We may recollect that Section 110 of the Finance Act, 2021 had omitted sub-section (5) of section 35 of the CGST Act (applicable from a date to be notified) so as to remove the mandatory requirement of getting annual accounts audited and the reconciliation statement in Form GSTR-9C submitted by specified professional viz Chartered Accountant / Cost Accountant.
In consonance to above Section 111 of the Finance Act, 2021 had substituted section 44 of the CGST Act,2017 (applicable from a date to be notified) so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by a Chartered Accountant / Cost Accountant and to provide for filing of the annual return on self-certification basis. It further empowers the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.
The substituted Section 44 is reproduced below:
Annual return
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.
The above amendment was protested by the professionals stating that GST Audit is not an avoidable compliance. It was argued that GST Audit ensures maker checker concept thereby detecting inconsistencies, lapses, errors, and ambiguities, if any, in complying with the provisions of GST law.
Since promulgation of the Finance Act,2021, Section 110 and 111 thereof were not notified and confusion prevailed as to whether GST Audit will be required in respect of FY 2020-21 or not. In this regard, the Press Release issued after the 43rd GST Council Meeting held on 28th May,2021 has provided clarity and has indicated that GST Audit will not be required for FY 2020-21.
For ready reference of our readers the relevant extract (Sl. No 4) of the Press Release in this regard is reproduced below:
- Simplification of Annual Return for Financial Year 2020-21:
- Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.
- The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore;
- The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.
The Finance Minister Nirmala Sitharaman said in Press Briefing that, Annual return filing will be simplified and the GST Council has recommended amending the CGST Act to allow for self-certification of reconciliation statements, instead of getting it certified by Chartered Accountants. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified.
This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants.
This change will apply for Annual Return for FY 2020-21. The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore. The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.
It may be noted here that as per Section 35(5) of the CGST Act, 2017, GSTR-9C i.e. Audit Certificate and reconciliation statement was required to be furnished by a taxpayer whose turnover exceeds Rs.2 crore in a financial year (relaxed to Rs 5 crores for FY 2018-19 and 2019-20 vide N.N 16/2020-Central Tax dated 23.03.2020 as amended vide N.N 79/2020–Central Tax dated 15-10-2020) while filing his annual return in form GSTR-9.
However we can now conclude that GST Audit requirement by a CA / CWA has been abolished from FY 2020-21 which is amusing to note as Tax Audit under Income Tax Act, 1961 is running since decades and reason for omitting same from GST Law viz ease of compliance appears to be absurd.
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CA. Mohammad Salim is an ICAI award winning Chartered Accountant having rich experience of more than 20 years in the field of indirect taxes. He is the Member, Indirect Taxes Committee of PHD Chamber of Commerce and Industry. He is author of four successful books on GST published by Taxmann Publication and is also GST expert on taxmann portal.
