The Government of India has issued certain clarification on 3rd July, 2019 regarding Annual Return and Reconciliation Statement amidst the ongoing difficulties faced by various stakeholders which have been elaborated below.
Payment of any unpaid tax
In situations where any information pertaining to revenue declaration has not made in FORM GSTR-1 or in FORM GSTR-3B, the taxpayers may pay the tax with interest through FORM GST DRC-03. This is the additional opportunity extended to taxpayers to declare the summary of supply against which payment of tax is made.
Primary data source for declaration in annual return
There has been confusion as to what would be the primary source for filing of the annual return. Information in FORM GSTR-1, FORM GSTR-3B and books of accounts should match. In cases where the assessee has short paid the tax, he shall pay such tax and declare the same in the annual return. Where the assessee has paid tax in excess he shall declare the same in the annual return and apply for refund (if eligible) through FORM GST RFD-01A. Input Tax Credit reversal shall be in FORM GST DRC-03 separately.
Reverse Charge in respect of Financial Year 2017-18 paid during Financial Year 2018-19
It has been clarified that RCM tax liability pertaining to FY 2017-18 paid during the FY 2018-19 will be declared in the annual return of 2018-19. Any differences in the turnover on account of the aforementioned entry, may be reported with reasons in the reconciliation statement (FORM GSTR-9C).
Treatment of Credit Notes/Debit Notes issued during FY 2018-19 for 2017-18
Credit note for any supply made during FY 2017-18 can be issued only up to September 2018. If the Credit Notes/ Debit Notes were declared in returns for FY 2018-19 and provision was made in Books of Accounts, the same shall be declared in Pt. V of the Annual return. Adjustment in turnover due to debit notes issued during FY 2018-19 for which provisions was made in the books of accounts of FY 2017-18 shall be declared in Table 5O of the reconciliation statement FORM GSTR-9C.
Most Important - Turnover for eligibility of filing of reconciliation statement
The turnover of all the registrations having the same PAN is to be used for determining the requirement of filing of reconciliation statement. Therefore, if there are two registrations in two different States on the same PAN, say State A (with turnover of Rs. 1.2 Crore) and State B (with turnover of Rs. 1 Crore) they are both required to ﬁle reconciliation statements individually for their registrations since their aggregate turnover is greater than Rs. 2 Crore. The aggregate turnover for this purpose shall be reckoned for the period July, 2017 to March, 2018.
Reconciliation of input tax credit availed on expenses.
Table 14 of the reconciliation statement calls for the reconciliation of Input Tax Credit claimed on expenses. Only those expenses are to be reconciled for which Input Tax Credit has been availed. Further, the list of expenses provided in Table 14 is not an exhaustive list.
Taxpayers welcome these clarifications amidst all the ongoing confusion around the annual return and reconciliation statement. Especially with the deadline of 31st August, 2019 approaching, these clarifications will only ease the burden on the assessee and provide them with a clear perspective.
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