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PRACTICAL INSIGHTS– GST ANNUAL RETURN FOR FY 17-18

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Presentation on theme: "PRACTICAL INSIGHTS– GST ANNUAL RETURN FOR FY 17-18"— Presentation transcript:

1 PRACTICAL INSIGHTS– GST ANNUAL RETURN FOR FY 17-18
ICSI INSTITUTE, HYDERABAD | JULY 01, 2019

2 CONTENT Approach to GST Annual Return GST Annual return & Issues
Key action points for FY GSTR 2A reconciliation, Tax summary, DRC-03 - Payment for additional liability

3 APPROACH TO GST ANNUAL RETURN

4 APPROACH TO GST ANNUAL RETURN
KEY DATA REQUIREMENTS (Part-1/2) S.No Particulars 1 Tax positions adopted by the company during implementation. Copy of the GST impact study report or any other opinion 2 Audited financial statement -PAN India 3 Excel version of audited financials - Linked to TB 4 Summary sheet providing the registrations and operations 5 Copy of registration certificates for all the registrations 6 Reconciliation of State wise outward supplies and tax liabilities 7 Reconciliation of State wise purchases/expenses with Input tax credit 8 Extract of the GSTR-3B returns along with workings 9 Extract of the GSTR-1 returns along with workings 10 Extract of the GSTR-6 returns, if any 11 Extract of Tran-1 and Tran-2 along with workings

5 APPROACH TO GST ANNUAL RETURN
KEY DATA REQUIREMENTS (Part-2/2) S.No Particulars 12 Copy of ST3/VAT/ER1 filed for the period April, 2017 to June, 2017 13 Extract of the Cash ledger from GSTN Portal 14 Extract of the Credit Ledger from GSTN Portal 15 Extract of the liability Ledger from GSTN Portal 16 Extract of GSTR-2A from GSTN portal 17 Reconciliation of GSTR-2A and credit availed in GSTR-3B 18 Consolidated GSTR 9 as extracted from GSTN portal 19 Consolidated GSTR 1 and 3B extracted from GSTN portal 20 GSTR 3B Vs GSTR 1 21 Summary of Taxes paid 22 Due dates and actual date of filing GST returns

6 APPROACH TO GST ANNUAL RETURN
EXTRACTION OF FINANCIAL INFORMATION STEP-1 – EXTRACTION OF STATE WISE REVENUE STEP-2 – EXTRACTION OF STATE WISE EXPENSES STEP-3 – EXTRACTION OF LEDGERS & ACCOUNTS Extract revenue ledgers and perform the classification as below - Revenue for April to June 2017; Revenue for July to Mar 2018; Divide the revenue into State GSTINs; Break up of revenue as per HSN or tax rates; Identify line items towards credit notes/debit notes and discounts; Classification of revenue ledger into : Taxable Zero rated Exempted/Nil-rated Non GST supply RCM supplies Extract expense ledgers and perform the classification as below - Expenses for April to June 2017; Expenses for July to March 2018; Divide the expenses into State GSTINs; Identify line items attracting RCM; Classification of expenses into: Raw materials Input Services Capital Goods Other Inputs RCM supplies Extract following records - Audited Financial Statements; Trial Balance; ITC ledger; Statement of related party transactions; Fixed assets register; Unbilled revenue at the beginning and end of the year; Advances at the beginning and end of the year; GST payment ledger; Accounts payable; Others as applicable. 6

7 STATE WISE GST ANNUAL RETURN STATE GSTIN RECONCILIATION REPORT
APPROACH TO GST ANNUAL RETURN BALANCES AS PER BOOKS AND GST RETURNS CORPORATE BOOKS OF ACCOUNTS FINANCIAL STATEMENTS Consolidated Profit & Loss Account State wise P&L Account Consolidated Balance Sheet State wise balances ACCOUNTING LEDGERS Consolidated Income Ledgers State wise Income Ledgers Consolidated Expense Ledgers State wise Expense Ledgers STATE WISE GST ANNUAL RETURN State wise GST Liability State wise Input tax Credit Ledger State GSTR-1 State wise Credit Ledger State wise Input tax Credit State wise accounts receivables State GSTR 3B State Wise RCM Liability STATE GSTIN RECONCILIATION REPORT Note : The Company shall provide appropriate reasons for any non-reconciliations 7

8 APPROACH TO GST ANNUAL RETURN
REVIEW OF TAX POSITIONS 1) Review of outward supply contracts 2) Review of Time of Supply 3) Review of Place of Supply 4) Review of Tax rate applicable on output supply 5) Review of Valuation adopted 6) Review of ITC eligibility 7) Review of GST compliance status 8) Review of GST Liability under RCM 8

