GST-Reconciliation

FTAPCCI, Hyderabad 30th October, 2018 Audit and Reconciliation Statement under GST by CA Manindar K Partner M/s SBS and Company LLP manindar@sbsandco.com +91 9700734609

Coverage  Statutory Requirement of Annual Returns & Audit  Reconciliation Statement  Audit Report 2 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Statutory Requirement of Annual Returns & Audit 3

Important Provisions  Audit {Section 2(13)}:  means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force  to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and  to assess his compliance with the provisions of this Act or the rules made thereunder 4 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Requirement of Audit {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: 5 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Relaxation from Audit {Proviso to Section 35(5)}: Audit is not required for Government Departments or Local Authority whose books of account are subject to C&AG Audit or by an auditor appointed to audit the accounts of local authorities under any law for the time being in force. 6 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Annual Return for Non-Audit cases {Section 44(1)}:  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 for every financial year electronically in such form and manner as may be prescribed  on or before the thirty-first day of December following the end of such financial year 7 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Annual Return for Audit cases {Section 44(2)}:  Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35  Shall furnish, electronically, the annual return under sub-section (1)  Along with a copy of the 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. 8 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Annual Return for Audit {Rule 80}:  Annual Return in FORM GSTR-9 shall be filed through the common portal either directly or through a Facilitation Centre notified by the Commissioner:  A composition tax payer shall furnish the annual return in FORM GSTR-9A.  Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement in FORM GSTR-9B.  (3) Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre 9 nomtaifniienddarb@ysbtshaendCcoo.cmommissioner. www.sbsandco.com +91 9700734609

Important Provisions  Turnover Threshold for Audit {Section 35(5) vs Rule 80(3)}:  Section 35(5) provides that every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited  Rule 80(3) Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner. 10 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Important Provisions  Section 35(5) uses the word ‘Turnover’ while Rule 80 uses the word ‘aggregate turnover’  Aggregate Turnover {Section 2(6)}: means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies 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  The two crores turnover limit: Is it applicable for each registration or for all registrations put together? 11 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Synopsis: GST Audit & Reconciliation Annual Return Statement GSTR-9 GSTR-9A GSTR-9B GSTR-9C Applicable to Applicable to Applicable to Normal Tax Composition GST TCS tax Applicable to taxpayer whose turnover during Payer tax payer payer FY is more than 2 crores 12 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation Statement 13

