Understanding GSTR-9C: A Guide to the Annual GST Reconciliation Statement

Form GSTR-9C serves as an annual reconciliation statement for Goods and Services Tax (GST) that eligible taxpayers are required to submit. This form, along with a copy of audited annual accounts, must be filed by every registered individual whose total turnover surpasses Rs. 5 crore in a financial year.

Recent Policy Revisions Governing GSTR-9C: Latest Updates

Awaiting clarifications for late fees under Section 47(2) of the CGST Act, 2017, the 55th GST Council Meeting, held on December 21, 2024, is set to issue a circular regarding delays in submitting GSTR-9 and GSTR-9C annual returns. The Council has also proposed waiving late fees for delayed GSTR-9C filings through a notification under Section 128 of the CGST Act, 2017. This waiver will apply to reconciliation statements for the financial years 2017-18 through 2022-23, provided that GSTR-9C is filed by March 31, 2025, to secure a waiver of late fees exceeding the amount due for GSTR-9 for those respective years.

Furthermore, during the 53rd GST Council Meeting on June 22, 2024, a recommendation was made to exempt taxpayers with an aggregate annual turnover below Rs. 2 crore for FY 2023-24 from filing GSTR-9/9A. This exemption was officially confirmed by CGST Notification 14/2024 on July 10, 2024.

Understanding GSTR-9C

GSTR-9C is a reconciliation statement that bridges the gap between the annual GST return filed in Form GSTR-9 for a specific financial year and the data presented in the taxpayer's audited annual financial statements.

This form compares the gross and taxable turnover recorded in a business's books of accounts with the consolidated figures from all GST returns filed for the financial year. Any discrepancies identified during this reconciliation process must be documented, along with their underlying reasons. The taxpayer then self-certifies this statement. It is important to note that a separate GSTR-9C form must be submitted for each GSTIN, meaning a single PAN might necessitate filing multiple GSTR-9C forms.

Taxpayers are responsible for preparing and self-certifying GSTR-9C. The submission occurs via the official GST portal or a designated facilitation center. Required accompanying documents include a copy of the Audited Accounts and the annual return in Form GSTR-9. This statement is mandatory for taxpayers whose annual accounts are subject to audit under GST regulations.

GSTR-9C Applicability and Turnover Threshold

According to CBIC Notification No. 30/2021, dated July 30, 2021, the requirement to file GSTR-9C applies to all registered GST individuals whose annual turnover surpasses the specified threshold of Rs. 5 crore in a given financial year.

Additionally, CBIC's CGST Notification No. 09/2020, dated March 16, 2020, exempts foreign airline companies, provided they adhere to the pertinent provisions and regulations of the Companies Act 2013, from the GSTR-9C filing obligation.

Moreover, non-resident individuals offering Online Information and Database Access or Retrieval (OIDAR) services to unregistered recipients in India are relieved from submitting both GSTR-9 and GSTR-9C, as per CBIC Notification No. 30/2019, dated June 28, 2019.

It is important to note that the turnover threshold for GSTR-9C was increased to Rs. 5 crore for the financial years 2018-19, 2019-20, 2020-21, 2021-22, and 2022-23, as per various CBIC notifications.

GSTR-9C Due Date

The filing deadline for GSTR-9C aligns with that of the GSTR-9 annual return. Consequently, GSTR-9C must be submitted by December 31st of the year immediately following the financial year being audited. The government retains the authority to extend this deadline if required. For example, GSTR-9C for the financial year 2024-25 is due by December 31, 2025.

Significance of GSTR-9C

Taxpayers are responsible for compiling this GST reconciliation statement. It requires reporting any discrepancies in sales, taxes, or input tax credit (ITC) details between the filed GST returns and the audited financial accounts, along with clear explanations for such variances.

Through self-certification, this statement provides a foundational document for GST authorities to validate the accuracy of the GST returns submitted by taxpayers.

GSTR-9C Structure and Content

GSTR-9C is structured into two primary components: Part A, the Reconciliation Statement, and a section for Verification/Self-certification.

Part A: Reconciliation Statement Details

Audited financial statements typically present figures at the Permanent Account Number (PAN) level. Therefore, specific details such as turnover, tax payments, and Input Tax Credit (ITC) acquired for a particular GSTIN, or for a specific State/Union Territory, need to be extracted from the comprehensive audited accounts of the entire organization.

The Reconciliation Statement itself is organized into five distinct sections.

• Part I: Basic Details: This section captures fundamental information including the Financial Year (FY), GSTIN, Legal Name, and Trade Name. Taxpayers are also required to declare if they are subject to an audit under any other legal framework.
• Part II: Turnover Reconciliation (Audited Financial Statement vs. GSTR-9): This segment focuses on reconciling the gross and taxable turnover reported in the annual return (GSTR-9) with the figures from the Audited Annual Financial Statements. Since audited statements are often at a PAN level, a GSTIN-level breakdown may be necessary for GSTR-9C reporting. As per Notification No. 56/2019, issued on November 14, 2019, details of turnover adjustments in Tables 5B to 5N are now optional. Any necessary adjustments can instead be declared in Table 5O by the taxpayer.
• Part III: Tax Paid Reconciliation: This part mandates a GST rate-wise reconciliation of tax liabilities based on accounts and those reported as paid in GSTR-9, highlighting any variances. Additionally, taxpayers must disclose any extra liability arising from unreconciled discrepancies identified during this process.
• Part IV: Input Tax Credit (ITC) Reconciliation: This section involves reconciling the ITC claimed and utilized by taxpayers as reported in GSTR-9 against the figures in the Audited Financial Statement. It also requires reporting expenses recorded in the Audited Accounts, distinguishing between eligible and ineligible ITC, and reconciling the eligible ITC with the amount claimed in GSTR-9, after accounting for any ITC reversals. As per Notification No. 56/2019, dated November 14, 2019, taxpayers are permitted to omit ITC reconciliation details in Tables 12B, 12C, and 14.

Taxpayer Verification and Self-certification

For comprehensive guidance on the GSTR-9C format and filing procedures, refer to the article: Guide to Form GSTR-9C.

Revisions to GSTR-9C Format and Filing Procedure

Significant modifications have been introduced to both the format and the filing process of GSTR-9C.

• Registered taxpayers now undertake verification themselves, as the requirement for CA/CMA certification has been eliminated.
• Taxpayers must ensure all GST returns for the financial year, including GSTR-1, GSTR-3B, and GSTR-9, are filed.
• Upon completion of the GSTR-9C return, taxpayers have the option to settle any additional liability identified within the form by submitting FORM DRC-03. When doing so, 'Reconciliation Statement' must be chosen from the dropdown menu in FORM DRC-03. It is crucial to remember that such liabilities must exclusively be paid via the electronic cash ledger.

For an in-depth review of the revised tables within the GSTR-9C format, please consult the dedicated page: Revised GSTR-9C from FY 20-21 onwards.

Historical Format of Part B: Certification (Now Obsolete)

Previously, GSTR-9C necessitated certification by either the Chartered Accountant who performed the GST audit or another CA not involved in the GST audit for that specific GSTIN. This requirement was abolished starting from the financial year 2020-21.