vidarbha industries association audit and annual …...2018/10/15 · a tax regime that relies on...

October 2018

Speakers:

Sonal Jain – Director, Pune ([email protected])

Sonal Kawdia – Manager, Nagpur ([email protected] om)

Vidarbha Industries Association

Audit and Annual Return under GST regulations

1

©2018 Grant Thornton India LLP. All rights reserved.

Contents

Annual Return3

GSTR for September 20182

Background1

2

Types of GST Audit4

Annual GST Audit 5


Contents

Annual Return3


Background1

3

Types of GST Audit4

Annual GST Audit 5


• Goods and Service Tax is levied on supply of goods and services

• Thresholds have been provided for registrations

• CGST and SGST is levied on Intra-state supplies and IGST on Inter-state supplies

• GST is Self-Assessment based

• Presently, a normal taxpayer is required to file following key returns:

• Requirement to undertake Audit annually exists for specified class of registered persons

• This presentation focuses on GSTR 3B for September 2018, GSTR 9 for 2017-18 and GST Audit (GSTR-9C) for 2017-18

4

BackgroundTypes of GST Returns

Type of Return Description Periodicity

GSTR-1 Details of O/w Supply Monthly or quarterly based on t/o

GSTR-3B Summary of O/w and I/w supply Monthly

GSTR-4 Composition Dealers Quarterly

GSTR-6 ISD Return Monthly

GSTR-9 Annual Return Annually


Contents

Annual Return3


Background1

5

Types of GST Audit4

Annual GST Audit 5


� Mandatory matching of 2A and 3B (u/s 42)

� Details of Inward supply to be matched with corresponding details of outward supply submitted by supplier

� When ITC claimed by recipient is more than or not declared by the supplier, the same is added as output tax liability of recipient

� Last Date for Availing ITC for FY 2017-18

� Section 16(2) - A registered person shall not be entitled to take input tax credit in respect of any

� invoice or debit note for supply of goods or services or both

� after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to whichsuch invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return , whichever is earlier.

� In absence of such ITC availed before filing of September GSTR 3B – Loss of ITC

� Amendment in credit notes/ outward supplies can be made latest by the month of September following the end of FY or Annual returnwhichever is earlier

� Ambiguity – Whether GSTR 3B falls under Section 39, if not, ca n ITC be availed up to filing of Annual return?

6

GSTR for September 2018 - Vital

Matching of 2A with 3B for FY 2017-18


Contents

Annual Return3


Background1

7

Types of GST Audit4

Annual GST Audit 5


� Who is required to file Annual Return� Annual Return (S.44) is required to be filed electronically in FORM GSTR-9 on or before 31st December following the end of financial year

by every registered person except:

- Input Service Distributor (ISD)

- Person paying tax u/s 51 (TDS)

- E-Commerce Operator

- Casual Taxable Person

- Non Resident taxable person

� Composition scheme - FORM GSTR-9A and E-commerce operators - FORM GSTR-9B

� The ensuing slides cover key aspects of GSTR 9

8

Annual Return (1/3)

Annual Return


� About Annual return -� FORM GSTR-9 has been notified vide Notification No. 39/2018 – Central Tax dated 4 September 2018

� Annual Return is not for rectification of errors, but it is consolidation of all returns filed for the period July 2017 to March 2018 in a single return

� No CA Certification required

� If some tax is further payable or some claim has not been reflected in monthly/quarterly returns, it can not be depicted in GSTR-9

� Certain auto-populated fields flowing from GSTR 3B and GSTR 2A.

� Relevant contents of Annual Return� Amendments of supplies/ tax (increase or decrease), ITC availment/ reversal made in returns of April to September 2018 return but

pertaining to FY 2017-18 needs to be disclosed

� Disclosure of supplies received from Composition De alers

� Bifurcation of ITC in Inputs, Capital Goods and Inp ut Services – not made in earlier return

� Inward supply on which tax is payable under RCM and ITC is paid and availed – to be bifurcated in RD/URD and Input/CG/IS – GTA (can be RD or URD)

� Reconciliation of GSTR-3B and 2A required – To reach at ‘ITC lapsed’ during the year

9

Annual Return (2/3)

Annual Return

Notification-39-2018-central_tax-English.pdf


� Points to be noted:� If information of outward supplies in GSTR-1 differs from information in 3B, resolution of such difference is not provided for.

