Understanding GSTR-9 and GSTR-9C: Annual Returns and Reconciliation in GST
The Goods and Services Tax (GST), introduced in India in July 2017, revolutionized the taxation system by subsuming multiple indirect taxes into one unified tax. Among the various compliance requirements under GST, filing annual returns (GSTR-9) and a reconciliation statement (GSTR-9C) holds significant importance for taxpayers. These filings ensure transparency, accountability, and accuracy in the taxpayer’s records, serving as critical tools for compliance and audit under GST law.
This blog explores every aspect of GSTR-9 and GSTR-9C, offering insights into their structure, filing process, common challenges, and best practices.
Table of Contents
What is GSTR-9?
GSTR-9 is the annual return that every GST-registered taxpayer (excluding a few categories) is required to file. It provides a summary of a taxpayer’s outward and inward supplies, tax liabilities, input tax credits (ITC), and other details for a financial year.
Key Features of GSTR-9
1. Applicability: It is mandatory for all regular taxpayers registered under GST, except:
• Composition scheme taxpayers (who file GSTR-9A until its discontinuation).
• Casual taxpayers.
• Input Service Distributors (ISD).
• Non-resident taxable persons.
• E-commerce operators who collect tax at source (TCS).
2. Components: GSTR-9 consolidates information furnished in monthly/quarterly GSTR-1, GSTR-3B, and other returns.
3. Due Date: Generally, the return is due by 31st December of the subsequent financial year. However, extensions are sometimes granted.
4. Penalties for Non-Compliance:
• A late fee of ₹200 per day (₹100 for CGST and ₹100 for SGST), subject to a maximum of 0.25% of the taxpayer’s turnover in the state/union territory.
Sections of GSTR-9
GSTR-9 comprises six parts divided into various tables:
1. Part I – Basic Details:
• GSTIN
• Legal and trade name
• Tax period (financial year)
2. Part II – Details of Outward and Inward Supplies:
• Information on outward supplies (taxable, exempt, and nil-rated supplies).
• Inward supplies on which tax is payable under reverse charge.
3. Part III – Details of ITC:
• ITC availed, reversed, and net ITC available.
4. Part IV – Details of Tax Paid:
• Tax paid under different heads (IGST, CGST, SGST/UTGST, and cess).
5. Part V – Amendments and Additions:
• Adjustments related to supplies or ITC of the previous financial year, reported in current-year returns.
6. Part VI – Other Information:
• Demands, refunds, HSN-wise summary, and late fees.
What is GSTR-9C?
GSTR-9C is a reconciliation statement certified by a Chartered Accountant (CA) or Cost Accountant, applicable to taxpayers with an annual turnover exceeding ₹5 crore. It bridges the gap between the taxpayer’s books of accounts and the annual return (GSTR-9).
Key Features of GSTR-9C
1. Applicability: Mandatory for taxpayers with turnover exceeding ₹5 crore in a financial year.
2. Purpose:
• Reconcile the data reported in GSTR-9 with the taxpayer’s financial statements.
• Ensure accuracy and transparency in reporting.
• Highlight discrepancies for rectification.
3. Certification Requirement:
• Must be certified by a CA or Cost Accountant.
• The certifying professional validates that GST compliance is in order.
4. Components:
• Reconciliation of turnover declared in GSTR-9 with audited financial statements.
• Declaration of unreconciled items with explanations.
5. Due Date: Aligns with the due date of GSTR-9.
Difference Between GSTR-9 and GSTR-9C
Aspect GSTR-9 GSTR-9C
Applicability Mandatory for all regular taxpayers. Applicable for taxpayers with turnover > ₹5 crore.
Nature Annual return summarizing GST transactions. Reconciliation statement ensuring accuracy.
Certification Self-certified. Certified by a CA or Cost Accountant.
Purpose Summarize and report GST data. Reconcile financial data and highlight discrepancies.
Steps to File GSTR-9
1. Log in to GST Portal:
• Navigate to the ‘Annual Return’ section.
2. Download Data:
• Auto-populated data from GSTR-1, GSTR-3B, and other filings is available for review.
3. Verify and Edit Details:
• Review turnover, ITC, tax paid, and other sections.
• Make necessary corrections, if required.
4. Submit Return:
• Validate the data and file the return with a digital signature (DSC) or electronic verification code (EVC).
5. Generate ARN:
• Upon successful filing, an Application Reference Number (ARN) is generated for future reference.
Steps to File GSTR-9C
1. Prepare Reconciliation Statement:
• Use audited financial statements to prepare the reconciliation.
2. Engage a CA/Cost Accountant:
• Obtain certification from a professional after validation.
3. Upload and File:
• Upload the certified GSTR-9C on the GST portal and complete the filing process.
Common Challenges in Filing GSTR-9 and GSTR-9C
1. Data Reconciliation Issues:
• Mismatches between GSTR-1, GSTR-3B, and books of accounts.
2. Errors in ITC Reporting:
• Incorrect reporting of availed/reversed ITC.
3. Time Constraints:
• Tight deadlines for preparation and certification.
4. Complexity for SMEs:
• Lack of expertise and resources for compliance.
5. Frequent Changes in GST Rules:
• Updates in formats and instructions create confusion.
Best Practices for Compliance
1. Maintain Accurate Records:
• Regularly reconcile GST returns with financial statements.
2. Engage Professionals:
• Consult CAs or tax experts for accurate filing.
3. Automate GST Compliance:
• Use GST-compliant accounting software for error-free data management.
4. Review Returns Periodically:
• Identify and rectify discrepancies before filing annual returns.
5. Stay Updated:
• Keep track of GST amendments and notifications.
