The Hon’ble Finance Minister, in Budget 2021-22, hailed as a ‘development-oriented’ and ‘visionary’ budget amid the pandemic-induced disruptions, inter alia, announced multiple changes to the Goods and Services Tax (“GST”) framework. The changes have been proposed vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“CGST Act”) and the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), in order to ease doing of business, curb input credit frauds, safeguard Government revenues and to provide statutory backing to debated Rules.
This GST Charcha deciphers into recent changes in GST Laws made vide Clause No. 101, 102 and 112 of the Finance Bill, 2021 with respect to scrapping GST Audit by professionals and moving to self-certification.
Section 35(5) of the CGST Act proposed to be omitted:
“35. Accounts and other records:
(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.
Provided that nothing contained in this sub-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.”
Section 44 of the CGST Act proposed to be substituted:
“44. Annual return:
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.”
Section 168(2) of the CGST Act proposed to be amended:
“168. Power to issue instructions or directions.
The Commissioner specified in clause (91) of section 2, sub-section (3) of section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and (4) of section 35, sub-section (1) of section 37, sub-section (2) of section 38, sub-section (6) of section 39, section 44, sub-sections (4) and (5) of section 52, sub-section (1) of section 143, except the second proviso thereof, clause (l) of sub-section (3) of section 158 and section 167 shall mean a Commissioner or Joint Secretary posted in the Board and such Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.”
Discussion and Comments:
Scrapping GST Audit by professionals and moving to self-certification:
It has been proposed to omit Section 35(5) of the CGST Act and substitute Section 44 of the CGST Act, so as to remove the mandatory requirement of getting annual accounts audited by a chartered accountant or a cost accountant and furnishing of audited reconciliation statement in Form GSTR-9C. Now, annual return in Form GSTR-9 is to be provided on self-certified basis with reconciliation statement.
Further, a proviso has been inserted to provide that the Commissioner may exempt any class of persons from filing annual returns upon receiving such recommendation from the GST Council.
Furthermore, the due date for filing annual return under Section 44 of the CGST Act, which was earlier prescribed as December 31 of every year, has now been amended in a manner that the same will be prescribed by way of notifying rules.
Correspondingly, Section 168 of the CGST Act is also proposed to be amended to enable the jurisdictional commissioner to exercise powers under Section 44 (i.e., annual return) of the CGST Act.
This amendment has shifted the onus of responsibility of reconciliation from auditors to taxpayers and may be taken as a step towards ease of doing business. However, certified reconciliation GSTR-9C ensured that the accounts are audited correctly and could prove fruitful in reducing and tackling litigation.
Importantly, it is to be noted that these provisions are not effective yet and therefore GST audit and filing of GSTR-9C is required for FY 2019-20 on or before February 28, 2021 (unless otherwise extended) if aggregate turnover is above Rs. 2 crore in case of GSTR-9 and Rs. 5 crore in case of GSTR-9C.
To know more, kindly see our video “GST Audit proposed to be Omitted - Not Advisable - Union Budget 2021” by CA Bimal Jain-
Note: Amendments carried out in the Finance Bill, 2021 will come into effect from the date when the same will be notified and when the said clause also gets concurrently notified with the corresponding amendments passed by the respective States and Union territories in respective SGST/ UTGST Act.
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.