� Covers only amendment during April to September 2018, Clarity with respect to new invoices required

� ITC reversals pertaining to FY 2017-18, with respect to matters below, required to be made before filing of September return:

o Business and other purposes

o Taxable and exempt supply- annual turnover

� No table to disclose refund voucher against advances for supplies not made

� Refund/Demand claimed, sanctioned and pending needs to be disclosed – as on 31 March 2018 or 31 December 2018 – Clarification needed

� HSN wise summaries required for both Outward and In ward supplies

� Relaxation – Annual Return does not seek below details:

• Document series,

• Opening and Closing stock,

• Exempted, NIL and Non-GST Inward supply,

• Goods lying with agent/principal or Job worker etc.

10

Annual Return (3/3)

Annual Return


Contents

Annual Return3


Background1

11

Types of GST Audit4

Annual GST Audit 5


Audit under GST Why GST Audit?

12

Trust based taxation regime

Self-assessment of outward GST liability and input tax credit

Minimum intervention by tax authorities

A tax regime that relies on self-assessment needs to have a robust audit mechanism to ensure compliance of the provisions of GST law by the taxable person.


Audit under GST What is Audit under GST?

As per section 2(13), “Audit” means • examination of records, returns and other documents • maintained or furnished by the registered person under the GST Acts or the rules made there under or under any other law for the time

being in force• to verify the correctness of turnover declared, tax es paid, refund claimed and input tax credit availe d, and • to assess his compliance with the provisions of the GST Acts or the rules made thereunder

Types of Audit

13


Contents

Annual Return3


Background1

14

Types of GST Audit4

Annual GST Audit 5

©2018 Grant Thornton India LLP. All rights reserved.15

Annual Audit (Section 35(5) and Rule 80) (1/5)

Who?

• Every registered person whose aggregate turnover during a FY exceeds Rs. 2 croresshall get his accounts audited by Chartered Accountant / Cost Accountant

When?

• Annual Audit is to be conducted on or before 31st December following the end of thefinancial year

How?

• Annual Audit Report has to be submitted along with annual return on common portalunder FORM GSTR-9C. The following certified copies are also required to be submitted:

� Copy of audited annual accounts

� Reconciliation Statement

1

2

3

FORM GSTR-9C has been notified vide Notification No. 49/2018 –Central Tax dated 13 September 2018

Part A is the Reconciliation Statement, and Part B is the Certification

notfctn-49-central-tax-english-new.pdf


Inter-state supplies

within same PAN

Exempt suppliesExports

Inter-state supplies

within same PAN

Aggregate turnover

Section 2(6) - “aggregate turnover” means

of persons having the same Permanent Account Number to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess

Section 2(108) - "taxable supply"means a supply of goods or services or both which is leviable to tax.

Section 2(47)- “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

Section 2(78)- “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

16

Annual Audit (2/5)

Key Definitions

Taxable

supplies


� Key contents of Audit Report� Reconciliation of turnover declared in Audited Financial Statement (AFS) with Annual Return (GSTR 9)

o Period – July 2017 to March 2018

o GSTN wise turnover is required while AFS is for entire entity as a whole

o Reconciliation of total turnover sub-divided in taxable turnover

o Reasons for un-reconciled turnover - total turnover and taxable turnover

� Reconciliation of ITC from AFS with Annual Return (GSTR 9)

o ITC amount after reversal to be considered

o Expense-head wise reconciliation required for eligible ITC

o Reasons for unreconciled difference (only 3 rows in notification, utility awaited)

� Cash payment - Additional liability based on auditor’s recommendation for non-reconciliation

o Auditor recommendation includes –

o Erroneous refund to be paid back

o Provision for any amount paid for supplies not included in GSTR 9

o Outstanding demands to be settled

� Certification from a Chartered Accountant/ Costs and Works Accountant

� Internal Auditor cannot perform GST Audit – ICAI clarification17

Audit Report (3/5)

Audit report


Annual Audit (4/5)

Penal Provisions (Section 47 and Section 125 of the CGST Act, 2017)

As per section 44(2) of the CGST Act, 2017, any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at 0.25% of his turnover in the State or Union territory.

Although no specific penalty has been prescribed under the GST law for non-filing of Annual return and Audit report (wherever applicable), a general penalty under section 125 of the CGST Act, 2017 may be imposed for such non-compliance which may extend upto INR 25,000.

Penal Provisions


Annual Audit – Key Areas and Preparedness (5/5)

• All the returns are filed and tax/ interest is paid

• RC is updated

• Back-up workings are available with the company

• Eligibility of ITC availed is confirmed;

• Reversal of ITC on account of taxable and exempt supplies, non-payment of consideration in 180 days, ineligible credits, etc.

