Businesses jittery over procedural hassles in filing of annual GST returns

Businesses are jittery over procedural hassles in filing annual returns under the goods and services tax (GST) regime. These have to be given for part of 2017-18 by the end of this month. And, seek much more detail than what is required in the monthly return under GST. The Confederation of Indian Industry has already asked the government to defer the deadline for filing to March 31.

Big firms with annual turnover of over Rs 15 million file two monthly returns and those below this threshold send quarterly returns. They have to file one GSTR-1 form, which seeks details of supply, and  of GSTR-3B which requires consolidated values of company supply, purchases, input tax credit claims and net tax liability. 

The annual return, GSTR-9, seeks a break-up of purchases in three formats — raw materials, services used and capital goods. “In monthly or quarterly returns, you never reported this break-up. As such, this would involve procedural hassles,” said Archit Gupta, chief executive at ClearTax. 

Earlier, he said, businesses would maintain separate records of taxes on merchandise and services, with the different levies in the earlier tax regime. These are now all part of GST and not all firms are maintaining separate records. 

The annual return also requires details of input tax credit that is ineligible under GST, adding to the compliance burden, he said. 

They also have to give the harmonised system nomenclature (HSN) code for purchases made by them in GSTR-9. Under the monthly returns, HSN codes are required only for sales, not purchases. Also, those with annual turnover up to Rs 15 million are not required to give HSN codes. Those between Rs 15 million and Rs 50 million are required to give two-digit HSN codes and those with over Rs 50 million annual to give four-digit codes. In the annual returns, all firms are required to give HSN codes for purchases. “This is a humongous exercise. Small and medium firms face more issues,” said Gupta. 

Harpreet Singh, partner at consultants KPMG, said the earlier expectation was that the annual return would primarily be a summation of monthly returns filed during the year. “The requirement to provide additional details like HSN code for inward supplies, trifurcation of inward supplies into inputs, input services and capital goods, etc, which were not a part of the monthly or quarterly returns, are a cause of concern,” he said.

Along with Form-9, those having annual turnover over Rs 20 million will also have to file Form-9C. This is meant for reconciliation between the GSTR-9 and annual financial statements of companies.

Abhishek Jain, partner at consultancy EY, said businesses are struggling to collate some of the information disclosures required in the annual return and the GST audit report. “This essentially being on account of non-maintaining of such data due to suspension of (the earlier) GSTR-2,” he said. GSTR-2, suspended by the GST Council, was basically a form for purchases; also a GSTR-3, an output-input return. 

Singh said the problems for multinational companies will be much more, as these do not keep state-wise annual financial statements. Thye would now have to reconcile it state-wise as well. 

“One of the critical aspects of the coming GST audit for multinationals would be to bifurcate the financials (including trial balance) GSTIN-wise, to undertake multiple reconciliations as mandated by the GST audit format” he said.