GST Update | Complex issues in filing GSTR-9 & 9C (GST Audit)

The CBIC in its official statement informed that, as on date 80% of Annual returns (GSTR-9) have not been filed and 95% of Reconciliations and certifications(GSTR-9C –Audit) not uploaded. This is with less than 10 days left!!!

The main reasons as to why the annual returns for all and Certification for those above Rs. 2 Crores have not been filed are as under :

1. The Govt. has failed in creating awareness of GST and its benefits to all.

2. It has failed in educating in account keeping customisation to meet compliance under GST for the members in the trade/ industry. 90% following the traditional chart of accounts.

3. The training of the officers and establishment of help desks to trade and industry has utterly failed as officers themselves have not been trained to support the tax payers. Those trained are not evaluated.

4. The humungous number of notification to correct the poorly drafted law exceeds 500!. Only the expert can keep track if that is the only area they practice.

5. Further the circulars, FAQ’s, Advance Ruling which are not in line with the law has added to the confusion.

6. Those who have taken up the exercise of annual returns can be bifurcated into 2 parts.

A. Those who are only to file annual returns – practitioners unable to file as they have no training on the filing of complex returns:

(i) The segregation of credits into input services, inputs and capital goods is not a normal procedure in the past especially for traders. One single credit a/c was maintained.

(ii) The need for GSTR 1 & 3B to be reconciled before taking up this exercise has prevented 70% from taking up annual return.

(iii) Those who have taken up find the further reconciliation to the financials a even bigger challenge. Majority of those that are filed have simply ignored the financials!!

(iv) Some who have completed have a liability which they are unable to set off against the ITC or recover from the customers. They do not have the money to pay and recover later from clients ( which may be difficult).

(v) HSN wise bifurcation is an impossibility for 90%. CBIC even after being informed 2 years back have stubbornly continued after giving some relaxation to extent of 10% and above in this futile exercise. This should have been made applicable for ONLY Turnover of 100+ crore tax payers initially.

(vi) The lack of clarity on the type of credit- SGST ( correct State), IGST and the method of utilisation which could have been a back end process or taken up after 3 years is an additional cause.

(vii) The need to indicate the difference between 2A and ITC claimed which is not reconcilable for several reasons has stalled many tax payers as they cannot afford to lose the credit which would be more than their margin at times.

B. Those who have to file the Reconciliation and certificate under Form 9C:

(i) If annual return cannot be prepared then question of 9C does not arise.

(ii) The reconciliation of Turnover (split for part year) is a nightmare. The cost of the incorrect timing of middle of the year for implementation is the cause.

(iii) Multilocational units- bifurcation of Turnover, ITC etc between the different registration is a major stumbling block.

(iv) Tax payers have not come forward with books and are continuing to expect further extensions- which would be to their disadvantage due to cost of interest.

The focus of the tax administrators has been on catching the GST evaders but other than those in fake bill. Circular trading we do not see much movement towards where there is huge leakage. They have neither educated themselves or looked at correcting the system early. Every circular requires a further circular, every clarification requires further clarification. The suggestion of forming a big team for change management given 2017 itself by involving professionals and officers has not take off due to inability to scale. Most trade members do not prefer to go for such training as the Officers frighten them on the non-compliances and the impact of penalty, interest etc.