Introduction to GST Annual Returns: The Introduction of Goods and Services Tax was a revolutionary move in the context of commodities and services tax. It has brought about a paradigm shift in the methodology of levy and collection of taxes. It is an internationally recognized multipoint tax system providing for levy of tax on goods as well as services on the value addition occurring at every stage of business activity with the availability of cross credits ( services credit for goods & vice versa). On a macro note it may be said that GST is a mechanism which supports self-compliance where in the assessees assess the taxes payable by them.
Introduction to GST Annual Returns
To ensure the correctness and veracity of the reported information annual returns and GST audit are required. It becomes essential to have counter checks and balances to ensure that there is no seepage of exchequer’s revenue. GST principles embrace information technology and reduce the interaction with the tax administrators. The responsibility has been given to the Chartered Accountants and cost accountants for performing the audit functions considering their expertise in the arena.
GST law needs all entities who are registered to the initial mechanism of returns required the filing of the following for a regular registered person.
- GSTR 1 – Furnishing of Details of Outward Supplies ( Section 37 )
- GSTR 2 – Furnishing of Details of Inward Supplies ( Section 38 ) (dispensed with from August 2017 onwards)
- GSTR 3 – Furnishing of the returns ( Section 39 ) (was envisaged but has not been introduced since beginning)
However, GSTR 3B was introduced by virtue of Sub Rule 5 of Rule 61 owing to the postponement of GSTR 2 and 3.
In case of a Composition Registered Person GSTR 4 is the prescribed return.
Further the concept of Annual returns has been effectuated under GST. Although the concept of Annual return was in vogue by virtue of VAT Statutes in certain states, the same wasn’t there in the Service Tax Statute as well as the Excise Law.
Legal provisions of GST Annual Returns
In order to understand the gamut of the GST Annual returns and its requirement, it would be relevant for us to understand the legal provisions relevant for GST Annual Returns. Two important provisions which are relevant and important in this context are Section 35(5) and Section 44(1) of CGST Act, 2017.
In terms of section 35(5) “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 subsection (2) of section 44 and such other documents in such form and manner as may be prescribed”.
Section 44(1) requires that every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year. This form is notified by the government vide Notification 39/2018 on 4th September 2018.
In terms of Rule 80(1) of the CGST Rules, 2017 “Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return as specified under sub -section (1) of section 44 electronically in FORM GSTR-9 through the common portal either directly or through a Facilitation Centre notified by the Commissioner:
Provided that a person paying tax under section 10 shall furnish the annual return in FORM GSTR9A.”
Further, Section 44(2) mandates every registered person who is required to get his accounts audited in accordance with Section 35(5) to furnish the copy of audited annual accounts and a reconciliation statement reconciling the value of supplies declared in the annual return with such audited annual financial statements.
In terms of Section 44(2), Rule 80(3) requires every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
Points to Note on Annual Returns
- Every registered person is required to file annual return on or before 31st December of the year succeeding the financial year in form GSTR-9. Example – For F.Y 2017-18 annual return would be filed on 31st December 2018
- Person paying tax under composition scheme is required to file annual return in form GSTR9A – Proviso to Sub Rule (1) of Rule 80.
- Every electronic commerce operator who is required to collect tax at source under section 52 shall furnish annual statement in form GSTR – 9B – Sub Rule 2 of Rule 80.
- Nil Annual Return- A person registered under GST but having no transactions during the year is still required to file a Nil Annual Return. A person who has got his registration cancelled during the year is also required to file the respective Annual returns.
- A Registered person who has opted in or opted out of composition is required to file both GSTR 9 & GSTR 9A for the relevant periods.
- The exceptions to filing of the Annual return applies to the following category of registered persons
- Input Service Distributor (ISD)
- A person required to deduct TDS
- Casual Taxable Person
- Non-Resident Taxable Person
In case of the regular registered persons whose aggregate turnover exceeds Rs. 2 Crore, they are required to furnish the following
- GSTR 9 – The Annual Return
- Audited Annual Accounts
- GSTR 9C – A reconciliation statement mapping the annual returns Vs. the Audited Annual Accounts.