Understanding GSTR-9 and GSTR-9C: What, Why, and How to File Your GST Reconciliation Statement

For businesses in India, complying with the Goods and Services Tax (GST) is a crucial part of the financial year. Two key forms stand out in the annual filing process: GSTR-9 and GSTR-9C. While both are essential, each serves a different purpose, and it’s important for businesses to understand how to handle them properly. Filing these forms correctly ensures that businesses meet compliance standards and avoid unnecessary penalties.

In this comprehensive guide, we’ll cover what GSTR-9 and GSTR-9C are, why they are needed, and how businesses can file them efficiently.

What is GSTR-9?

GSTR-9 is the annual return form required under GST law. It provides a summary of a business’s monthly or quarterly GST returns (filed through GSTR-1, GSTR-3B, etc.) for a particular financial year. Essentially, it consolidates data on outward supplies, inward supplies, tax paid, input tax credit (ITC) claimed, and any adjustments made during the year.

Why is GSTR-9 Important?

Filing GSTR-9 is mandatory for all regular taxpayers under GST. It helps the government track overall compliance and identify discrepancies between the data submitted in regular returns and the final annual return. Additionally, it allows businesses to reconcile their accounts, ensuring that there are no mistakes or unreported liabilities.

Who Needs to File GSTR-9?

All taxpayers registered under GST, including those who have opted for regular taxation, must file GSTR-9. However, small taxpayers with an aggregate turnover of less than ₹2 crores have been exempted from filing GSTR-9 for certain financial years, but this exemption may vary based on government notifications.

Sections of GSTR-9

GSTR-9 consists of six parts, each dealing with a different aspect of the taxpayer’s transactions for the financial year. Here’s a quick breakdown:

1. Basic Details: Contains details like GSTIN, legal name, and trade name (if any).
2. Details of Outward and Inward Supplies: Summary of sales and purchases, segregated into taxable, exempt, and nil-rated supplies.
3. Input Tax Credit (ITC): Details of ITC claimed, reversed, and the net ITC available.
4. Tax Paid: The amount of tax paid under different heads like CGST, SGST, and IGST.
5. Particulars of Transactions for the Previous Financial Year: If any amendments or corrections were made for earlier years.
6. Other Information: Demands and refunds, HSN-wise summary of goods/services, late fees, etc.

Key Points to Remember While Filing GSTR-9

• Accurate Reconciliation: Ensure that the data filed in GSTR-9 matches your monthly or quarterly returns. Mismatches can lead to penalties.
• Audit Requirements: For businesses with a turnover of more than ₹5 crores, GSTR-9C is also required, which involves an audit of the financial data.
• No Amendments Allowed: Once filed, no amendments are allowed in GSTR-9, so it’s crucial to double-check the data before submission.

What is GSTR-9C?

While GSTR-9 provides a summary of the returns filed during the financial year, GSTR-9C is a reconciliation statement. It is required by businesses with an annual turnover of more than ₹5 crores. Essentially, GSTR-9C compares the data filed in GSTR-9 with the audited financial statements of the company.

Why is GSTR-9C Important?

GSTR-9C serves as a validation tool. It ensures that the data reported in GSTR-9 aligns with the audited financial records. Any discrepancies are highlighted in GSTR-9C, giving businesses an opportunity to clarify or explain those differences. The government uses this reconciliation statement to ensure that businesses are not underreporting their turnover or tax liability.

Who Needs to File GSTR-9C?

Any business with an aggregate turnover exceeding ₹5 crores in a financial year must file GSTR-9C along with GSTR-9. However, unlike GSTR-9, GSTR-9C requires certification by a Chartered Accountant (CA) or a Cost Accountant, making it a bit more complex.

Key Sections of GSTR-9C

GSTR-9C has two parts:

1. Part A – Reconciliation Statement: This section compares the figures from GSTR-9 with the financial statements of the company. Any differences must be explained.
2. Part B – Certification: This section is filled out by the CA or Cost Accountant certifying the reconciliation statement. They confirm whether the reconciliation is accurate and point out any discrepancies.

Common Areas Where Discrepancies May Occur

• Turnover Reporting: Differences between the turnover reported in financial statements and GSTR-9.
• Input Tax Credit (ITC): Discrepancies between the ITC claimed in monthly returns and the audited financials.
• Tax Paid: Differences in the tax paid according to GSTR-9 and the audited records.

The Role of Auditors in GSTR-9C Filing

The auditor’s role in GSTR-9C filing is crucial. They verify that the reconciliation is accurate and that there are no significant discrepancies between the filed returns and the audited financials. Auditors must ensure that the reconciliation is free from errors and must explain any differences identified during the process.

How to File GSTR-9 and GSTR-9C

Filing GSTR-9

1. Login to the GST Portal: Head over to the official GST portal (https://www.gst.gov.in/).
2. Navigate to GSTR-9: Once logged in, go to ‘Annual Return’ under the ‘Services’ section and select GSTR-9.
3. Auto-Populated Data: Review the auto-populated data from your monthly/quarterly returns (GSTR-1, GSTR-3B, etc.).
4. Verify and Correct: Cross-check all sections, especially outward supplies, inward supplies, and ITC.
5. Pay Additional Liability (if any): If you identify additional tax liability, it must be paid through Form DRC-03.
6. Submit: After reviewing all data, submit the form.

Filing GSTR-9C

1. Prepare Reconciliation Statement: Your CA or Cost Accountant will prepare the reconciliation statement based on your audited financials and GSTR-9 data.
2. Upload Documents: Log in to the GST portal and upload the GSTR-9C reconciliation statement.
3. Digital Signature: Ensure that both GSTR-9 and GSTR-9C are signed using a Digital Signature Certificate (DSC) by both the taxpayer and the auditor.
4. Submit: After all documents are uploaded and signed, submit GSTR-9C through the portal.

Common Mistakes to Avoid

• Incorrect Turnover Reporting: Ensure that the turnover figures in your financial statements and GSTR-9 match exactly.
• Wrong ITC Data: Double-check ITC claims against your purchase records to avoid discrepancies.
• Missing Auditor’s Certification: Ensure that your GSTR-9C is certified by a CA or Cost Accountant. Filing without certification can lead to rejections and penalties.

Key Changes in GSTR-9 and GSTR-9C

In recent years, there have been several changes to simplify the filing of GSTR-9 and GSTR-9C:

• Exemption for Small Businesses: Businesses with a turnover below ₹2 crores were exempted from filing GSTR-9 for certain years. However, this exemption changes based on government notifications.
• Self-Certification for GSTR-9C: In certain financial years, the requirement for CA certification of GSTR-9C was relaxed, allowing businesses to self-certify.
• Simplified Reporting: For financial years like 2020-21 and 2021-22, the government allowed taxpayers to skip certain fields in GSTR-9 and GSTR-9C (such as HSN details, ITC reversals, etc.).

It’s important to stay updated with these changes, as non-compliance can lead to fines and penalties.