Taxmann's GST Annual Return & Reconciliation

Foreword “Without change there is no innovation, creativity or incentive for improvement. Those who initiate change, will have a better opportunity to manage the change that is inevitable” Change is the only constant and for Chartered Accountants its more than necessary. We are the elite finance professionals. Not only are we guardians and nurturers of wealth, but also partners in nation building. With such immense responsibilities resting on our shoulders and the highest professionalism expected of us, we cannot afford to let situations dictate us, but we have to labour to overcome hurdles and come out on top.

GST is an example of what change can look like for us professionals. It is so dynamic that it may turnaround an entire outlook within seconds. The Government has been proactive through these reforms and has been ensuring that businesses find it easy under the GST regime.

The quest for quality is a continuous process and we must be ready to undertake to become better professionals as well as to provide quality services to our clients. We have an obligation to our profession - and our clients - to demonstrate that our work continues to be beyond reproach.

Renowned authors Mr. Vivek Laddha, Mr. Shailendra Saxena and Mrs. Pooja Patwari are the most accessible commentators on the Goods and Services Tax. In this 4th edition of the book with Taxmann, they explain with clarity and wit the origin and consequences of the GST compliances. They make a complex issue simple, without making it simplistic.

Wishing all the authors good luck!

Warm Regards,

PREMCHAND GODHA Chairman & Managing Director Ipca Laboratories Limited

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Know Your Authors VIVEK LADDHA

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He, being Bachelor of Law, Cost Accountant, Chartered Accountant and Company Secretary, possesses all 4 pillars of profession of business solutions.

Mr. Laddha is presently a Secretary (Gen.) of Federation of Makers and Traders and also Ex-Chairman of GST Cell of NIRC of Institute of Cost Accountants of India, co-opted member of Indirect Tax Committee of CIRC of Institute of Chartered Accountants of India.

He had delivered the 250+ sessions on GST for Multinational Companies, various trade association and forums of ICAI and ICMAI. He has provided 300 + legal opinions for the complex matters to various corporate of India.

He has authored 5 books i.e. ‘GST Master Guide’, ‘Sabka Vishwas – Dispute Resolution Scheme’, ‘GST Audit Manual with Annual Return’, ‘GST for Traders’, ‘GST Reverse Charge & Composition Scheme’ and ‘GST For CA Inter/IPCC’ published by ‘Taxmann’.

Currently Mr. Laddha is engaged in Practice of Indirect Tax in Bhilwara and Mumbai. He is also visiting faculty member of Western India Regional Council of CA Institute.

Mr. Laddha has conducted trainings for NACIN, GST Department Officers, IISLA, Life Insurance Corporation, HDFC Bank, Baroda Pioneer Mutual Fund, UTI Mutual Fund, HDFC Mutual Fund and other reputed Private Organisations.

He has completed his articleship from a veteran firm i.e. M.P. Chitale & Co., Mumbai and acquired the post qualification exposure at BDO Haribhakti, Mumbai.

He is the founder member of Students’ Forum of Bombay Chartered Accountants Society (BCAS), and Past President of Rajasthan Vidyarthi Griha (RVG), Students’ Committee, Mumbai.

SHAILENDRA SAXENA

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He is Chartered Accountant, Company Secretary, Cost Accountant, DISA (ICAI), CFE (USA) & Ph.D. I-7

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KNOW YOUR AUTHORS

He is past Chairman of Surat South Gujarat Chapter of WIRC of Institute of Cost Accountants of India.

He is past Chairman of Bharuch Branch of WIRC of Institute of Chartered Accountants of India.

He was member of GST Group from Surat (Gujarat) formed by Indirect Taxes Committee, Institute of Chartered Accountants of India for giving suggestion to Government for F.Ys. 2016-17 to 2018-19.

He was nominated as a Member of GST Committee of The Southern Gujarat Chamber of Commerce & Industry for F.Ys. 2019-20 & 2020-21.

He has more than 20 years’ corporate experience for handling Taxation (Indirect & Direct) and presently working as a practicing Chartered Accountant.

His articles are regularly published on the subject Indirect taxes including GST and Direct taxes regularly published, Taxmann.com, Taxguru.com.

He is invited as a speaker for conducting training program towards Service Tax & GST for officer of Central Excise, Customs and GST Department, Bharuch, Surat and Mumbai.

POOJA PATWARI

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She is a member of the Institute of Chartered Accountants of India having a professional experience of 9+ years.