9 APPROACH TO GST ANNUAL RETURN AND AUDIT
RECONCILIATIONS Reconciliations are the critical part of a GST Annual return, to ascertain the differences between the following: Outward Supplies GSTR-1, GSTR-3B and books of accounts (Outward supplies register) Adjustments to the turnover (unbilled revenue, unadjusted advances, debit/credit notes) GSTIN wise reconciliation of tax liability related General Ledger balances with tax liability reported in GST returns Inward GSTIN wise ITC availed in GSTR-3B and books of accounts ITC as per GSTR-3B and ITC as per GSTR 2A ITC appearing as per GSTR 2A vs 2A amount appearing in GSTR 9. GST Annual Returns and Audit Certification

10 GST ANNUAL RETURN

11 gst Annual return The Government has notified Form GSTR- 9 for GST annual return to be filed by August 31, 2019 (extended due date for FY ). The various sections of the annual return is listed below: Other Information – particulars of tax demands, refunds and HSN summary Basic Details of the Company and FY 06 01 Particulars of previous FY declared in returns of April to September of current FY 05 02 Details of Outward & inward supplies made during FY Liability paid in cash and through ITC, as declared during FY 04 03 Details of ITC as declared during FY or next FY for 17-18

12 CHECKS AND BALANCES- Annual return FILING
Outward supplies Inward supplies Tax payable/ Tax paid Reconciliation for data as per system computed GSTR 9 and corrected GSTR 9 If the changes is more than 20% of the system computed GSTR-9, the data fields would be in red Supplies after adjustments Additions in correct tax types CGST=SGST Disclosure of omitted exempt/nil/non-GST/no supplies Total in Part V to match with reconciled supplies Final check of totals with consolidated GSTR1, 3B, 9 and reconciliation Multiple tax rates in HSN to be reported separately and total to match with reported supplies Taxable value, Tax rate and Tax to match in HSN Final check at GSTIN portal after uploading Break up of ITC to match with GSTR 3B No additional availment of ITC in GSTR 9 ITC availed in FY to be reported in GSTR 2A and Part V- transactions Reversals in FY in Part V Import of goods to be reported in GSTR 2A reconciliation and ITC availed in GSTR 3B break up segment ISD credits Tran-I and II credits Final check of totals with consolidated GSTR 3B, 9 and reconciliation Multiple tax rates in HSN to be reported separately Taxable value, Tax rate and Tax to match in HSN* Final check at GSTIN portal after uploading Tax payable as per GSTR 3B plus additional liability Difference between payable and paid through ITC and cash to be settled through DRC-03 Tax summary control sheet for future references Differential taxes (including interest) on supplies for which GST is paid during GSTR 3B of FY Final check at GSTIN portal after uploading *Mandatory to report HSN code at two digits level for taxpayers having annual turnover in the preceding year above ₹ 1.50 Cr but up-to ₹ 5.00 Cr and at four digits‘ level for taxpayers having annual turnover above ₹ 5.00 Cr. This summary details are required to be declared only for those inward supplies which in value independently account for 10 % or more of the total value of inward supplies

13 GSTR-9 press release - Clarification by government

14 Press Release Clarification
GSTR 9 Clarifications Sl.NO. Press Release Clarification BDO Comments 1 Information contained in FORM GSTR-2A as on May 1, shall be auto-populated in Table 8A of FORM GSTR- 9 Registered persons were given an option to make any adjustments pertaining to FY by March, 2019 returns and consequently the cut-off date for GSTR 2A figures in GSTR 9  is reckoned as May 1, 2019. However, practically we find that in few cases figures are being updated till date. 2 Input tax credit on inward supplies shall be declared from April 2018 to March 2019 in Table 8C of FORM GSTR-9. As per GSTR 9 notified format the period for availment of ITC has been provided as April to September 2018 for FY However, as the due date was extended upto March 2019, it has been correspondingly clarified that ITC availed  upto March 2019 may be disclosed. 3 Particulars of the transactions for FY declared in returns between April 2018 to March 2019 shall be declared in Pt. V of FORM GSTR-9. Such particulars may contain details of amendments furnished in Table 10 and Table 11 of FORM GSTR-1. Similar to above clarification, this pertains to Outward supplies. 4 It may be noted that irrespective of when the supply was declared in FORM GSTR-1, the principle of declaring a supply in Pt. II or Pt. V is essentially driven by when was tax paid through FORM GSTR-3B in respect of such supplies. If the tax on such supply was paid through FORM GSTR-3B between July 2017 to March 2018 then such supply shall be declared in Pt. II and if the tax was paid through FORM GSTR-3B between April 2018 to March 2019 then such supply shall be declared in Pt. V of FORM GSTR-9. Below is the manner of disclosure in GSTR 9: Part II: Turnover of FY disclosed in GSTR 3B of FY 17-18 Part V: Turnover of FY disclosed in GSTR 3B of FY 18-19 Note: Date of disclosure in GSTR 1 is not a basis for the above.