A Comprehensive Breakdown of GSTR-9 Columns and Tables
GSTR-9 is divided into six parts, each consisting of multiple tables. Each table collects specific details from the taxpayer regarding their GST transactions during the financial year. Below is a column-wise explanation:
Part I: Basic Details (Table 1-3)
This part captures the general details of the taxpayer and the return period.
1. Table 1 – Financial Year:
• Indicates the relevant financial year for which the return is being filed.
2. Table 2 – GSTIN:
• The 15-digit unique Goods and Services Taxpayer Identification Number (GSTIN) of the taxpayer.
3. Table 3A – Legal Name:
• The registered legal name of the taxpayer, auto-populated from the GST portal.
4. Table 3B – Trade Name:
• The trade name of the taxpayer, if applicable, auto-populated from the GST portal.
Part II: Details of Outward and Inward Supplies Made During the Financial Year (Table 4-5)
This part contains details of taxable outward supplies, inward supplies under reverse charge, and other transactions.
1. Table 4 – Details of Advances, Supplies, and Tax Liability:
• 4A: Supplies made to unregistered persons (B2C) – Taxable supplies to consumers.
• 4B: Supplies made to registered persons (B2B) – Supplies to GST-registered entities.
• 4C: Zero-rated supply (Export) without payment of tax – Includes exports under a Letter of Undertaking (LUT).
• 4D: Supply to SEZ without payment of tax – Supplies to Special Economic Zones (SEZs) without tax liability.
• 4E: Deemed exports – Supplies treated as exports under GST law.
• 4F: Advances on which tax is paid but invoices not issued.
• 4G: Inward supplies liable to reverse charge – Details of supplies for which the recipient pays tax.
• 4I to 4L: Credit notes, debit notes, and amendments related to outward supplies.
2. Table 5 – Details of Exempt, Nil-Rated, and Non-GST Supplies:
• Includes exempted, nil-rated, and non-GST outward supplies such as electricity, petroleum products, etc.
Part III: Details of Input Tax Credit (ITC) (Table 6-8)
This section captures the ITC availed, reversed, and claimed during the financial year.
1. Table 6 – ITC Availed During the Year:
• 6A: Total ITC available as per GSTR-3B.
• 6B: ITC on inward supplies (other than imports and RCM) – Supplies from registered persons.
• 6C: ITC on inward supplies liable to reverse charge.
• 6D: ITC on imports of goods.
• 6E: ITC on imports of services.
• 6F: ITC received from ISD (Input Service Distributor).
• 6G: ITC reclaimed for the financial year.
2. Table 7 – ITC Reversal:
• Details of ITC reversed due to ineligibility or other reasons such as Rule 37 (non-payment to suppliers).
3. Table 8 – Other ITC-Related Details:
• 8A: ITC as per GSTR-2A (auto-populated).
• 8B: ITC as per books of accounts.
• 8C: Differences between GSTR-2A and books of accounts.
Part IV: Details of Tax Paid (Table 9)
This part provides a summary of taxes paid under each head.
1. Table 9 – Tax Paid Details:
• 9A: Integrated GST (IGST) paid.
• 9B: Central GST (CGST) paid.
• 9C: State GST/UTGST paid.
• 9D: Cess paid.
• 9E: Interest, late fees, and penalties.
Part V: Details of Transactions of Previous Financial Year Declared in Returns of Current Financial Year (Table 10-14)
This part contains amendments or additions made to the previous year’s data in the current year’s returns.
1. Table 10 – Supplies/Tax Declared through Amendments:
• Outward supplies declared through amendments in GSTR-1 or GSTR-3B.
2. Table 11 – ITC Availed for Previous Financial Year:
• ITC claims relating to the previous year but claimed in the current financial year.
3. Table 12 – Reversal of ITC:
• Reversal of ITC claimed in the previous year but reversed in the current year.
4. Table 13 – ITC Availed but Not Utilized:
• ITC not utilized from previous filings, now claimed in the current year.
Part VI: Other Information (Table 15-19)
This part provides details regarding demand, refunds, and HSN summary.
1. Table 15 – Refunds Claimed:
• Includes details of GST refunds claimed and sanctioned during the financial year.
2. Table 16 – Demands and Payments:
• Details of GST demands raised and payments made for them.
3. Table 17 – HSN-Wise Summary of Outward Supplies:
• HSN (Harmonized System of Nomenclature) codes for goods/services supplied along with taxable value and tax paid.
4. Table 18 – HSN-Wise Summary of Inward Supplies:
• HSN details for inward supplies.
5. Table 19 – Late Fees:
• Late fees for non-compliance with return filing timelines.
Why Understanding Each Column Matters
Each table and column in GSTR-9 plays a vital role in ensuring compliance with GST law. Errors or omissions in these columns can lead to notices, penalties, or audits. By understanding the significance of every field, taxpayers can:
1. Ensure Data Accuracy:
• Avoid mismatches between GSTR-9 and monthly returns (GSTR-1, GSTR-3B).
2. Identify Discrepancies:
• Recognize ITC mismatches or supply-related errors for corrective action.
3. Facilitate Smooth Audits:• Provide a clear and comprehensive summary for reconciliation and audits.
Conclusion
GSTR-9 and GSTR-9C are critical components of GST compliance in India, ensuring accuracy and transparency in tax reporting. While GSTR-9 summarizes the taxpayer’s GST transactions for the year, GSTR-9C reconciles these returns with audited financial statements, highlighting discrepancies for corrective action. Despite the challenges, timely preparation, professional guidance, and technology adoption can streamline the filing process, helping businesses meet their compliance obligations efficiently.