She is the co-author of books ‘GST Master Guide’, ‘GST Audit Manual with Annual Return’, ‘Sabka Vishwas – Dispute Resolution Scheme’, ‘GST - Reverse Charge & Composition Scheme’ and ‘GST For IPCC/CA Inter’ published by ‘Taxmann’.

She is known for blending all the business laws and tax laws to come out with a decision.

Apart from handling practice of Indirect Tax, she is also a trustee in education based trust dealing with awareness for society at large in the locality.

She has also Completed Certification Course of Concurrent Audit of ICAI.

She has acquired the post qualification exposure at S.K. Patodia & Associates, Mumbai. As a practitioner, she is covering wide area of business solutions including portfolio of clients having turnover of more than INR 100 Cr.

Authors’ Talk …….

Dear Readers, We are happy to share this manuscript on the contemporary topic i.e. Annual Return and Reconciliation Statement under GST with you. As the GST is the bread and butter for the government and so, government is more concerned about Forms GSTR-9, GSTR-9A & GSTR-9C. This book incorporates the amendments made in the forms as updated by Notification No. 30/2021-CT, dated 30 July, 2021. We have also considered the views expressed by Press Releases and clarifications issued time to time.

We have not just covered the Forms 9, 9A and 9C but also incorporated the issues relating to Anti-Profiteering and policy mismatch in GST & Accounting Standards. This book exhaustively covers the number of case studies in separate Chapter for Outward Supply and ITC so that executors can understand the impact of data of FY 2019-20 declared in return of FY 2020-21 and impact of data of FY 2020-21 declared in return of FY 2021-22. Dedicated steps of walkthrough also have been penned down in this book.

This book covers the role of professionals performing the assignments of compilation of Forms GSTR- 9, GSTR-9A & GSTR-9C . We have analysed this engagement of professional in line with SA-4410 issued by Institute of Chartered Accountants of India along with the applicable clauses of Code of Ethics.

We feel blessed from almighty to get support from our parents and friends. We are thankful to Shri Premchand Ji Godha (Chairman and MD, Ipca Laboratories Limited) for writing a ‘Foreword’ for this book.

We also feel blessed from our Guru Shri Kalpesh Madhusudan Shukla and Shri Pradeep Kumar Kheruka for motivating us time to time and guide us as a torch bearer.

Readers are requested to provide open hearted feedbacks to us so that we can meet your expectations in upcoming print of this book. These can be mailed to us: callauthor@ hotmail.com or can be contacted on 70148-73831.

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Contents PAGE

Foreword

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Know Your Authors

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Authors’ Talk …….

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CHAPTER 1 List of Governing Provisions

1

CHAPTER 2 Legal consequences of wrong filing/non-filing of GSTR-9 and GSTR-9C CHAPTER 3 Annual Return and Reconciliation Statement: Fortune Maker of Registered Person CHAPTER 4 Case Study on Outward Supply in GSTR 9 CHAPTER 5 Case study on Inward Supply in GSTR 9

CHAPTER 6 Opportunities for Professionals in Indirect Taxes CHAPTER 7 Eligibility issues for professionals

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CHAPTER 8 Summon to professionals and duty in GST Laws I-11

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CONTENTS

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CHAPTER 9 Professional Fee: Annual Return and Reconciliation (Jaraa Yaad Karo Kurbaani!!)

29 CHAPTER 10 Walkthrough for professionals to perform GSTR 9/9A/9C

CHAPTER 11 Annual Accounts vs. Annual Return vs. Reconciliation Statement

CHAPTER 12 Applicability of Annual Return and GSTR 9C (Year wise comparison) CHAPTER 13 Turnover: A Ticklish Sound in GST Regime CHAPTER 14 Journal Entries under GST Environment CHAPTER 15 Issues in Accounting w.r.t. GST

CHAPTER 16 Looking at Financial Statements for GST Annual Return and Reconciliation Statement CHAPTER 17 Segments of Annual Return - GSTR 9 (Regular Scheme) CHAPTER 18 Your Steps for preparing GSTR 9

CHAPTER 19 Advanced FAQs on Annual Return

CHAPTER 20 Basics of Annual Return with Practical Issues CHAPTER 21 Part I of GSTR 9: Basic Details

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CONTENTS

CHAPTER 22 Part II of GSTR 9: Details of outward and inward supplies declared during the financial year CHAPTER 23 Part III of GSTR 9: Details of ITC for the financial year

CHAPTER 24 Part IV (Form 9) : Details of tax paid as declared in returns filed during the financial year