15 Press Release Clarification
GSTR 9 Clarifications Sl.NO. Press Release Clarification BDO Comments 5 Any additional outward supply which was not declared by the registered person in FORM GSTR-1 and FORM GSTR-3B shall be declared in Pt.II of the FORM GSTR-9. Such additional liability shall be computed in Pt.IV and the gap between the “tax payable” and “Paid through cash” column of FORM GSTR-9 shall be paid through FORM DRC-03. It has been clarified that all the outward supplies made during FY which was neither declared in GSTR-1 nor GSTR-3B is to be disclosed in Pt. II of      GSTR-9. The additional liability is to be discharged through Form DRC-03. 6 Many taxpayers have reported a mismatch between auto-populated data and the actual entry in their books of accounts or returns. One common challenge reported by taxpayer is in Table 4 of FORM GSTR-9 where details may have been missed in FORM GSTR-1 but tax was already paid in FORM GSTR-3B and therefore taxpayers see a mismatch between auto-populated data and data in FORM GSTR-3B. It may be noted that auto-population is a functionality provided to taxpayers for facilitation purposes, taxpayers shall report the data as per their books of account or returns filed during the financial year. It has been clarified that the auto populated data need not be taken as the basis for the GSTR-9 and that it is only a facilitation measure. GSTR-9 is to be filed taking the books of accounts and returns as the basis.

16 Press Release Clarification
GSTR 9 Clarifications Sl.NO. Press Release Clarification BDO Comments 7 Many taxpayers have represented that Table 8 has no row to fill in credit of IGST paid at the time of import of goods but availed in the return of April 2018 to March Due to this, there are apprehensions that credit which was availed between April 2018 to March 2019 but not reported in the annual return may lapse. For this particular entry, taxpayers are advised to fill in their entire credit availed on import of goods from July to March 2019 in Table 6(E) of FORM GSTR-9 itself. In the current notified GSTR 9 format, there is no separate table available to disclose IGST paid on imports pertaining to FY for which ITC is availed in FY It has been clarified that such imports may be disclosed in Table 6(E) of GSTR 9. 8 Payments made through FORM DRC-03 for any supplies relating to period between July 2017 to March 2018 will not be accounted for in FORM GSTR-9 but shall be reported during reconciliation in FORM GSTR-9C. It has been clarified that the additional liability which is paid through DRC-03 is to be reported only as a reconciliation item in GSTR-9C and not in GSTR-9.  

17 GST ANNUAL RETURN – Issues

18 Issues in GST annual return
Consolidated GSTR 2A vs 2A data as per GSTR 9? HSN of inward supplies on which ITC is eligible, availed or not availed, ineligible? 1 3 5 2 4 Segregation- FY and FY ? Unadjusted advances as per books vis a vis declared in returns Multiple GSTINs- wrong ITC availment and reversal?

19 Issues in GST annual return
Segregate the value of inward supplies subject to RCM for unregistered/ notified supplies? Pre and post Oct 13,2017 ITC availed post March 2018 in April 2018 to March 2019 and possible solutions for omission, if any 6 8 10 7 9 Wrong adjustment of advances and potential additional liability and disclosures Debit/credit notes adjustments Exempt/Nil rated/non-GST supplies -not declared in monthly return, is it required to disclose in annual return? Ineligible ITC not shown GSTR 3B Tran I and II- f any credit is denied by department, should it be net off or gross?

20 Issues in GST annual return
Breakup of ITC Break-up of ITC availed as inputs, input services and capital goods would be required. This would be an onerous task since there was no such requirement in GSTR 3B. ITC Lapse ITC lapsed in the FY on account of the difference in ITC available as per GSTR 2A and ITC actually availed. Classification- Eligible and Ineligible Amount of ITC reclaimed during FY needs to be disclosed separately. Identification of re-claimed credit out of credit availed in GSTR 3B would be difficult ITC reclaimed Specific disclosures Following disclosures would not be available directly from GSTR 3B or GSTR1 and hence working for the same may have to be done: HSN wise summary of inward supplies; Goods sent on approval basis but not returned Inward supplies from composition dealers Demands and Refunds Late fees paid – Gross or net? Refund -sanctioned/ refunded/pending till September 30,2018 or as on March 31,2018? Same for demands also SCNs not be covered. Only order in original Appeal for rejected refunds not covered. Anti Profiteering A verification has to be signed stating that the benefit of reduction has been passed on to the recipient of supply

