8 Things to Keep in Mind While Filing Annual Returns (GSTR-9)

In the GST regime, the Annual Return is known as GSTR-9 and filing this Annual Return for each Financial Year on or before the prescribed date is mandatory. For the Financial Year 2017 -18, the Govt. has extended the due date for filing GSTR-9 up to 31st August 2019.

However, being a new term, taxpayers find some difficulties while filing it. And on the other hand, the Govt. is going to be extra vigilant to flag defaulters. Notably, there is no way to amend GSTR-9 return once filed, taxpayers are required to be cautious to avoid making any errors.

Henceforth, let us know the most important 8 things that should be kept in mind while filing Annual Returns i.e. GSTR-9:

1. Not filing GSTR-9 on time – Since enough time has already been given, the Govt. has clarified that the due date for filing GSTR-9 shall not be extended anymore. So, in order to avoid unnecessary penalties and interest taxpayers need to execute all their liabilities properly before the due date. Non-filers may be issued demand notice instantly from the GST department.

2. Incorrect Reporting – GST was introduced in India in July 2017, which means the first year of filing the annual return will only be for 9 months and not for the entire year. Taxpayers need to be extremely careful while reporting transactions for FY 2017-18 as only data for 9 months period i.e. July 2017 to March 2018 needs to be reported.

3. Mismatch in monthly and Quarterly Returns – Taxpayers should ensure that all monthly and quarterly filed returns match appropriately with the data reported in the Annual Return. Mismatch of data would be one of the common causes for a demand notice from the GST department. While the due date for making amendments to data of FY 2017-18 has passed, taxpayers can still disclose any additional tax liability in their GSTR-9 Return. And this can be paid in form DRC-03.

4. Forgot/Ignored to file a monthly/quarterly/annual NIL Return – As per the GST Act, every taxpayer registered under GST has to compulsorily file GSTR-1 and GSTR-3B every month and GSTR-9 at the end of the FY till the period up to which his/her registration is cancelled/surrendered. Even in cases where there have been no transactions during a particular month/quarter or the whole year, a Nil return is required to be filed mandatorily.

5. Non-maintenance of proper documentation – Before filing GSTR-9 online on the Govt. portal, it is the duty of the taxpayer to reconcile, verify and report only accurate information. Additionally, the taxpayer must ensure that there is complete documentary proof of all data that is reported in the return, to avoid unnecessary complications in the future.

6. Ignoring GST Audit – As per the GST Act, if the annual turnover of the business exceeds ₹ 2 crores in the FY 2017-18, the owner (registered taxpayer) is subjected to GST audit. If the taxpayer does not initiate the GST audit, then he/she should get it done right away, as in such cases, the annual returns are to be annexed with a certified reconciliation statement in GSTR-9C and the audited financial statements.

GST audit shall cover a complete range of transactions undertaken during the FY and therefore will be very crucial for the identification of discrepancy and taking timely corrective actions so as to minimize anticipated litigation, wherever possible.

7. Filing two Annual Returns at a time – Previously, if a taxpayer had opted for the ‘Composition Scheme’ under GST and then switched to become a ‘Regular Taxpayer’, at this point he/she will have to file two annual returns i.e. GSTR-9 and GSTR 9-A for the respective periods by the designated due date.

If this happened in the last Financial Year, then buckle yourself up and keep all the details ready for GSTR 9 & 9A. At the time of reporting, the taxpayer should ensure that he/she does not duplicate the entries in both returns, by mistake. 

8. Segregation of claimed ITC – The Input Tax Credit claimed in GSTR-3B is required to be bifurcated as ‘Inputs’, ‘Input services’ and ‘Capital goods’ for the purpose of reporting. This was never mandatory in the GSTR-3B. Properly systematized accounting for each transaction as capital goods, services and goods will help a lot.

The taxpayer should be very careful while reporting the ITC claimed and they should also know that they will not be able to claim any unutilized ITC and reverse any ITC claimed in GSTR-9.

Conclusion

To get all information for filing GST annual returns in one place is definitely a time-consuming and tedious task. It would be better for taxpayers to begin with the process of reconciliation and GST audit if applicable. A taxpayer needs to be ready with the audited financial reports for each registration to avoid any complication further or unnecessary penalty. Currently, if submitted once, there is no provision to revise GSTR-9. Thus, by keeping these 8 points in mind, one can ensure filing of error-free annual returns.