CHAPTER 25 Part V : Particulars of the transactions for the financial year declared in returns of the next financial year till the specified period CHAPTER 26 Part VI : Other Information

CHAPTER 27 Segments of Annual Return (Composition Scheme)

CHAPTER 28 GSTR-9A: Is it really applicable and basics of annual return (Composition) with practical issues CHAPTER 29 Part I of GSTR-9A: Basic Details

CHAPTER 30 Part II of Form 9A: Details of outward and inward supplies declared in returns filed during the financial year CHAPTER 31 Part III: Details of tax paid as declared in returns filed during the financial year

CHAPTER 32 Part IV: Particulars of the transactions for the previous FY declared in returns of April to September of current FY or upto date of filing of annual return of previous FY whichever is earlier

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CONTENTS

CHAPTER 33 Point V: Other Information

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CHAPTER 34 Segments of Form GSTR-9C

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CHAPTER 35 Your steps for preparing GSTR-9C

CHAPTER 36 Basics of Reconciliation Statement with practical issues CHAPTER 37 Part I of Reconciliation Statement: Basic Details

CHAPTER 38 Part II of Reconciliation Statement: Reconciliation of turnover declared in audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9) CHAPTER 39 Part III: Reconciliation of tax paid CHAPTER 40 Part IV: Input Tax Credit (ITC)

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CHAPTER 41 Part V: Additional liability due to non-reconciliation CHAPTER 42 Accounts and Records

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CHAPTER 43 Compliance of Anti-Profiteering Clause

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APPENDICES

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Check List for GSTR 9/9A and GSTR 9C Relevant Provisions

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CONTENTS u u u

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Form GSTR-9

Form GSTR-9A Form GSTR-9C

Section 35 of the CGST Act, 2017 - Accounts and other records - Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for purpose of auction of tea, coffee, rubber, etc.

u Section 39, read with sections 37 and 38 of the Central Goods and Services Tax Act, 2017 - Returns - Furnishing of - Filing of Returns under GST

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363 377 381

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Clarification on filing of annual return (Form GSTR-9)

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Clarification regarding Annual Returns and Reconciliation Statement

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u GSTN Clarification: Issues reported in filing Form GSTR 9C by the taxpayers u Clarification regarding optional filing of annual return under Notification No. 47/2019-Central Tax, dated 9th October, 2019

u Clarification by GST Network on 17-8-2020 on Table 8A of Form GSTR-9

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411 413

FAQs on GSTR-9

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Letter of acceptance given by professionals for Compilation Engagement and responsibility of Management 419 l Engagement Letter 419

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Appointment Letter

Cover Letter of Compilation Report Compilation Report

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TURNOVER: A TICKLISH SOUND IN GST REGIME

CHAPTER

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Note: It may be noted that vide NOTIFICATION NO. 31/2021 - CENTRAL TAX, registered person having AGGREGATE TURNOVER up to Rs. 2 Cr. in FY 2020-21is exempted from furnishing annual return for FY 2020-21 and registered person having aggregate turnover upto Rs. 5 Cr. is exempted from furnishing reconciliation statement.

Both of the requirements are depending upon the quantum of aggregate turnover for FY 2020-21.

Further, GSTR-9C requires the reconciliation between TURNOVER as per audited financial statements and TURNOVER as declared in annual return (GSTR 9).

GST regime, we can observe number of terminologies pertaining to turnover being referred at different places. We have analysed all these terminologies in this chapter so that readers can clearly imagine the scope and implications of every wording along with the use of the same.

Basis

Source of definition

Definition

Aggregate Turnover

Section 2(6)

Turnover in State or Turnover in Union territory

Adjusted Total Turnover

Annual Turnover

Section 2(112)

Rule 89(4)(E)

It is not It is not defined defined

Section 10(1) It requires the person under composition scheme to pay the tax with prescribed % on turnover in state.

Rule See 89(4)(E) Note 4 below It is one of the variables of computation of refund to be claimed.

See Note 1 be- See Note 2 See Note 3 low below below

Usage of Section 22(1) terminology (a) For examining the applicability of registration (b) For examining the applicability of annual return and reconciliation.

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Turnover

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Section 35(5): Audit under GST. Now omitted w.e.f. 1-82021 (For detail see separate topic given below headed as ‘Turnover was the mystery under GST’)

Total Turnover

It is not defined -

(1) Earlier Rule 80(1) (2) Table 5N of Form GSTR-9, (3) Rules 42 and 43 of CGST Rules (4) Exemption granted in case of services provided by incubate up to Rs. 50 lakhs in FY subject to conditions as per N/N 12/2017-CT(R).

