Notified provisions for scrapping GST Audit by professionals and moving to self-certification

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Background:

Section 110 and 111 of the Finance Act, 2021 (“Finance Act”) amended Section 35 and 44 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) respectively, 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.

Following notification has been issued to effect the same:

Notification:

The CBIC vide Notification No. 29/2021- Central Tax dated July 30, 2021 appointed August 1, 2021 as the date for appointment of Section 110 and 111 of the Finance Act shall come into force.

Section 110 of the Finance Act omitted sub-cluse (5) of Section 35 of the CGST Act which reads as under:

“(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 111 of the Finance Act substituted Section 44 of the CGST Act to read as under:

“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.”

Our Comments:

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.

To know more, kindly see our video “GST Audit proposed to be Omitted – Not Advisable – Union Budget 2021” by CA Bimal Jain- https://www.youtube.com/watch?v=a9MBEKDynLs

The Notification can be accessed at: https://egazette.nic.in/WriteReadData/2021/228607.pdf

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