21 Key ACTION POINTS FOR fy 2017-18

22 Key action points- Documentation
UNAVAILED ITC FOR FY April 2018 to March 2019 Beyond the due date of March 2019-GSTR 3B, the Company may not be statutorily eligible for these credits Vendor invoices/debit notes dated on or before 31 March 2018 The Company shall have to ascertain their entitlement and credits availed pertaining to FY 2017–18. July 2017 to March 2018 March 2019 onwards [Section 16(4) of the CGST Act, 2017]

23 Key action points- DOCUMENTATION
RECTIFICATION OF ERRORS/ OMISSIONS IN RESPECT OF OUTWARD SUPPLIES Till March 2019 Beyond April 1, 2019 , the Company may not be statutorily eligible to make any rectification for outward supplies made in FY Original outward supply invoices/debit notes dated on or before 31 March 2018 Any rectifications for details of outward supplies made and declared in returns filed during FY shall be allowed latest by the due date for filing the said return for the month of March 2019 July 2017 to March 2018 April 1, 2019 onwards [Proviso to Section 37(3) of the CGST Act, 2017]

24 Key action points- DOCUMENTATION
ISSUANCE OF CREDIT NOTE Beyond 30 September 2018, the Company may not be eligible to recoup the credits in respect of such credit notes April 2018 to September 2018 Original outward supply invoices/debit notes dated on or before 31 March 2018 The credit notes for any supply made in FY are required to be issued and disclosed by the Company latest by 30 September 2018 Facility for issuance of consolidated credit / debit notes in respect of multiple invoices issued in a Financial year has been introduced which was not available earlier July 2017 to March 2018 October 2018 onwards [Section 34(2) of the CGST Act, 2017]

25 GSTR-2A-Reconciliation

26 GSTR- 2A RECONCILIATION
PARTICULARS AMOUNT(INR) a) ITC as per GSTR 2A Add: Credit availed in books not available in GSTR 2A Less: Credit as per GSTR 2A which are ineligible and absorbed as cost in books Less: Credit availed in FY Add: Credit availed in books and GSTR 3B of FY , but vendor uploaded in FY and appearing in GSTR 2A of FY Less: Amount reflected higher in 2A but invoice no in both books and GSTR 2A is correct Add: Amount reflected higher in books but invoice no in both books and GSTR 2A is correct Less: Accounted in books of (doc date and posting date in 18-19) and availed in GSTR 3B of FY but ITC is reflected in GSTR 2A of FY Add: Credit availed through GSTR 2 and accepted it and is not reflected in GSTR 2A Less: RCM supplies from registered parties , who have uploaded in GSTR 2A as supplies on which reverse charge is applicable and the recipient has paid GST under RCM Add: Vendors who have not filed GST returns, but availed in books Sub total of (a) b) Amount as per GSTR 3B of FY Difference: Eligible credit not availed in GSTR 3B (a-b)

27 TAX SUMMARY

28 TAX SUMMARY Ineligible ITC availed
ITC omitted to be reversed for exempt supplies ( Nil-rated, Non-GST other than interest income) Discount Received from vendor, Scheme benefits (Corresponding ITC not reversed)- GST credit notes Ineligible ITC availed and utilised and reversed voluntarily- Interest to be paid for the period RCM to be paid for invoices from unregistered prior to Oct 13, but accounted in books later ITC not reversed for non-payment to vendor within 180 days and interest not paid RCM not paid in other cases Interest not paid for belated reversal of ITC in relation to vendor payment more than 180 days Short payment, if any Reversal of excess ITC availed and potential interest, if any Interest to be paid for belated filing of GSTR 3B- Gross vs Net Wrong GST rate adopted and additional liability Tran credits voluntarily reversed, but interest not paid for the period between date of wrong utilization and reversal Advances adjusted but not reflected in GSTR 3B and excess payment Ineligible Tran credits to be reversed Credit notes not reflected in GSTR 3B and excess payment Supplies omitted to be declared in GSTR 3B and to be reported in GSTR 9 and applicable GST, if any Outward supplies as per Books higher than GSTR 3B, but no difference in tax Inter head adjustments Credit notes on sales, wrongly reflected as ITC in GSTR 3B which warrants adjustment in output