48 Remark

TURNOVER: A TICKLISH SOUND IN GST REGIME

Different terminologies giving similar sound require the good attention. Here we have tried to consolidate all the relevant terminologies to let the readers understand in order to reach at the decision.

Note 1: “aggregate turnover” [Sec 2(6)] means the aggregate value of—

(a) all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), (b) exempt supplies,

(c) exports of goods or services or both, and

(d) inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes GST and cess

Note 2: “turnover in State” or “turnover in Union territory” [Sec 2(112)] Means the aggregate value of—

(a) all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) (b) exempt supplies made within a State or Union territory by a taxable person, (c) exports of goods or services or both, and

(d) inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person excludes GST and cess

Note 3: Adjusted Total Turnover [Rule 89(4)(E)] Means the sum total of the value of—

(a) The turnover in a State or a Union territory, as defined u/s 2(112), excluding the turnover of services; and

(b) The turnover of zero-rated supply of services determined in terms of Rule 89(4)(D) and non-zero-rated supply of services, excluding—

(i) The value of exempt supplies other than zero-rated supplies; and

(ii) The turnover of supplies in respect of which refund is claimed u/r 89(4A)* or (4B)** or both, if any, during the relevant period.

―Relevant period means the period for which the claim has been filed.

*Rule 89(4A) In the case of supplies received on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 48/2017-Central Tax dated, 18th October, 2017 published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide number G.S.R. 1305(E), dated the 18th October, 2017,

TURNOVER: A TICKLISH SOUND IN GST REGIME

49

refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, shall be granted.

**Rule 89(4B): In the case of supplies received on which the supplier has availed the benefit of the refund of input tax credit, availed in respect of inputs received under the prescribed notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted.

Note 4: Annual Turnover: An undefined terminology: Earlier Notification No. 12/2017-CT, dated 28-6-2017 (Read point (b) given below) provided the HSN requirement on invoice based on the annual turnover. Also, there is a requirement to declare HSN wise annual turnover in table 12 of GSTR 1 (Read Instructions 16 and 17 of GSTR 1 in point (a) below). Kindly note that the term ‘annual turnover’ was not defined. Then Notification No. 12/2017-CT got amended vide N/N 78/2020-CT, dated 15-10-2020, w.e.f. 1 April, 2021 (Read point (c) given below) which requires HSN requirement on invoice based on the aggregate turnover.

Readers may note that even after removing the anomaly vide N/N 78/2020-CT, dated 15-10-2020 by using the aggregate turnover as a criteria for the purpose of determination of applicable number of digits of HSN code in tax invoice, law makers have not aligned the table 12 of GSTR-1. It is suggested to correct the Instruction Nos. 16 and 17 of Form GSTR-1.

(a) Instruction No. 16 of GSTR-1: Summary of supplies effected against a particular HSN code to be reported only in summary table. It will be optional for taxpayers having annual turnover upto Rs. 1.50 Cr. but they need to provide information about description of goods. (The term ‘Annual Turnover’ changed with ‘Aggregate Turnover’ but in the instruction it is still unchanged).

Instruction No. 17 of GSTR-1: It will be mandatory to report HSN code at two digits level for taxpayers having annual turnover in the preceding year above Rs. 1.50 Cr. but upto Rs. 5.00 Cr. and at four digits level for taxpayers having annual turnover above Rs. 5.00 Cr. (The term Annual Turnover changed with ‘Aggregate Turnover’ but in the instruction it is still unchanged).

(b) Number of HSN Digits required based on the annual turnover vide Notification No. 12-2017-CT, dated 28-6-2017 (HSN requirement). This notification was applicable till 31-3-2020.

In pursuance of the first proviso to rule 46 of the CGST Rules, 2017, it is notified that a registered person having annual turnover in the preceding financial year as specified in column (2) of the Table below shall mention the digits of Harmonised System of Nomenclature (HSN) Codes, as specified in the corresponding entry in column (3) of the said Table, in a tax invoice issued by him under the said rules.

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TURNOVER: A TICKLISH SOUND IN GST REGIME

Serial Number

Annual Turnover in the preceding Financial Year

Number of Digits of HSN Code

(1)

(2)

(3)

1.

Upto INR 1.5 Cr.

2.

Nil

more than INR 1.5 Cr. and Upto INR 5 Cr.

