)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Sales as per Audited Financial Statement	1.25 crores	9 lakhs	9 lakhs
2	Amount Recovered as Pure Agent	20 lakhs	-	-
3	Amount Recovered as Pure Agent, (but it doesn’t qualify criteria of Pure Agent Related Provisions)	5 lakhs	-	-
4	Turnover as declared in GSTR 9	1 crore	9 lakhs	9 lakhs

Sr. No 1 - Sales may be declared in Table 5A
Sr. No 2 - Amount recovered as pure agent may be declared in Table 5M
Sr. No 3 - This will not be reflected under Table 5 but will be shown under Table 6 as reconciled item.

Example 4 - 

A Ltd is a SEZ registered unit. Disclosure of turnover will be shown as follows -

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Export of Goods to USA under LUT	1 crores	-	-
2	Goods Supplied domestically, where DTA unit filed BOE	20 lakhs	-	-

Sr. No 1 - It will be part of Table 5A. Also it will be disclosed in Table 7C
Sr. No 2 - It will be part of Table 5A. Also It will be disclosed in Table 5K

Example 5 - 

X Ltd has made the following transactions during the year -

(in Rs.)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Profit on Sale of Fixed Asset	1 lakh	-	-
2	Sale value of Fixed Asset	10 lakhs	0.9 lakhs	0.9 lakhs

Sr. No 1& 2 - It will be disclosed as adjustment in Table 5O

Example 6 - 

Mr. A imports goods. In case of imports, he makes the following transactions -

(in Rs.)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Goods Supplied on High Seas Sales Basis	20 lakhs	-	-
2	Sale of imported Goods	1 crore	9 lakhs	9 lakhs
3	Total Sale as per Audited Financial Statement	1.2 crore	9 lakhs	9 lakhs

Sr. No 1 - Goods supplied on HSS, will be disclosed in Table 5A and also in Table 7B
Sr. No 2 - It will be form part of Table 5A. No separate disclosure required
Sr. No 3 - It may be declared in Table 5A

3. Advances received against Supply of Goods or Services - 

GST was payable on advance received against supply of goods or services. However, in the case of goods two exemption notifications were issued - Notification No 40/2017 dated 13th October, 2017 (for registered taxpayers having turnover below Rs. 1.5 crores) and Notification No 66/2017 dated 11th November, 2017 (for all registered taxpayers) wherein no GST is required to be paid on advance received against supply of goods.

No exemption is available if advance is received against supply of services.

Example 7 - 

GST on Advance received against supply of Goods (Case where Notification No 40/2017 CT dated 13th Oct 2017, is applicable)

(in Rs.)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Advance received on 1st Aug 2017	20 lakhs	1.8 Lakhs	1.8 Lakhs
2	Advance received on 25th Aug 2017	10 Lakhs	0.9 Lakhs	0.9 Lakhs
3	Advance received on 1st Oct 2017	10 Lakhs	-	-
4	Advance received on 25th Jan 2018	30 Lakhs	-	-
5	Invoice raised on 1st Mar 2018, with respect to 1st Advance	30 Lakhs	Balance Amount	Balance Amount
6	Invoice raised on 1st May 2018, with respect to 2nd , 3rd and 4th Advance	60 Lakhs	Balance Amount	Balance Amount

Sr. No 1 - No separate reporting, as invoice is raised during the same year.
Sr. No 2 - It will be disclosed in Table 5C
Sr. No 3 - For non payment of GST, auditor should recommend interest liability at Part V
Sr. No 4 - No reporting required as it is exempted

Example 8 - 

GST on Advance received against supply of Goods (Case where Notification No 66/2017 CT dated 11th Nov 2017, is applicable

(in Rs.)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Advance received on 1st Aug 2017	20 lakhs	1.8 Lakhs	1.8 Lakhs
2	Advance received on 25th Aug 2017	10 Lakhs	0.9 Lakhs	0.9 Lakhs
3	Advance received on 1st Oct 2017	10 Lakhs	-	-
4	Advance received on 14th Oct 2017	30 Lakhs	-	-
5	Invoice raised on 1st Mar 2018, with respect to 1st Advance	30 Lakhs	Balance Amount	Balance Amount
6	Invoice raised on 1st May 2018, with respect to 2nd , 3rd and 4th Advance	60 Lakhs	Balance Amount	Balance Amount

Sr. No 1 - No separate reporting, as invoice is raised during the same year.
Sr. No 2 - It will be disclosed in Table 5C
Sr. No 3 and 4 - For non payment of GST, auditor should recommend interest liability at Part V

Example 9 - 

GST on advance received against supply of services

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Advance received on 1st Aug 2017	20 lakhs	1.8 Lakhs	1.8 Lakhs
2	Advance received on 25th Aug 2017	10 Lakhs	0.9 Lakhs	0.9 Lakhs
3	Advance received on 1st Oct 2017	10 Lakhs	-	-
4	Advance received on 12th March 2018	30 Lakhs	-	-
5	Invoice raised on 1st Mar 2018, with respect to 1st Advance	30 Lakhs	Balance Amount	Balance Amount
6	Invoice raised on 1st May 2018, with respect to 2nd , 3rd and 4th Advance	60 Lakhs	Balance Amount	Balance Amount

Sr. No 1 - No separate reporting, as invoice is raised during the same year.
Sr. No 2 - It will be disclosed in Table 5C
Sr. No 3 and 4 - For non payment of GST, auditor should recommend interest liability at Part V

4. Unbilled Revenue - 

There are certain incomes which have been recognised as income in the books of accounts on accrual basis but not reflected in GST. Such income is known as unbilled revenue.