• Classification of goods/ services (Composite/ Mixed Supply)

• Taxability of outward supplies & transactions covered under RCM, Job work etc;

• Positions taken on various transactions by the Company.

• Reconciliation of monthly returns with annual return;

• Reconciliation of annual return with audited financials;

• Reconciliation of expenses with books and GSTR 2A;

• Reconciliation of Income with books.

• Review classification, rate of tax applicable, etc

• Review of Valuation methodology

• Concepts of Distinct Entity, Place of Supply, etc

• Proper Maintenance of accounts and records etc.

Check on GST

compliancesInput Tax Credit

Review of

positions takenReconciliations Miscellaneous


GlossaryAbbreviation Full FormCGST Act The Central Goods and Services Tax Act, 2017

SGST Act State Goods and Services Tax Act, 2017

O/w supply Outward

I/w Inward Supply

T/o Turnover

IGST Act The Integrated Goods and Services Tax Act, 2017

ITC Input Tax Credit

GSTR Goods and Service Tax Return

FY Financial Year

TDS Tax Deducted at Source

RCM Reverse Charge Mechanism

RC Registration Certificate

ISD Input Service Distributor

RD Registered Dealer

URD Unregistered Dealer


Questions?


Thank you

Disclaimer:This Presentation includes general information existing as at the time of preparation. Further, the comments are representational and for discussion purposes only. Final impact to be evaluated specific to each business.This Presentation does not purport to identify all the issues or developments at the time of preparation/ filing or even pursuant to the transaction. This presentation should neither be regarded as comprehensive nor sufficient for the purposes of decision-making as purpose of this presentation is just to provide overview on conceptual points. The information provided is not, nor is it intended to be an advice on any matter and should not be relied on as such as same would require case to case basis analysis. Professional advice should be sought before taking action on any of the information contained in it. Grant Thornton India LLP does not undertake any legal liability for any of the contents in this presentation. Without prior permission of Grant Thornton India LLP, this document may not be quoted in whole or in part or otherwise referred to in any documents.”


Contact us

© 2018 Grant Thornton India LLP. All rights reserved.Companies Act, 2013.Grant Thornton India LLP (formerly Grant Thornton India) is registered with limited liability with identity number AAA-7677 and has its registered office at L-41 Connaught Circus, New Delhi, 110001.References to Grant Thornton are to Grant Thornton International Ltd (Grant Thornton International) or its member firms. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.

NEW DELHINational OfficeOuter CircleL 41 Connaught CircusNew Delhi 110001T +91 11 4278 7070

NEW DELHI6th floorWorldmark 2,AerocityNew Delhi 110037T +91 11 4952 7400

AHMEDABAD7th Floor, HeritageChambers,Nr. Azad Society,Nehru Nagar,Ahmedabad – 380015

BENGALURU5th Floor, 65/2, Block A, Bagmane Tridib, Bagmane Tech Park, C V Raman Nagar, Bengaluru - 560093T +91 80 4243 0700

CHANDIGARHB-406A, 4th Floor L&T Elante Office BuildingIndustrial Area Phase IChandigarh 160002T +91 172 4338 000

CHENNAIArihant Nitco Park, 6th FloorNo.90, Dr. Radhakrishnan SalaiMylaporeChennai 600004T +91 44 4294 0000

DEHRADUN2410, Michigan Avenue,Doon Express Business Park,Saharanpur Road,Dehradun – 248002

GURGAON21st Floor, DLF SquareJacaranda MargDLF Phase IIGurgaon 122002T +91 124 462 8000

HYDERABAD7th Floor, Block IIIWhite HouseKundan Bagh, BegumpetHyderabad 500016T +91 40 6630 8200

KOCHI7th Floor, Modayil Centre pointWarriam road junctionM.G.RoadKochi 682016T +91 484 406 4541

KOLKATA10C Hungerford Street5th FloorKolkata 700017T +91 33 4050 8000

MUMBAI16th Floor, Tower IIIndiabulls Finance CentreSB Marg, Elphinstone (W)Mumbai 400013T +91 22 6626 2600

MUMBAI9th Floor, Classic PentagonNr Bisleri factory, Western Express HighwayAndheri (E)Mumbai 400099T +91 22 6176 7800

NOIDAPlot No. 19A, 7th FloorSector – 16ANoida 201301T +91 120 7109 001

PUNE3rd Floor, Unit No 309 to 312West Wing, Nyati UnitreeNagar Road, Yerwada Pune- 411006T +91 20 67448800

To know more, please visit www.grantthornton.in or contact any of our offices as mentioned below:

vidarbha industries association audit and annual …...2018/10/15 · a tax regime that relies on...

Documents