Clarifications regarding Annual Return and Reconciliation Statement

(Refer Notification No. 31/ 2019-Central Tax dated June 28, 2019 and Press Release dated July 3, 2019)

Clarifications regarding annual return and reconciliation statement

• Filing of reconciliation statement is mandatory for taxpayers (in single PAN) whose turnover for the period July 2017 to March 2018 exceeds ₹ 2 crores in all States.
• Annual return should reflect the correct values of outward supplies and tax payable even if the same does not match with FORM GSTR-1 and FORM GSTR-3B. Additional liability for Financial Year (‘FY’) 2017-18 not declared in FORM GSTR-1 and FORM GSTR-3B, can be declared in annual return and paid through FORM GST DRC-03.
• No Input Tax Credit (‘ITC’) can be reversed or availed through the annual return. If taxpayers are liable to reverse any ITC, they can do the same through FORM GST DRC-03.
• The excess tax paid, can be reflected in annual return and refund claim may be filed in FORM GST RFD-01.
• Details of FORM GSTR-2A generated as on May 1, 2019 shall be auto-populated in Table 8 of annual return. The purpose of Table 8 of annual return is collation of information by Government for settlement purposes and taxpayer need not be concerned with the values reflected in this table.
• The taxpayers can declare all data / details to the best of their knowledge and records in FORM GSTR-9 even if such information was not part of FORM GSTR-1 and FORM GSTR-3B. The data is only for information purposes and reasonable / explainable variations in the information reported in these tables, will not be viewed adversely. 

NITYA Comments:

This is an important clarification since the taxpayers were finding it difficult to bifurcate credit into inputs, input services and capital goods. However, similar clarification is not issued for expense wise breakup in reconciliation statement.

• In relation to expense wise summary, only expenses on which credit has been availed needs to be reconciled.
• Reverse charge for FY 2017-18 paid in FY 2018-19 is not required to be reflected in annual return of FY 2017-18 and will be reflected in annual return of FY 2018-19.
• Role of Chartered Accountants signing reconciliation statement is limited to reconciling the values declared in annual return with the audited annual accounts of the taxpayer.