For FY 2017-18, one has to be careful while reporting under this section as total unbilled revenue as on 01st April 2017 is not to be considered as an adjustment is required for invoices booked during the period April 2017 to June 2017. Thus, unbilled revenue as at 30th June 2017 is to be considered.

Example 10 - 

A Ltd has reported unbilled revenue as at 01st April 2017 - Rs 10 Lakhs

During April 2017 to Jun 2017 invoice issued against such unbilled revenue- Rs 3 Lakhs

Unbilled revenue at the beginning of the year to be reported in Table 5B - Rs 7 Lakhs (10 minus 3)

5. Deemed Supply under Schedule I - 

Under Schedule I certain supply have been treated as deemed supply even if no consideration has been on such supplies. Supplies covered under Schedule I are as follows -

a. Supplies made to related parties
b. Supply of goods via Agent
c. Permanent transfer or disposal of asset where no consideration has been received but input tax credit was availed’

Such supplies are to be reported in Table 5D and may not be added in Table 5A.

Example 11 - 

A Ltd has made the following transactions -

(in Rs.)

Sr. No	Particulars	Value	GSTR 9C Reporting
1	Sales of goods	10 Lakhs	Table 5A
2.	Asset disposed	5 Lakhs	Table 5D
3.	Branch Transfer	2 Lakhs	Table 5D

6. Other Income and Recovery - 

Let us understand how various incomes other than sales and recoveries made be treated under GSTR 9C.

Example 12 - 

(in Rs.)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	Sales	1 Crore	9 Lakhs	9 Lakhs
2	Interest Income on FD	1 Lakh	-	-
3	Dividend Received	2 Lakhs	-	-
4	Canteen Recovery from Employee - deducted from Canteen Expenses	0.5 Lakhs	-	-
5	Interest received from Customer for late payment	0.25 Lakhs	-	-
6	Penalty Amount received from Supplier, as per contract terms, for Non-performance of partivity	1 Lakh	-	-

Sr. No 1 - It will be reported in Table 5A
Sr. No 2 & 3 - It may be disclosed at Table 5O, if said amount is already included in Sr. No 5A. If it is not disclosed in Table 5A, the same may not be reported in Table 5O
Sr. No 4,5 and 6 - It may be disclosed at Table 5O by adding the values, then it will reconciliation item on which there will be additional liability at Table 6.

Else auditor can disclose additional liability on the same in Part V

7. Input tax credit - 

It is important to verify tax availed as per books of accounts, GSTR 2A and GSTR 3B is in line with each other. Auditor may come across such instances where excess credit has been in GSTR 3B but the same has not been booked in books of accounts, ineligible credit has been availed or reversals required have not been made as per Rules. In such cases, the auditor may show this amount as additional liability payable.

However, any input tax credit not availed till the specified time limit shall lapse i.e. for FY17-18, input tax credit could have been claimed upto filing of March 2019 return.

Example13 - 

Input tax credit - Wrongly availed.

(in Rs)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	ITC availed in F.Y. 17-18. Later, taxpayer has identified some wrong ITC of 17-18 and reversal done in May 18 Return		0.5 Lakhs	0.5 Lakhs
2	ITC availed in F.Y. 17-18. During GST Audit, auditor observed wrong ITC is claimed in Nov 18. Disclosure is not made for the same, in any return upto Nov 18		1 Lakh	1 Lakh

Sr. No 1 - No separate reporting is required as the taxpayer has already made the reversal. However auditor should recommend Interest liability at Part V
Sr. No 2 - Auditor should disclose additional liability of wrong ITC in Part V

Example 14 - 

Input tax credit - Payment to creditor within 180 days

(in Rs)

Sr No	Particulars	Value	CGST Paid	SGST Paid
1	ITC availed in July 2017	10 lakhs	0.5 Lakhs	0.5 Lakhs
2	Out of the above payment made to supplier upto Mar 18	8 lakhs
3	Balance amount paid in Nov 18	2 Lakhs

Sr. No 3 - Auditor should disclose additional liability / Interest in Part V

Example 15 -

ITC - Auditor observed below Credit availed by taxpayer in Books as well as GSTR Return upto Mar 18. What to do

Sr. No	Particulars	CGST	SGST
1	Food	5,000	5,000
2	Works Contract	25,000	25,000
3	Purchase of Car	90,000	90,000
4	Factory Insurance	30,000	30,000
5	Employee Insurance (not specified by law)	225,000	225,000

Sr. No 1, 2, 3 and 5 - It is blocked credit as per Sec 17(5). It is to be reported as additional liability by Auditor in Part V of GSTR 9C

Conclusion -

These are certain points one should take care while reconciling values under GSTR 9C. Situations under GSTR 9C are such that may vary business to business - what may be applicable to one business, may be ineligible to other. Thus, careful interpretation of terms according to business should be done.

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End Note - 

GSTHero is a government of India appointed GST Suvidha Provider and is also a cloud-based multi-user software with a smooth mechanism to work together with an advanced ITC reconciliation feature that will provide you and your clients an automated tool to handle ITC reconciliation and also open up a list of new service avenues for your tax practice.