Audit of account under GST and form 9C
Q 1. Are the accounts maintained by the registered taxable person required to be audited by a Chartered Accountant/ Cost Accountant under GST?
Ans. Every registered person whose aggregate turnover during a financial year exceeds the prescribed limit of Rs. 2 crore, shall get his accounts audited by a Chartered Accountant or a Cost Accountant. In all other cases, no audit is required to be conducted by the Chartered Accountant or Cost Accountant.
Q 2. Will a registered person who is exclusively having exempted supplies of goods or services exceeding Rs. 2 crore be required to file FORM GSTR-9C?
Ans. The definition of ‘aggregate turnover’ includes even exempted supplies. Therefore, even if a person is registered under GST and only provides exempted supplies, he will have to file FORM GSTR-9C.
Q 3. Is FORM GSTR-9C required to be filed for each registration obtained by a person in respect of each of the States?
Ans. Section 35(5) of SGST Act, also requires conduct of audit in addition to section 35(5) of CGST Act. Thus, audit is required State wise for compliance of section 35(5) of SGST Act.
Therefore, a person having registration in Karnataka and Tamil Nadu is required to be audited under KGST Act, 2017 and TNGST Act, 2017.
In case of more than one registration in a State, GSTIN wise audit is required i.e. once the PAN based aggregate turnover exceeds Rs. 2 crore, every registered person having same PAN is required to get its accounts audited, e.g., a business vertical in State of Maharashtra is having turnover of Rs. 2.5 crore and another business vertical is having turnover of Rs. 0.50 crore, then both the GSTINs are required to get their accounts audited.
Q 4. Is a Chartered Accountant required to be registered as a GST practitioner for the purpose of certifying FORM GSTR-9C?
Ans. Section 48 of the CGST/ SGST Act read with Rule 83(8) of the CGST/ SGST Rules authorizes a GST practitioner to undertake the following activities:
- furnish the details of outward and inward supplies;
- furnish monthly, quarterly, annual or final return;
- make deposit for credit into the electronic cash ledger;
- file a claim for refund; and
- file an application for amendment or cancellation of registration:
The GST Act/ Rules do not vest a GST practitioner with the power to audit under section 35(5). Therefore, a Chartered Accountant is not required to be registered as a GST practitioner for the purpose of certifying FORM GSTR-9C.
Q 5. What are the documents to be enclosed along with FORM GSTR- 9C?
Ans. As per section 35(5),
- a copy of audited accounts and
- such other documents in such form and manner ‘as may be prescribed’ ought to be submitted along with reconciliation statement (i.e. FORM GSTR9C).
Prescription ought to be provided in the Rules as the Act employs the term ‘as may be prescribed’. No documents other than audited annual accounts have been prescribed in Rule 80(3).
Part B of FORM GSTR-9C requires the GST auditor to enclose a copy of audit report of the entity, where the audit of the entity has been carried out by another person under a statute other than GST Act.
Q 6.Should FORM GSTR-9 and FORM GSTR-9C be filed separately?
Ans. Section 44(2) of the CGST/ SGST Act, 2017 provides a registered person to file annual return in FORM GSTR-9 along with a copy of the reconciliation statement in FORM GSTR-9C. Thus, FORM GSTR-9C has to be filed along with FORM GSTR-9 in cases where aggregate turnover exceeds Rs. 2 crore.
Q 7.What are the consequences of the failure in submitting the annual return and not getting the accounts audited?
Ans. The following are the consequences of the failure in submitting the annual return and not getting the accounts audited:
- Section 44(2) of the CGST Act and State/ Union Territory GST Act provides that every registered person shall file electronically an annual return in FORM GSTR-9 along with a reconciliation statement in FORM GSTR-9C, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement.
- Section 47(2) of the CGST Act provides for levy of a late fee of Rs. 100/- per day (each under CGST Act and under SGST Act) for delay in furnishing annual return in FORM GSTR-9, subject to a maximum amount of quarter percent (0.25%) of the turnover in the State or Union Territory. Similar provisions for levy of late fee exist under the State/ Union Territory GST Act.
- On a combined reading of section 47(2) and section 44(2) of the CGST Act and State/ Union Territory GST Act, a late fee of Rs. 200/- per day (Rs. 100 under CGST law + Rs. 100/- under State/ Union Territory GST law) can be levied which would be capped to a maximum amount of 0.50% (0.25% under the CGST Law + 0.25% under the SGST/ UTGST Law) of turnover in the State or Union Territory.
- In a situation where a registered person gets FORM GSTR-9C duly certified but fails to furnish both FORM GSTR-9 and FORM GSTR- 9C on the common portal, the provisions of late fee cited in clause “a to c” supra would equally apply.
- In a situation where a registered person files only FORM GSTR-9, but fails to file FORM GSTR-9C, the filing of FORM GSTR-9 may be considered to have been defaulted, whereby the late fee cited in clause “a to c” supra would apply
Q 8.Will audit under section 35(5) be applicable to non-filers or unregistered persons liable to take registration?
Ans. The audit under section 35(5) of the CGST Act to be conducted by CA or CWA is applicable only to a registered person. A non-filer is still a registered person under section 25 of the CGST Act. Hence, he may be required to get the audit conducted under section 35(5) of the said Act. Also as per Instruction No. 2 appended to FORM GSTR-9C, it is mandatory to file all FORM GSTR-1, FORM GSTR-3B and FORM GSTR-9 for the financial year 2017-18 before filing this return.
However, unregistered person who is liable to take registration under section 25 of the CGST Act is a taxable person. But the said unregistered person is not a registered person as defined under section 2(94) of the CGST Act, 2017. Hence in terms of section 35(5) of the Act, an un registered person who is liable to take registration is not required to get his accounts audited.