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GST Annual Return (GSTR 9) becoming a nightmare for Manufacturing industry - Keshav R Garg


GST Annual Return (GSTR 9) becoming a nightmare for Manufacturing industry
Explains – CA Keshav R Garg, Partner,  K D & Associates India



With about 60 days left for filing of annual return (GSTR 9 and GSTR 9C) by the taxpayers for FY 2017-18, it is turning out to be a nightmare especially for the manufacturing industry. There had been various substantial issues which are leading to total chaos while finalizing the figures for annual return. Here are some of the practical challenges, industry is facing which are not easy to resolve:

1.       Reconciliation of Input Tax Credit claimed with Input Tax Credit declared by the corresponding vendors. Most taxpayers have claimed ITC based upon the tax invoice in their possession. Since Government itself deferred matching concept during monthly filing for FY 2017-18, introduction of same in GSTR 9 is leading to lot of manual clerical work.  

2.       Preparation of GSTIN financial statements including Balance Sheet, Profit & Loss statement etc. as GSTR 9C requires reconciliation between audited financial statement of the state and the GSTR 9 (annual return).

3.       With most of the manufacturing entities having multiple business units, the issue of cross ITC is grave. For instance A company which had Unit A and Unit B with different GSTIN and has bought goods in Unit A, the vendors have in some cases declared tax in respect of Unit B instead of Unit A. This is leading to huge deviations in the ITC reconciliation. Cross invoicing is also now impossible due to introduction of e-way as the goods have been consumed in Unit A, hence there are no goods for movement as such.

4.       The monthly reconciliation as available on the portal has different figures when compared with figures data being auto populated in GSTR 9 (Annual Return). For instance the ITC as per GSTR 2A is different in monthly reconciliations with those auto populated in GSTR 9. Under this circumstances, taxpayer is facing difficult time in deciding the correctness of the data.

5.       Bifurcation of Input Tax credit claimed input Inputs, Capital Goods and Input Services which have not been done during filing of monthly return is a new task taxpayers have been assigned with.

6.       The date for filing of return for goods sent to job worker for FY 2017-18 (ITC-04) has been extended up to 30.06.2019. Till the time all these returns are not filed by the taxpayers, auditors shall not be in the position to declare correct liability. Since last date for audit is also 30.06.2019 and there are number technical issues in ITC -04 at the portal, it seems to be a difficult task to meet same deadline for both tedious tasks.

7.       With balance sheets for FY 2017-18, already finalized as per other laws, the  adjustment entries of findings made by GST auditors in respect of the same year would result into “prior period items” in the financial statements for FY 2018-19.

8.       Preparing the HSN wise summary of the inputs received during 2017-18 is something which will lead troubles for the taxpayers. Although government has made it mandatory that only 10% of them needs to be reported, but the intent of matching the inputs with the output made by the taxpayer would lead to classification issues.

Looking at the scenarios above it looks that finalizing GSTR 9 and GSTR 9C would be difficult task given the fact that consultants have so many other dead lines to meet during this tenure of two months.

Regards
Keshav R Garg
9888090008

Comments

  1. Sunil Dandekar28 April 2019 at 22:00

    The basic issue of determining turnover for the year is creating a problem as table 4 and 5 of GSTR-9 requires whole year turnover as per accounts as per the amended GSTR-9 and table 10 and 11 again requires to state turnover of 17-18 which is reported in 18-19 returns and determining turnover for the year adding both figures resulting in duplication of turnover. Any clarification on this ?

    ReplyDelete
  2. Suresh Jacob8 July 2019 at 02:48

    We do agree with your opinion on the affects of annual return on manufacturing industries as they have been struggling to find some way out of complex filing norms. Here i would suggest to visit saginfotech.hatenablog.com for some more insight on GST.


    ReplyDelete

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