3.

2

more than INR 5 Cr.

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(c) After amendment made vide N/N 78/2020-CT, dated 15-10-2020, w.e.f. 1 April, 2021, HSN requirement on the tax invoice was made applicable based on the aggregate turnover.

In pursuance of the first proviso to rule 46 of the CGST Rules, 2017, it is notified that a registered person having annual turnover in the preceding financial year as specified in column (2) of the Table below shall mention the digits of Harmonised System of Nomenclature (HSN) Codes, as specified in the corresponding entry in column (3) of the said Table, in a tax invoice issued by him under the said rules.

Serial Number

Aggregate Turnover in the preceding Financial Year

Number of Digits of HSN Code

(1)

(2)

(3)

1.

2.

upto Rs. 5 Cr.

more than Rs. 5 Cr.

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TURNOVER WAS THE MYSTERY UNDER GST (FOR FYs 2017-18, 2018-19, 2019-20)

Source of Provision

Provision

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Comment

Section 35(5) Every registered person whose The term ‘Turnover’ is used in this omitted w.e.f. turnover during a financial year provision while the law does not 1-8-2021 exceeds the prescribed limit define the meaning of ‘Turnover’.

-shall get his accounts audited by a CA or a CMA accounts and other records and - shall submit a

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copy of the audited annual accounts,

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reconciliation statement u/s 44(2), and

other documents in such form and manner as may be prescribed:

Source of Provision

Rule 80(3)

TURNOVER: A TICKLISH SOUND IN GST REGIME

Provision

Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of accounts are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, whose aggregate turnover during a financial year exceeds five crore rupees, shall also furnish a self-certified reconciliation statement as specified under section 44 in FORM GSTR-9C along with the annual return referred to in sub-rule (1), on or before the thirty-first day of December following the end of such financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

Press Release, It may be noted that furnishing Dated (Extract of the Annual return in FORM of para 4 only) GSTR-9 is mandatory only for taxpayers with aggregate annual turnover above Rs. 2 Cr. while reconciliation statement in FORM GSTR- 9C is to be furnished only by the registered persons having aggregate turnover above Rs. 5 Cr.

51 Comment

Aggregate turnover is defined u/s 2(6). We have further analysed the implication through practical issues given hereunder.

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TURNOVER: A TICKLISH SOUND IN GST REGIME

ILLUSTRATIVE LIST: INCOME IN FINANCIAL STATEMENT VS. AGGREGATE TURNOVER IN GST This list will not only help to determine the aggregate turnover as per section 2(6) rather it will help the auditor for preparing the Table 5 of reconciliation statement of GSTR 9C requiring the reconciliation between turnover of audited financial statements and annual return. We have analysed various types of incomes from view point of GST law that as to whether it falls under the scope of supply or not.

Types of income

Will it be part of aggregate turnover?

Sale of goods

Yes

Services rendered

Yes

Reason

Accrued (but not received) inter- No est, late fee or penalty for delayed payment of any consideration

Time of supply does not trigger until it is received so does not form part of the aggregate turnover [Sec. 12(6)/Sec. 13(6)]

Receiving Loans or deposits

Not a supply

Receipt of interest, late fee or Yes penalty for delayed payment of any consideration No

Accrued interest or interest re- Yes ceivables or accumulated interest on loan/deposit/advances/ debentures/Post office deposits/ National Savings Certificates (NSCs) but not received

Sec. 12(6)/ Sec. 13(6)

Exempt Supply {entry 27 of 11/2017-CT(R)}

Interest received on loan/deposit Yes /advances/debentures/Post office deposits/National Savings Certificates (NSCs)

Exempt Supply {entry 27 of 11/2017-CT(R)}

Sale of currency or profit on sale No of currency

Money is excluded from the definition of goods or services, so question does not arise to check the test of aggregate turnover

Bad debts recovered

Creditors written back

No No

Sale of securities or profit on sale No of securities

Securities are neither the goods nor the services, so question does not arise to check the test of aggregate turnover

Types of income

TURNOVER: A TICKLISH SOUND IN GST REGIME

Will it be part of aggregate turnover?

