Understanding and Preparing the GSTR-9C Reconciliation Statement
GSTR-9C is a self-certified reconciliation statement that harmonizes a taxpayer's annual GSTR-9 return with their audited financial statements. Mandated for registered taxpayers with over Rs. 5 crore annual turnover, it ensures accurate self-assessment of GST liabilities. The form is structured into five parts, covering reconciliation of turnover, taxes paid, and input tax credit, along with reporting any additional liabilities. Taxpayers can file GSTR-9C using an offline utility after submitting GSTR-9, followed by online upload and self-authentication.
The GSTR-9C is a crucial reconciliation statement requiring self-certification, mandated for specific taxpayers under the Goods and Services Tax (GST) regime. This statement necessitates a thorough comparison of the annual GST returns filed in GSTR-9 with the taxpayer's audited financial statements for a particular financial year, with the aim of identifying and reporting any discrepancies.
Recent Updates On June 22, 2024, the 53rd GST Council meeting proposed an exemption for taxpayers from filing GSTR-9/9A for the financial year 2023-24 if their total annual turnover is less than Rs. 2 crore. This recommendation was formalized through CGST Notification 14/2024, issued on July 10, 2024.
Introduction to GSTR-9C
GSTR-9C functions as a reconciliation document designed to harmonize figures reported in the annual GSTR-9 with the audited financial statements of a taxpayer for a given financial year. All registered taxpayers with an annual turnover exceeding Rs. 5 crore are obligated to submit this statement. Its purpose is to facilitate accurate self-assessment of taxes for the financial year. Taxpayers must prepare this statement and then submit it online or via a facilitation center, accompanied by their audited financial statements and the GSTR-9 return for the relevant period.
Key Sections of Form GSTR-9C
The GSTR-9C form is structured into several distinct parts:
Part-A: Reconciliation Statement Overview
Financial statements are typically prepared at the PAN level. Therefore, turnover, tax paid, and Input Tax Credit (ITC) pertaining to a specific GSTIN (or State/UT) must be extracted from the overall audited accounts of the organization.
The Reconciliation Statement is organized into five main segments:
- Part I: Basic Details This section requires the taxpayer to provide the financial year, GSTIN, legal name, and trade name. It also asks if the taxpayer is subject to audit under any other legal framework.
- Part II: Reconciliation of Turnover This part focuses on reconciling the gross and taxable turnover figures declared in the annual return with those in the audited financial statements. Often, audited financial statements are at a PAN level, necessitating a GSTIN-wise breakdown for GSTR-9C reporting. Certain turnover adjustments in tables 5B to 5N are optional; any necessary adjustments can be reported in Table 5O. This update was introduced via Notification No: 56/2019 on November 14, 2019. This section comprises four tables:
Table 5: Gross Turnover Reconciliation
| Table | Name | Details |
|---|---|---|
| A | Turnover as per audited financial statements for the State/UT | Report turnover, including exports, as per audited financial statements, specifically for each GSTIN. |
| B | Unbilled revenue at FY commencement | Add unbilled revenue from the start of the FY, on which GST was payable during the current year. |
| C | Unadjusted advances at FY end | Add advances at the end of the FY where GST has been paid but revenue is not yet recognized. |
| D | Deemed supply as per Schedule I | Add deemed supplies under Schedule I of the CGST Act, if not already included in audited turnover. |
| E | Credit notes issued post-FY, reflected in annual return | Reduce credit notes issued after the FY end but shown in the annual return from turnover. |
| F | Trade discounts in audited statements, not permissible under GST | Add trade discounts accounted for in audited statements on which GST was applicable. |
| H | Unbilled revenue at FY end | Reduce unbilled revenue recorded during the FY that is not liable for GST in the same FY. |
| I | Unadjusted advances at FY commencement | Reduce advances from the beginning of the FY where GST has not been paid but revenue is recognized in audited statements. |
| J | Credit notes in audited statements, not permissible under GST | Add credit notes accounted for in audited statements but not allowed under the CGST Act. |
| K | Adjustments for SEZ unit supplies to DTA Units | Reduce adjustments for SEZ unit supplies to DTA units (where DTA units filed bills of entry). |
| L | Turnover during composition scheme period | Reduce turnover for the period a taxpayer was under the Composition Scheme (if they opted out during the year). |
| M | Turnover adjustments under section 15 and rules | Adjust turnover based on valuation principles under section 15 of the CGST Act (add or reduce). |
| N | Turnover adjustments from foreign exchange fluctuations | Adjust turnover for foreign exchange fluctuations (add or reduce). |
| O | Other turnover adjustments | Add or reduce any other turnover adjustments not specifically listed. |
| P | Adjusted annual turnover | This value is automatically calculated based on the adjustments above. |
| Q | Turnover declared in Annual Return (GSTR-9) | Report the turnover as declared in GSTR-9. |
| R | Unreconciled turnover (Q – P) | The difference between P and Q. |
Table 6: This table allows taxpayers to provide explanations for any discrepancies between the turnover reported in the annual return and the audited financial statements.
