GSTR-9 filing relaxed by GST Council; Should I still file GSTR-09?

The Finance Ministry made a historic decision on 20 September 2019, Friday, to reduce corporate tax rates during the middle of the fiscal year. While businesses across the country applauded that move, another announcement was made the same day in the evening by the GST Council providing relief from GSTR-9 filing.

All taxpayers having an annual turnover up to Rs 2 crore during FY 17-18 and FY 18-19, have now an option to choose not to file the GSTR-9. Further, these forms will undergo more simplification in the coming days. 

MSMEs or small taxpayers with turnover below Rs 2 crore currently account for over 80% of the total GST taxpayer base in India. The relief comes at a point when the compliance for annual return filing is not picking up for the first year of return filing, i.e. FY 2017-18. It was observed in the initial weeks of August 2019 that only 17% of applicable taxpayers had filed GSTR-9 for FY 17-18, despite several extensions given. 

Many trade representations were received by the Union FM indicating that the filing of annual returns was a humongous task. Now, such GSTINs are given a choice of whether or not to file the annual return in GSTR-9 form. However, they must continue to file annual returns for FY 2019-2020 onwards.

While such small businesses can choose to leave out the GSTR-9 filing for two fiscal years, it is advised to exercise due precaution before making that decision. Filing GSTR-9 has its advantages. It not only helps in increasing the compliance rating but also acts as a statutory document useful for gaining the confidence of your creditors and bankers.

Moreover, this exemption will not necessarily spare any business from conducting the yearly reconciliation of its accounted data with the regular GST returns in GSTR-1, 2A and GSTR-3B. Hence, no taxpayer must stop the reconciliation exercise, considering that GSTR-9 filing is now not an obligation.

Also Read: How to Best Utilise the Three Month Extension for GSTR-9

Businesses should further understand that the non-filing of GSTR-9 will not ideally excuse them of any potential notices. The tax authorities continue to be vigilant and will be able to take action based on the regular GST returns.

Every story has its flipside. Likewise, relief from GSTR-9 filing has one too! The accounts and income tax returns of FY 2017-18 are closed; there is no scope for manipulation. However, the accounts and income tax returns of several businesses are yet to be finalised for FY 2018-19.

There is scope left for tax evasion as businesses may resort to illegal means to surpass any legal barriers of GSTR-9 filing. It can be carried out by potential manipulation of figures of annual turnover to claim exemption. It is cautioned that such actions can have serious legal consequences on the business entity.

Similar to the small taxpayers, composition dealers have also been granted an unconditional waiver from the filing of the annual returns in GSTR-9A for the fiscal years 2017-18 and 2018-19.

It is a wise move since GSTR-9A did not have any implications on the tax payment. It was a mere declaration of the consolidated yearly sales figure and taxes paid on it. Accordingly, in the future, this form is most likely to be done away since the form GSTR-4 has been altered to allow an annual declaration of turnover and tax details.

Large taxpayers must continue to comply and close annual return filing both in GSTR-9 and GSTR-9C by 30 November 2019 for FY 17-18 and the years following that. No clarity is received on the areas to be taken up for the simplification of the formats of annual returns and by when this will be done.

Till such time, it must be kept in mind that the GST annual returns once filed cannot be revised. Hence, declare details carefully after a thorough GST reconciliation between the accounted data and the GST Returns filed for FY 2017-18 and FY 2018-19.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in