53 Reason

Gain arising on financial assets No measured at fair value through profit or loss

Accounting gain or loss does not meet the criteria of supply

Dividend Income

No

Not a supply

Sale of Land

No

Foreign Exchange gains on trans- No lation of assets and liabilities as per AS-11/IND AS-21 Receiving Insurance claims

No

Accounting gain or loss does not meet the criteria of supply Actionable claims other than lottery, betting and gambling are neither the goods nor the services, so question does not arise to check the test of aggregate turnover Neither the goods nor the services, so question does not arise to check the test of aggregate turnover- Para 5 of Schedule III

Sale of Building (Where part of Yes [2/3rd of Para 5(b) of Schedule II the consideration has been re- t h e a m o u n t ceived before issuance of comple- charged] tion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.)

Sale of Building (Where entire No consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.)

Para 5(b) of Schedule III

Commission Income

Supply of services

Sale of Liquor, Natural Gas, pe- Yes troleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel Discount income

Yes No

These are non-taxable supply and included in the definition of exempt supply as given u/s 2(47) of CGST Act Not a supply

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TURNOVER: A TICKLISH SOUND IN GST REGIME

Will it be part of aggregate turnover?

Reason

Sale of furniture, Plant & Yes Machinery

Supply of goods

Income from any treatment or Yes process undertaken by a person on goods belonging to another unregistered person

Supply of services

Provisions written back

Not a supply

Income from Royalty

Yes

Income from any treatment or Yes process undertaken by a person on goods belonging to another registered person [i.e. Job work]

Supply of services Supply of services

Sale of wastage and scrap

Yes

Supply of goods

Stale cheques written back

No

Not a supply

Duty Drawback Slump Sale

No No

Yes

Sitting Fee received by indepen- Yes dent director Partner’s salary as partner from No partnership firm Salary/Remuneration as an No Executive Director from Company

Interest income on partner’s Yes fixed capital credited to partner’s capital account Interest income on partner’s vari- Yes able capital credited to partner’s capital account Insurance claim received on life No insurance policies

Not a supply

Exempt supply

Supply of services No No No No

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TURNOVER: A TICKLISH SOUND IN GST REGIME

PRACTICAL ISSUES

Case 1: Mr. Krishna is submitting you the below information and asking you to submit the report on applicability of Reconciliation statement.

Particulars

Situation 1 for FYs 2020-21

Situation 2 for FYs 2018-19 & 2019-20

Situation 3 for FY 2017-18

April to June

100 Lakhs

110 Lakhs

45 Lakhs

January to February

200 Lakhs

180 Lakhs

100 Lakhs

July to September

October to December Total

150 Lakhs 100 Lakhs

550 Lakhs

140 Lakhs 150 Lakhs

580 Lakhs

55 Lakhs 60 Lakhs

260 Lakhs

Legal Position: For FY 2020-21: Aggregate turnover of Mr. Krishna exceeds INR 5 cr. so he is required to furnish annual return as well as reconciliation statement.

Registered person whose aggregate turnover during a financial year exceeds five crore rupees, shall also furnish a self-certified reconciliation statement as specified under section 44 in FORM GSTR-9C along with the annual return referred to in sub-rule (1), on or before the thirty-first day of December following the end of such financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

FYs 2018-19 and FY 2019-20: For financial years 2018-19 and 2019-20, the limit is extended to INR 5Cr. So in FY 2018-19, Mr. Krishna is liable to furnish the annual return (exceeding Rs. 2 cr.) as well as liable to audit u/s. 35(5) in the given instance.

FY 2017-18: Aggregate turnover of MR. Krishna exceeds INR 2 cr. in GST period, so he will be liable to furnish the annual return and also liable to get its accounts etc. audited as per section 35(5) for FY 2017-18. This note is relevant for FY 2017-18 only but case studies are relevant for ongoing FY as well: It was a burning issue so far as the interpretation is concerned that whether aggregate turnover of FY shall be computed for FY 2017-18 (i.e. April 2017 to 2018) or July 17 to March 2018. Technical guide of ICAI stated to take the figure of April 17 to March 2018 and on 14-6-2019, GSTN clarified (instead of the fact that it is not the body for making the law) that for the computation of aggregate turnover of FY 2017-18, the quantum of April 2017 to March 2018 shall be taken into consideration. But we had a considered opinion that it should be taken for July 2017 to March 2018. Aggregate turnover is defined u/s 2(6) of CGST Act and which cannot be applied for a period of non-GST regime. Authors in earlier publications stated that aggregate turnover is the terminology of GST Law and same cannot be applied for non-GST period. ICAI view is considerate view.

Fortunately, later on it was clarified that period of July 2017 to March 2018 shall only be taken for the computation of aggregate turnover of FY 2017-18.

