No GST Audit (GSTR-9C) - Union Budget 2021

The Union Finance Minister, Smt. Nirmala Sitharaman while presenting the Budget Speech on 1st day of February 2021, before the Parliament, proposed:

Clause 101 of Finance bill to omit Sub-section (5) of section 35 of the CGST Act so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional.

Clause 102 of Finance bill to substitute Section 44 of the CGST Act so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professionals and provide for filing of the annual return on self-certification basis. It also provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

This is to come in effect from a date to be notified later.

The GSTR-9C is a reconciliation statement required to be furnished by a taxpayer whose turnover exceeds rupees two crores in a financial year while filing his annual return in form GSTR-9.

“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 sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.

Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority whose books of accounts are subject to audit by the Comptroller and Auditor General of India or auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”

“Section 44. 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 which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:

Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section:

Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor- General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”.

Pursuant to Rule 80(3) of the CGST Rules, 2017 every registered person whose aggregate turnover during a financial year exceeds rupees two crores shall get the accounts audited as specified under Section 35(5) of the CGST Act, 2017. The assesse would also require to furnish a copy of audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed, duly certified, in Form GSTR-9C, electronically.

As per rule amendment in rule 80 of CGST Rules via notification No.16/2020–Central Tax Dated 23rd March, 2020, “Provided that every registered person whose aggregate turnover during the financial year 2018-2019 exceeds five crore rupees shall get his accounts audited as specified under subsection (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C for the financial year 2018- 2019, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”

GST audit is required only when turnover is more than rupees five crores.

Henceforth, the aforesaid sub-section (5) of Section 35 of the CGST Act, 2017 will be omitted and Section 44 of the CGST Act, 2017 is to be substituted completely by Clause 101 & 102 of the Finance Act, 2021 respectively.

As per the Finance Act, 2021, the requirement of GST audit and submission of GSTR-9C as certified by the CA/CMA is removed. It will come into force once notified by the CBIC. Meanwhile, as per the 43rd GST Council Meeting that was held on 28th May 2021, the GST Council recommended that GSTR-9C may be still submitted as self-certified by taxpayers with annual aggregate turnover of equal to or more than Rs.5 crore. The same is yet to be notified by the CBIC as on 11th June 2021.

 

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