ANNUAL RETURN: A COMPREHENSIVE ANALYSIS
By: – CA.Saurav Patni
Goods and Services Tax – GST
Dated:- 30-11-2018
Introduction
Ever since GST came into prominence with effect from 1st July, 2017, there were several anticipations for the GST audit and its reconciliation with the annual return, including linkage of the same with the erstwhile VAT regime or the Income Tax Return/Tax Audit Report. Some of the additions in the Tax Audit Report were also opined and notified by the Government, so that the payments made under GST regime commensurate with the Income Tax & Account Books such as reconciliations in respect of turnover, expenditures incurred, ITC availed, etc., however the same has been kept in abeyance till 31st March, 2019 for the very reason of it being burdensome for the companies to compile the enhanced requirements for tax audit post the close of the accounting period and statutory audits. However amidst all such skepticism, the Government has recently introduced
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ticle, we will analyze the Annual Return in depth to ensure better compliance and understand the essence of the Form as notified by the Council by virtue of Notification No. 39/2018-CT dated 04.09.2018.
Annual Return
As per section 44(1) of the CGST Act, 2017, every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.
From this it can reasonably be implied that barring the following persons/taxpayers, all the taxpayers are required to file the Annual Return:
* Input Service Distributor
* Person paying tax u/s 51 (TDS) and u/s 52 (TCS)
* Casual Taxable Person
* Non-Resident Taxable Person
The forms w.r.t Annual Return as notified by the Council is based on ce
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ST Act and ₹ 100 under SGST Act for each day of default that prevails in not adhering to the deadline. Further, it is pertinent to note that the maximum fees that can be levied shall not exceed 0.25% of the total turnover in the respective state or union territory.
As per the functionality of other returns prescribed under the Act, the Annual Return also, does not come with the option to revise, and hence, to connote, the Annual Return is a one-shot summarized return of consolidated figures for a particular Financial Year, with no recourse for revision. Therefore, the Annual Return is required to be dealt with utmost skepticism for the very reason that the same is the consolidated return based on the figures already stated in the erstwhile returns filed under this Act and will be cited by various stakeholders including auditors-both external and internal, tax authorities, etc. for taking reference in their dealings in matters relating to tax governance.
The part-wise analysis o
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rsons (including UINs), or
* Routed through ECO
but will not include supplies attracting reverse charge mechanism (RCM)
It is pertinent to note that B2B supplies unlike B2C supplies shall not be netted by Dr. / Cr. notes as the same is dealt separately under Table 4I and 4J. Further, the amendments made in this respect and reported in the returns shall not form part of this table and will be separately reported under Table 4K & 4L.
* Unadjusted Advances
(Table No. 4F)
It shall include all such advances on which tax has been paid in the current Financial Year but invoice has not been issued yet.
Note that:
* the un-adjusted advances shall not be a part of Table 4A to 4E
* only those advances for which invoice is not been issued i.e. which remains unadjusted as at the end of the Financial Year are to be included.
* Inward Supplies liable to reverse charge mechanism (RCM)
(Table No. 4G)
It shall include all inward supplies (including advances and import of services, if
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id table shall also include the value of “No Supply”. From this it can be reasonably implied that it shall include the value for those activities which are not considered as supply i.e. items which are specified under Schedule III of the CGST Act, 2017 like sale of land, etc. However, there is no specific table in the annual return to include such cases and is absolutely absurd to include the value of such activities in Table 5D to 5F. Therefore, ambiguity arises as to whether such transactions need to be inculcate in the stated tables or not which requires clarification by the Council.
* Total Turnover (including advances)
(Table No. 5N)
It shall include the sum total of:
* all the supplies on which tax has been paid or not including amendments, if any
* advances on which tax is paid but invoice is not issued in the current Financial Year
but shall not include the value of inward supplies on which tax has been paid under RCM.
3.
Part-III Details of ITC as declared in retur
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ion of GSTR-2A with GSTR-3B to ascertain the correct amount of credit was required to be done at the time of filing the return for the month of September. The remaining credit which was not taken in the month of September would now be lapsed and have to be booked as an expense resulting in loss of credit and profitability at the same time. Contrary to the said situation, it is not clear, whether a taxpayer can avail the eligible credit in excess of the credit specified in GSTR-2A or not as the difference in Table 8 would be shown as negative in such case. This is owing to the fact that the taxpayer may have availed the correct amount of credit based on the invoice but the invoice may not appear in the GSTR-2A. The matter requires clarity as the taxpayer cannot be made deprived of the eligible ITC.
4.
Part- IV Details of tax paid as declared in returns filed during the financial year
The details of tax payable and paid bifurcated into cash/credit utilization is required to be provide
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lation to the refund claimed (which inter alia shall include the aggregate amount of refund filed during the Financial Year viz, sanctioned/ rejected/ pending for processing excluding provisional and non-GST refund claims).
* HSN Summary
(Table No. 17 & 18)
It shall include the rate-wise HSN summary of all inward and outward supplies during the Financial Year.
It is pertinent to note that the HSN wise summary of outward supplies was required to be stated in GSTR-1, but the same was not segregated by the taxpayers in accordance with the GST rate. Further, the rate-wise HSN summary of inward supplies was never required to be stated in the monthly returns. Thus, it becomes all the more cumbersome to have such records prepared, update and reported in the Annual Return at the same time.
From the aforesaid analysis, it is evident that GSTR-9 format i.e. Annual Return has ambiguities and interpretational issues which requires an overall insight before stating the same in the said return
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Sir, The article is really very impressive, but I have few question arising and thought of sharing:-
1. whether the data are required to be filled by taxpayers/ person filing the returns? if Answer is "YES", is this not an extra burden on the STRONG solders of taxpayers/person filing the returns. As only refund is under the semi technology environment and after a period of more than 16 months, why it cannot be auto filled with amending facility, when more than ₹ 2200 crores of taxpayers are spend on technology?
2. Recently, it was announced that the date of filing will be extended by 31st March,2019. if so, can a Notification or order or circular issued has over riding effect on the provisions of law? As 31st Dec. is specifically mentioned in Act.
3. 3. Of course, the extension of the date will benefit the mass, but is this acceptable? If “YES” can we held our self responsible for future if same is repeated, which is not beneficial to public at large?
However
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