Overview of Reconciliation Statement Part I Basic Details Part II Reconciliation of Turnover Declared between Audited Financial Statements and Annual Return Reconciliation of Gross Turnover Reconciliation of Taxable Turnover Part III Reconciliation of Tax Paid Reconciliation of Rate wise Tax Liability and Amount Payable thereon Additional Amount Payable but not Paid 14 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Overview of Reconciliation Statement Part IV Reconciliation of Input Tax Credit Reconciliation of Net Input Tax Credit Reconciliation of ITC declared in Annual Return with ITC availed on Expenses Tax Payable on Unreconciled Difference in ITC Part V Auditor’s Recommendation on Additional Liability due to non-reconciliation 15 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Basic Details 16 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover 17 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5A Turnover as per Audited Financial Statements  Turnover as per audited Financial Statements shall be declared here.  There may be cases where multiple GSTINs (State-wise) registrations exist on the same PAN.  Such entities have to internally derive their GSTN wise turnover and declare the same here.  Any reference to audited Financial Statements includes reference to books of accounts in case of persons / entities having presence over multiple States. 18 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5B Unbilled Revenue at the beginning of the FY  Unbilled revenue booked in last FY on the basis of accrual system of accounting.  The tax invoices/bills in this regard are issued in the current Financial Year.  If GST invoices are issued for such unbilled revenue of last FY, then the same shall be declared here.  Example: If rupees Ten Crores of unbilled revenue existed for the financial year 2016- 17, and during the current financial year, GST was paid on rupees Four Crores of such revenue, then value of rupees Four Crores rupees shall be declared here 19 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5C Unadjusted Advances at the end of the FY  Value of all advances for which GST has been paid but the same has not been recognized as revenue in the audited Annual Financial Statement shall be declared here Table 5D Deemed Supply under Schedule I  Aggregate value of deemed supplies shall be declared here  Any of the deemed supplies which is already part of Audited FS is not required to be included here 20 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5E Credit Notes issued after the end of Financial Year  Aggregate value of credit notes which were issued after 31st of March for any supply accounted in the current financial year but such credit notes were not reflected in the annual return (GSTR-9)shall be declared here. TabAlegg5FregTartaedevDalisuceouonftsdaececmouendtedsufoprpinlieAsudshiteadllFbSebudteacrleanreodt pheermreissible under GST  Trade discounts which are accounted for in the audited Annual Financial Statement but on which GST was leviable(being not permissible) shall be declared here. 21 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover 22 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5G Turnover from April 2017 to June 2017  Turnover included in the audited Annual Financial Statement for April 2017 to June 2017 shall be declared here. Table 5H Unbilled Revenue at the end of Financial Year  Unbilled revenue which was recorded in the books of accounts on the basis of accrual system of accounting during the current financial year but GST was not payable on such revenue in the same financial year shall be declared here 23 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5I Unadjusted Advances at the beginning of a FY  Value of all advances for which GST has not been paid but the same has been recognized as revenue in the audited Annual Financial Statement shall be declared here. Table 5J Credit Notes accounted for in Audited FS but are not permissible under GST  Aggregate value of credit notes which have been accounted for in the audited Annual Financial Statement but were not admissible under Section 34 of the CGST Act shall be declared here. 24 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5K Adjustments on account of supply of goods by SEZ units to DTA units  Aggregate value of all goods supplied by SEZs to DTA units for which the DTA units have filed bill of entry shall be declared here. Table 5L Turnover for the period under Composition Scheme  If the registered person was under composition scheme for some part of the financial year, then such turnover shall be declared here 25 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover 26 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5M Adjustments in turnover under section 15 and rules  There may be cases where taxable value for GST and invoice value would be different. In such cases, the total of net adjustments shall be declared here. Table 5N Adjustments in turnover due to foreign exchange  Any difference between the turnover reported in the Annual Return (GSTR9) and turnover reported in the audited Annual Financial Statement due to foreign exchange fluctations shall be declared here. 27 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Part-II: Reconciliation of Turnover Table 5Q Annual Turnover as declared in Annual Return {GSTR-9}  This turnover shall be derived from Sl.No 5N, 10 and 11 of GSTR-9  5N: Total turnover including advances  10: Supplies/tax declared through amendments and net of debit notes  11: Supplies/tax reduced through amendments and net of credit notes 28 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Taxable Turnover 29 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Taxable Turnover Table 7B Value of Exempted, Nil Rated, Non-GST supplies, No supply turnover  Value of exempted, nil rated, non-GST and no-supply turnover shall be declared here.  This shall be reported net of credit notes, debit notes and amendments if any. Table 7C Zero-rated supplies without payment of tax  Value of zero rated supplies (including supplies to SEZs) on which tax is not paid shall be declared here.  This shall be reported net of credit notes, debit notes and amendments if any.  Zero-rated supplies with payment of tax shall be part of taxable turnover. 30 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Taxable Turnover Table 7D Supplies on which tax is to be paid by recipient on RCM basis  Value of reverse charge supplies on which tax is to be paid by the recipient shall be declared here.  This shall be reported net of credit notes, debit notes and amendments if any. Table 7F Taxable Turnover as per the liability declared in Annual Return (GSTR-9)  Taxable turnover as declared in Table 4N of the Annual Return (GSTR9) shall be declared here. This turnover includes inward supplies liable for RCM 31 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Tax Paid 32 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Tax Paid Table 9Q Taxable Turnover as declared in Annual Return GSTR-9  Amount declared as payable as per table 9 of GSTR-9  Also includes the differential tax payable as per table 10 and 11 of GSTR-9 33 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Amounts Payable due to Non-Reconciliation 34 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Net Input Tax Credit 35 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Net Input Tax Credit Table 12A ITC Availed as per Audited Financial Statement for State/UT  Value of ITC availed (after reversals) as per Audited FS shall be declared here.  In case of multiple GSTNs with same PAN, ITC shall be derived internally for each GSTN and declared here. Table 12B ITC booked in earlier FY and claimed in current FY  This shall include the transitional credit which was booked in previous FY and moved to electronic credit ledger in current FY. 36 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of Net Input Tax Credit Table 12C ITC booked in current FY to be claimed in subsequent FYs  Any ITC which has been booked in the audited Annual Financial Statement of the current financial year but the same has not been credited to the ITC ledger for the said financial year shall be declared here. Table 12E ITC claimed in Annual Return GSTR-9  Net ITC available for utilization as declared in Table 7J of Annual Return (GSTR-9) shall be declared here. 37 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of ITC with Expenditure 38 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of ITC with Expenditure 39 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Reconciliation of ITC with Expenditure  This table is for reconciliation of ITC declared in the Annual Return (GSTR9) against the expenses booked in the audited Annual Financial Statement or books of account.  The various sub-heads specified under this table are general expenses in the audited Annual Financial Statement or books of account on which ITC may or may not be available.  Further, this is only an indicative list of heads under which expenses are generally booked. Taxpayers may add or delete any of these heads but all heads of expenses on which GST has been paid / was payable are to be declared here. 40 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Tax Payable on non-Reconciliation of ITC 41 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Auditor Recommendation on Additional Liability 42 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Auditor Recommendation on Additional Liability  Auditor shall recommend on the additional liability to be discharged by the taxpayer due to non- reconciliation of turnover or non-reconciliation of input tax credit.  The auditor shall also recommend if there is any other amount to be paid for supplies not included in the Annual Return.  Any refund which has been erroneously taken and shall be paid back to the Government shall also be declared in this table.  Any other outstanding demands which is recommended to be settled by the auditor shall be declared in this Table. 43 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Audit Report {Part B of GSTR-9C}  Report whether proper books/records/documents as required under GST laws are maintained  Report observations, comments, discrepancies, inconsistencies if any  Report on Information and Explanations necessary for conduct of audit are provided or not provided  Certify that Balance sheet, Cash Flow Statement and P&L Account are in agreement with books of accounts maintained at registered place of business and additional place of business  Certify that particulars given in reconciliation statement (GSTR-9C) are true and correct subject to observations/qualifications if any 44 manindar@sbsandco.com www.sbsandco.com +91 9700734609

Thank you!!! At CA Manindar K Partner FTAPCCI, Hyd 30th October, 2018 M/s SBS and Company LLP manindar@sbsandco.com 9700734609 Our Presence: Hyderabad, Kurnool, Nellore, TADA, Vizag & Bengaluru: info@sbsandco.com; 040-40183366 Disclaimer: Please logon to: http://www.sbsandco.com/disclaimer/ Read our monthly SBS e-Journals www.sbsandco.com/wiki 45 www.sbsandco.com/digest