Table 7: Taxable Turnover Reconciliation
| Table | Name | Details |
|---|---|---|
| A | Adjusted annual turnover (from 5P) | Auto-populated from Table 5P. |
| B | Value of Exempted, Nil Rated, Non-GST, No-Supply turnover | Report the value of exempted, nil-rated, non-GST, and no-supply turnover, after accounting for credit/debit notes and amendments. |
| C | Zero-rated supplies without tax payment | Report the value of zero-rated supplies (including to SEZs) where no tax was paid, after adjustments for credit/debit notes and amendments. |
| D | Supplies subject to reverse charge | Report the value of supplies where the recipient is liable to pay tax under reverse charge, after adjustments for credit/debit notes and amendments. |
| E | Taxable turnover after adjustments (A-B-C-D) | Calculated as (A-B-C-D). |
| F | Taxable turnover declared in Annual Return (GSTR-9) | Report the taxable turnover based on the liability declared in GSTR-9 (referring to Tables 4N to 4G and Tables 10-11). |
| G | Unreconciled taxable turnover (F-E) | The difference between F and E. |
Table 8: Taxpayers can use this table to explain any unreconciled taxable turnover identified in Table 7G.
- Part III: Reconciliation of Taxes Paid This section requires a GST rate-wise breakdown of tax liability as per accounts and as reported in GSTR-9, along with any differences. It also requires reporting of additional liability arising from unreconciled discrepancies. This part includes three tables:
Table 9: Reconciliation of Taxes Paid
| Table | Name | Details |
|---|---|---|
| A-O | Tax rates | For each tax rate (e.g., 5%, 12%, 18%, 28%, 3%, 0.25%, 0.10%), report taxable values, central tax, state tax, integrated tax, and cess values. Reverse charge tax payments should be listed separately under rows marked 'RC'. Interest, late fees, and penalties are also to be reported. |
| P | Total amount payable | This is the sum of amounts from A to O. |
| Q | Total amount paid as per Annual Return (GSTR-9) | Report the tax amount paid as declared in GSTR-9. |
| R | Unreconciled payment amount | The difference between P and Q. |
Table 10: This table is used to provide reasons for any unreconciled tax amounts reported in Table 9R.
Table 11: Any additional amount payable due to reasons explained in Tables 6, 8, and 10 must be reported here.
- Part IV: Input Tax Credit (ITC) Reconciliation This section deals with reconciling ITC claimed and utilized by taxpayers, as per GSTR-9 and the audited financial statements. It also requires reporting of expenses from audited accounts, categorizing eligible and ineligible ITC, and reconciling eligible ITC with the amount claimed in GSTR-9, post-reversals. Taxpayers have the option to skip filling details for ITC reconciliation in tables 12B, 12C, and 14, as per Notification No: 56/2019 (November 14, 2019). This part contains five tables:
Table 12: Net Input Tax Credit Reconciliation
| Table | Name | Details |
|---|---|---|
| A | ITC availed as per audited financial statement for the State/UT | Report ITC availed as per audited financial statements for the specific GSTIN. For multiple GSTINs under one PAN, ITC must be derived for each. |
| B | ITC booked in prior FYs, claimed in current FY | Report ITC booked in previous financial years but availed in the current FY (e.g., transitional credit). |
| C | ITC booked in current FY, to be claimed in future FYs | Report ITC booked in the current FY but not yet credited to the ITC ledger. |
| D | ITC availed as per audited financial statements/books | This is the sum of A, B, and C. |
| E | ITC claimed in Annual Return (GSTR-9) | Report net ITC as declared in Table 7J of GSTR-9. |
| F | Unreconciled ITC | The difference between 12D and 12E. |
Table 13: This table requires explanations for any unreconciled ITC found in Table 12F.