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TURNOVER: A TICKLISH SOUND IN GST REGIME

Case 2: The following persons are registered in GST laws under different states.

Submit the legal position of aggregate turnover and applicability of annual return and reconciliation statement for F.Y. 2020-21.

Person/ State

Uttar Pradesh

Rajasthan

Madhya Pradesh

Maharashtra

Delhi

Total

X Ltd.

1,00,00,000 1,00,00,000 1,00,00,000 1,00,00,000 1,00,00,000 5,00,00,000

A Ltd.

1,50,00,000 1,30,00,000 1,50,00,000 1,70,00,000 10,00,000

Y Ltd. Z Ltd.

50,00,000

90,00,000

10,00,000

40,00,000

1,00,00,000 2,50,00,000 2,50,00,000 1,00,00,000

5,00,000

Legal position: For FY 2020-21

1,95,00,000 7,00,00,000 6,10,00,000

In case of X Ltd. Annual return is required to be furnished as the aggregate turnover is exceeding the limit of INR 2 Crore but it is not required to furnish reconciliation statement because the aggregate turnover does not exceed INR 5 Crore.

In case of Y Ltd. Neither annual return nor reconciliation statement is not required to be furnished as the aggregate turnover does not exceeds INR 2 Crore.

In case of Z Ltd. and A Ltd. Annual return is required to be furnished as the aggregate turnover is exceeding the limit of INR 2 Crore as well as required to furnish reconciliation statement because the aggregate turnover exceeds INR 5 Crore.

Case 3: Mr Ankit Raipuria is providing multiple services as below. Submit the legal position of aggregate turnover and applicability of reconciliation statement for F.Y. 2020-21.

Particulars A. Taxable supplies B. Exempt supplies

C. Export of goods/services D. Inter State Supplies E. Non-GST Supplies

F. Value of inward supplies on which tax is paid under reverse charge mechanism Gross Total

Legal Position:

Amount 1,00,00,000 2,00,00,000 1,00,00,000 50,00,000 50,00,000 20,00,000

5,20,00,000

Aggregate Turnover (A+B+C+D+E) as per sec. 2(6) of CGST Act, 2017 is ` 5,00,00,000.

Value of F is not considered while computing the aggregate turnover as per sec. 2(6) It may be noted that—

u

As per section 2(6): Aggregate turnover comprises of exempt supply.

u

u

u

u

u

57

TURNOVER: A TICKLISH SOUND IN GST REGIME

As per sec. 2(47), exempt supply considers the element of non taxable supply inter alia.

As per sec. 2(78), “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act. In other words it is non-GST supply (i.e. Alcohol for human consumption and 5 petroleum products as given u/ss. 9(2) of CGST Act and 5(2) of IGST Act i.e. petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel). So the conclusion is that aggregate turnover includes non-GST supply as well.

For FY 2020-21: Sec. 35(5) omitted w.e.f. 1-8-2021 instead the registered person is required to furnish reconciliation statement if the aggregate turnover exceed ` 5 Crores. For FYs 2018-19 and 2019-20.

For financial year 2018-19, the limit for audit is extended to ` 5 Cr. So in FY 2018-19, he will be liable to furnish the annual return (exceeding ` 2 cr.) but he will not be liable to audit u/s 35(5) in the given instance ( as aggregate turnover does not exceed INR 5 Cr).

FY 2017-18: Aggregate turnover if exceeds ` 2 cr. in 1 July, 2017 to 31 march, 2018, then he will be liable to furnish the annual return and also liable to get his accounts etc. audited as per section 35(5) for FY 2017-18.

Case 4: Mr. Kapsa (Registered person) is providing GTA Services and other taxable services to his clients. Submit the legal position of aggregate turnover and applicability of annual return and reconciliation statement.

Particulars A. Taxable supplies B. Exempt supplies C. Export of goods/services D. Inter-State Supplies E. Value of inward supplies on which tax is paid under reverse charge mechanism F. Value of outward supplies on which tax is paid under reverse charge mechanism by the recipient of the supplies. (Note 1)

Amount 10,00,000 -

2,10,00,000

Legal Position:

u

Aggregate Turnover is ` 2,20,00,000.

u

For FY 2020-21, sec. 35(5) is omitted w.e.f. 1-8-2021. Though as per section 44 of CGST Act, registered person is required to file annual return if turnover exceeds INR 2 Crore and also required to furnish reconciliation statement if the aggregate turnover exceeds INR 5 Crores.

u

As per the Entry No. 2 of Notification No. 13/2017-CT(R) the goods transport services provided by GTA to any business entity is covered under RCM. It is outward supply for the Mr. Kapsa

58

TURNOVER: A TICKLISH SOUND IN GST REGIME

Therefore, in this case the annual return is applicable but not the reconciliation statement.

u

u

For FYs 2018-19 and 2019-20: He will be liable to furnish the annual return (as aggregate turnover is exceeding 2 cr.) but he is not liable to audit u/s 35(5) in the given instance (as aggregate turnover does not exceed INR 5 Cr. of any one).