29 TAX SUMMARY RCM wrongly availed twice
Excess reporting of advance received excessively due to report issues but with no tax effect RCM availed on ineligible items Purchase returns wrongly shown as output liability instead of reversal of ITC ITC not reversed for goods lost, written off, physical inventory difference, FOC supplies 180 days reversal wrongly shown as ITC reversal instead of addition to output liability GST not paid on canteen recoveries Stock transfer /Purchases wrongly adjusted against output in GSTR 3B instead of availing ITC GST not paid on notice pay Outward supplies reported in wrong GSTIN instead of respective GSTINS GST required to be paid on wrong claim of exemptions Interest for considering wrong time of supply in RCM Advances wrongly adjusted in another GSTINs instead of respective GSTINs – Excess payment in One GSTIN and short payment in another GSTIN GST wrongly paid on exports and adjusted the excess tax voluntarily in subsequent period GST returns Advances adjusted twice and excess adjustment of GST Advances received wrongly disclosed in another GSTIN instead of respective GSTINs Excess tax paid under wrong head (Refund to be claimed) GST on ocean freight not paid- CIF vs FOB Vs CHA Additional ITC to be reversed, upon calculating the Annual ITC reversal and monthly reversed Additional GST to be paid on sale of fixed assets

30 TAX SUMMARY Unadjusted advances (Received prior to the cut-off date Nov 13, 2017) on which GST was omitted to be paid at the time of receipt of advances Interest to be paid for supplies omitted to be disclosed in the respective GSTR 3B, but added and disclosed along with subsequent GSTR 3B ITC wrongly availed in wrong GSTINS which warrants reversal and availment of credit in the correct GSTIN Advance excessively adjusted due to report issues but with no tax effect GST not paid on cross charge Advance adjustment has been wrongly shown as advance received and excess tax reported

31 DRC-03- Payment for additional liability

32 DRC-03 FORM GST DRC- 03 is the form used to give intimation of payment made voluntarily or made against the show cause notice (SCN) or statement. Any balance tax liability if not paid while filing GSTR-3B needs to be paid while filing GSTR-9. Available balance in electronic cash ledger is used to make payment of outstanding liabilities. In case, the liabilities are higher than the available cash balance, a challan has to be created for making additional cash payment.

33 QUESTIONS?... 33

34 BDO ENABLE GST BDO India’s ASP-GSP Solution
BDO Enable GST is aimed at ensuring Complete Accuracy, Tax Analytics, Custom Solution, Confidentiality and Comprehensiveness while discharging compliance requirements. Complete Accuracy Tax Analytics and Reporting Customisable Services Confidentiality Comprehensive Managed Services Transmission of accurate processed business data to the GSTN Portal with intelligent validations and business rules processing Sophisticated data processing techniques to yield information from large and multi-source data sets Scalable and customisable ASP technology solution ensures seamless integration with ERP/software systems as per specific enterprise needs Adheres to data security standards duly endorsed by the GSTN and adapts to the best industry practices as defined under ISO 27001:2013 requirements BDO’s PAN India presence and team of GST domain experts offers complete managed compliance services (including assessment and related offerings to meet on-going changes in GST law) Live URL :

35 SUMEET SETHIA EXPERTISE SUMMARY
Sumeet is a member of the Institute of Chartered Accountants of India (ICAI), with 3+ years of experience in assisting array of clients in the field of Indirect Tax, compliance management, Due diligence and GST audit. Sumeet has a good experience over auditing and compliances during his article ship period for various big corporate clients. SELECT KEY PROJECTS Offered end-to-end advisory support to implement seamless and tax efficient structures for Indian Corporates for its GST Implementation. End-to-end GST Compliance, Advisory, Refund, Litigation support, assessment and audit services to several major clients such as IT, Hospital chains, Life Insurance, Banking etc. Involved in various assignments related to monthly compliances related to GST. Instrumental in Indirect tax health check up for an International Hospitality unit in Jaipur. In his previous role, Sumeet was engaged in various projects including post-implementation review of ERP software, designing tax models and reports on the software review. Supported clients belonging healthcare sector on various assignments from an indirect tax perspective focusing on the potential risks and savings. Sumeet has worked on various accounting software like Tally, SAP, Oracle etc. Sumeet Sethia Assistant Manager Indirect Tax M: E: AREAS OF EXPERTISE Consumption Taxes, including GST India domestic indirect taxes Bahrain VAT INDUSTRY EXPERTISE IT/ITES Manufacturing Hospitality Sector Life Insurance EDUCATION & PROFESSIONAL QUALIFICATIONS Chartered Accountant Bachelors of Commerce (Accounts & Taxation)

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