Table 14: Reconciliation of ITC Declared in GSTR-9 with ITC on Expenses as per Audited Statements/Books
| Table | Name | Details |
|---|---|---|
| A-Q | Expenses | Various sub-heads for general expenses are provided. Taxpayers should declare respective ITC against each head and can customize expense heads as needed. |
| R | Total eligible ITC availed | This is the sum of A-Q. |
| S | ITC claimed in Annual Return (GSTR-9) | Report net ITC as declared in Table 7J of GSTR-9. |
| T | Unreconciled ITC | The difference between 14R and 14S. |
Table 15: Reasons for discrepancies between ITC availed on expenses (Table 14R) and ITC declared (Table 14S) must be specified here.
Table 16: Any amount payable due to reasons specified in Table 13 and Table 15 must be reported here.
- Part V: Additional Liability Due to Non-Reconciliation This section addresses:
- Additional liability arising from discrepancies in turnover or ITC reconciliation.
- Any other amounts due for supplies not reported in the annual return.
- Erroneously claimed refunds that need to be repaid to the government.
- Any other outstanding demands requiring payment.
Taxpayers can settle any additional liability declared in the GSTR-9C form by using FORM DRC-03. When using FORM DRC-03, 'Reconciliation Statement' should be selected from the dropdown menu. Such payments can only be made through the electronic cash ledger.
Taxpayer Verification
Form GSTR-9C requires self-certification by the taxpayer. Authentication can be performed either using a Digital Signature Certificate (DSC) or through an Aadhaar-based signature mechanism.
GSTR-9C Filing Procedure
The GSTR-9C form is typically prepared using an offline utility tool provided on the GST portal. Before filing, certain conditions must be met:
- The taxpayer must be a registered entity with a valid GSTIN.
- Valid GSTN login credentials (User ID and password) are required.
- The GSTR-9 for the relevant financial year must have already been filed.
- The registered person's aggregate annual turnover for the specific financial year must exceed Rs. 5 crore.
On the official GST Portal, the GSTR-9C filing option becomes active only after the GSTR-9 for that financial year has been submitted. To file GSTR-9C, taxpayers should follow these steps:
A. Actions on the GST Portal:
- Log in to the GST Portal.
- Download the previously filed Form GSTR-9.
- Download the Form GSTR-9C tables, which are derived from Form GSTR-9.
- Acquire the latest version of the GSTR-9C Offline Tool from the GST portal.
B. Actions Using the Offline Tool:
Utilize the GSTR-9C Offline Utility Excel Worksheet to prepare the statement offline:
- Open the GSTR-9C Offline Utility Excel Worksheet.
- Input table-wise details into the Worksheet.
- Generate a Preview PDF file to review the Draft Form GSTR-9C.
- Create the JSON File. For a comprehensive guide on preparing GSTR-9C with the offline tool, consult the article "How to file GSTR-9C using the Offline Utility" (link).
C. Uploading on the GST Portal:
Upload the generated JSON File to the GST Portal.
- Error Handling: If an error occurs during upload, download the error report, make necessary corrections, and re-upload the updated JSON file.
- Editing Processed Data: If a taxpayer wishes to modify data in a successfully processed file before final submission, they should download the processed GSTR-9C JSON File from the GST Portal, import it into the Offline Tool, apply corrections, and then upload the revised JSON.
D. Final Filing and Record Keeping:
Finally, file Form GSTR-9C and then download or view the filed form for future reference.