GSTR-9C: Reconciliation Statement and Audit Requirement

GSTR-9C is a reconciliation statement that bridges the gap between a taxpayer’s GST returns and their audited financial statements. For large businesses with significant GST turnover, GSTR-9C is an important annual compliance requirement. Here is what it is, who needs to file it, and what it involves.

What is GSTR-9C?

GSTR-9C is a reconciliation statement that compares the figures declared in GSTR-9 (the annual GST return) with the figures in the taxpayer’s audited financial accounts. It highlights any discrepancies between what was reported in monthly GST returns and what is reflected in the audited books.

GSTR-9C must be certified by a Chartered Accountant or Cost Accountant. The professional must verify that the reconciliation statement is accurate and consistent with the audited financials.

Who Must File GSTR-9C?

GSTR-9C is mandatory for taxpayers with aggregate annual turnover exceeding **Rs. 5 crores** in the relevant financial year. For taxpayers below Rs. 5 crores, GSTR-9C is not required.

Note: Until FY 2020-21, GSTR-9C also involved a full GST audit. From FY 2021-22 onward, the GST audit by CA/CMA was removed, and GSTR-9C became a self-certified reconciliation statement (with optional CA certification for larger filers). However, many states and businesses continue to get CA certification for accuracy and risk management.

Due Date for GSTR-9C

GSTR-9C is filed along with GSTR-9. The due date is **December 31** of the following financial year. For FY 2024-25, the due date is December 31, 2025.

What Does GSTR-9C Reconcile?

GSTR-9C reconciles the following between GSTR-9 and audited accounts:

– **Turnover:** Is the turnover in GSTR-9 consistent with the turnover in audited financials? Common differences include advances, exempted supplies, and non-GST income.
– **ITC:** Is the ITC claimed in GSTR-9 consistent with ITC in the audited accounts? Differences arise from ITC on capital goods, blocked credits, and timing differences.
– **Tax Paid:** Is the tax paid in GST returns consistent with the tax liability as per books?

Any unexplained differences are flagged as potential liabilities or excess payments.

Structure of GSTR-9C

GSTR-9C has two parts:

– **Part A:** Reconciliation Statement (Figures from GSTR-9 vs audited accounts for turnover, ITC, and tax).
– **Part B:** Certification (by the CA/CMA or the taxpayer themselves, confirming accuracy of the reconciliation).

Practical Example

Nexus Pharma Ltd has a turnover of Rs. 18 crores in FY 2024-25. Its GSTR-9 shows a taxable turnover of Rs. 17.8 crores, while its audited accounts show Rs. 18 crores. The Rs. 20 lakh difference relates to an advance received for a supply due in April 2025 (next year). The GSTR-9C reconciliation explains this difference, and no additional tax liability arises since the supply has not yet occurred.

Consequences of Non-Filing

If GSTR-9C is not filed by the due date:

– Late fee: Rs. 200 per day (Rs. 100 CGST + Rs. 100 SGST).
– Maximum late fee: 0.25% of the taxpayer’s turnover in the state.

Persistent non-compliance can also trigger a special audit by a nominated CA under Section 66 of the CGST Act.

Key Takeaways

– GSTR-9C is a reconciliation statement for taxpayers with annual turnover above Rs. 5 crores.
– It reconciles figures in GSTR-9 with audited financial statements.
– Filed along with GSTR-9, due by December 31 of the following year.
– From FY 2021-22, CA certification is no longer mandatorily required (self-certification is allowed), though many taxpayers continue to get it certified.
– Covers turnover reconciliation, ITC reconciliation, and tax paid reconciliation.
– Late fee: Rs. 200 per day up to 0.25% of state turnover.

GSTR-9C is the final layer of GST compliance assurance for large taxpayers. Preparing year-round reconciliation working papers makes the December filing process manageable and accurate.