GST Audit Abolished – Is it a Relief?
A big relief was provided by Hon’ble Finance Minister, Smt. Nirmala Sitharaman in Finance Act, 2021, wherein Section 35(5) of CGST Act, 20217 shall be omitted and Section 44 of the CGST Act, 20217 shall be substituted (refer Section 101 and Section 102 of the Finance Act, 2021) and by virtue of this amendment the mandatory requirement of furnishing of a Reconciliation Statement, i.e. GSTR9C, duly audited by a qualified Chartered Accountant or Cost Accountant is waived off. Now, only a self-certified Reconciliation Statement is required to be filed while filing the Annual Return of GST i.e. GSTR-9.
Decisions made in 43rd GST Council Meeting dated 28.05.2021
The Press Release to give effect to the amendments as provided in Finance Act 2021 amending the Section 35 and Section 44 of the CGST Act, 2017 has been released but notification to this effect is yet to be released. The key pointers pertaining to GST Tax Audit is stated hereunder:
- Self-Certification of reconciliation statement by tax payer may be filed instead of certification by Chartered Accountant or Cost Accountant.
- The said amendment for GST Annual Return shall be applicable from FY 2020-21.
- The filing of annual return of FY 2020-21 in the FORM GSTR-9 / 9A is made optional for taxpayers whose aggregate annual turnover does not exceeds Rs 2 Crores.
- Taxpayers whose annual aggregate turnover exceeds Rs. 5 Crores, are required to file the reconciliation statement for the FY 2020-21 in the FORM GSTR-9C.
Self-certified reconciliation statement for the FY 2020-21 is required to be filed by the taxpayers in FORM GSTR-9C whose annual aggregate turnover exceeds Rs 5 Crore. Meaning thereby that there is no need to obtain and file certified copy of reconciliation statement from a Practicing Chartered Accountants or Cost Accountants
Section 35(5) of the CGST Act, 2017 is reproduced hereunder for the ready reference:
Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed
Section 44 (2) of CGST Act, 2017 is also reproduced hereunder for ready reference:
Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
Note: The relaxation in filing certified reconciliation statement is been provided, however, on account of regular updates in GST Laws, taxpayers are advised to get their GST Audit done by qualified professionals as they do have through understanding of GST laws and the latest updates. This will not only help taxpayers in filing correct GSTR-9 but will also help in avoiding penalties which may be levied in case of incorrect filing.
Author’s view: In Audit process, two parties are involved. First is, who makes and the other is who checks. However, if Reconciliation Statement (GSTR -9C) is self-certified then it means that the maker and checker is same and therefore, there are remote chances that the taxpayer traces the errors/mistakes. When the person who is preparing the accounts, filing the GSTR-1 , GSTR-3B and same person is doing the reconciliation required by GSTR -9C then it is not much of use. There are number of areas like place of supply, classification, rates, value, taxability etc which requires professional skills. GSTR-9 and 9C is last chance to rectify our mistake well in time with interest And, in case there remains any error and at later stage gets detected by GST department then the taxpayer may end up by paying heavy amount of interest & penalty.