FY 2017-18 : Aggregate turnover if exceeds ` 2 cr. in 1 July, 2017, to 31 march, 2018, then he will be liable to furnish the annual return and also liable to get his accounts etc. audited as per section 35(5) for FY 2017-18.

Case 5: Mrs. XYZ, an advocate is providing the services of below category from Rajasthan. Compute the aggregate turnover. Submit the legal position of aggregate turnover and applicability of reconciliation statement.

Particulars A. Taxable supplies (Residential Property let out for commercial purpose) B. Exempt supplies (Interest on loan given) C. Export of goods/services D. Inter-State Supplies E. Non GST Supplies F. Value of inward supplies on which tax is paid under reverse charge mechanism G. Value of outward supplies on which tax is to be paid under reverse charge mechanism by the recipient of the supplies

Amount 50,00,001 50,00,000 -

1,00,00,000

Legal Position:

(1) Aggregate Turnover (A+B+G) as per sec. 2(6) of CGST Act, 2017 is ` 2,00,00,001.

(2) Mrs. XYZ is an advocate still in this case she is liable to be registered as per sec.

22(1) as her aggregate turnover is crossing the threshold limit of ` 20 Lakhs.

(3) (A) If it is the case of FY 2020-21: (a) A Registered person is required to furnish annual return if turnover exceeds ` 2 Crore. (b) Sec. 35(5) is omitted w.e.f.

1-8-2021 though the registered person is required to furnish reconciliation statement if the aggregate turnover exceeds ` 5 Crores.

(B) If it is the case of FY 2018-19: For financial year 2018-19, the limit is extended to ` 5 Cr. So in FY 2018-19, he will neither be liable to furnish the annual return (not exceeding Rs. 2 cr.) nor he is liable to audit u/s 35(5) in the given instance (as aggregate turnover does not exceed INR 5 Cr ).

(C) If it is the case of FY 2017-18: He is crossing the aggregate turnover in a FY beyond ` 2 cr. in GST period, so she will be liable to furnish the annual return and also liable to get its accounts etc. audited as per section 35(5) For FY 2017-18.

GST

Annual Return & Reconciliation AUTHOR

: VIVEK LADDHA, SHAILENDRA SAXENA,

PUBLISHER

POOJA PATWARI

: TAXMANN

DATE OF PUBLICATION : OCTOBER 2021 EDITION

: 4TH EDITION

ISBN NO

: 9789392211683

NO. OF PAGES

: 440

BINDING TYPE

: PAPERBACK

Rs. 995 | USD 45

DESCRIPTION GST Annual Return & Reconciliation covers comprehensive analysis in the form of Case Studies, Advanced FAQs, Step-by-Step Guides etc., on Forms 9, 9A & 9C, along with issues relating to Anti-profiteering & policy mismatch in GST & Accounting Standards.

This book will be helpful for GST Professionals engagement in advisory, compliance, and litigation services.

The Present Publication is the 4th Edition, authored by Vivek Laddha, Shailendra Saxena & Pooja Patwari, updated till 12th October 2021 & amended by the CGST (Sixth Amendment) Rules 2021, with the following noteworthy features: u [40+ Case Studies] on GSTR 9 u [50+ Advanced FAQs] on Annual Return u [Item-wise Cross Examination] of Financial Statements u [Eligibility Issues] in Compilation Engagement for Professionals u [Ready Steps for Preparing GSTR 9 & 9C] u [Maintenance of Accounts & Records] u [Compliance of Anti-Profiteering Clause] u [Walkthrough for Professionals] for GSTR 9 & 9C u [Formats] for the following, in line with SA-4410 issued by the ICAI along with the applicable

clauses of the Code of Ethics

n

Acceptance Letter & Management Responsibility for Compilation Engagement

n

Appointment Letter for Compilation Engagement and Compilation Report

u [Check List] for Outward & Inward Supply u [Linking AS & Ind AS] with GST Provisions

ORDER NOW