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Checklist to ensure a smooth GST Annual Return & Audit journey


Note: The due date to file annual GST return form GSTR-9 for FY 2018-18 has been further extended to November 30, 2019.

In our series of two articles, we are attempting to shed light on issues in GST annual return and how to deal with those issues to make the journey smoother. It is paramount to furnish correct details in GST Annual Return and Audit Report because incorrect details can lead to tax demands, interests, penalties and the much-dreaded litigation.

In part 1 of this series, we dealt with annual GST returns and audit issues causing taxpayer turmoil.

In this article, i.e. part 2 of this series, we will cover procedural checklist that will help ensure companies experience smooth and hassle-free GST annual return filing.

Regular taxpayers file their GST annual return in form GSTR-9, while composition scheme taxpayers file in GSTR-9A. 

Taxpayers with an annual turnover exceeding Rs 2 crore must have their accounts audited and file reconciliation statements in GSTR-9C. The GSTR - 9C has two parts: Part A is the reconciliation statement along with certification by the assessee, and Part B is the certification by the auditor. The intent of GST audit is to confirm compliance with GST. 

Before filing your GST annual return, here is a checklist of important points to keep in mind: 

  • The Financial year (FY) for the purpose of this first annual return in GST will comprise only nine months, i.e., July 17 to March 18. Taxpayers will need to isolate nine months’ worth of data from their total turnover, which may be a daunting task. Before heading to file GSTR 9, it is essential to ensure that monthly or quarterly returns are in sync with books of accounts.

  • Keep a list handy of all tax invoices issued during the period July 17 to March 18. Since tax invoices need to be reported according to their GSTIN, try to maintain invoices in that format to start with. Accounting software usually takes care of that requirement. Because form GSTR-9C requires state-wise data, also keep a list of state-wise figures of turnover handy.

  • Make a list of all debit and credit notes issued during the period mentioned above. Be sure to synchronise these with your books of accounts.

  • The government issued a notification of a change in the treatment of advances 66/2017. Pursuant to the notification, taxpayers must reconcile advances received with the amount of GST paid for goods and services from July 1 to 15 November 2017. This requirement also applies to advances received for services and GST paid from 15 November 2017 to 31 March 2018. Exemptions are available only in cases of the supply of goods, and not for the supply of services.

  • In case of multiple storage branches, stock transfers amongst branches must also be reconciled. The stock held as per books of accounts and the GST annual return must be identical.

  • Annual returns call for consolidation of data reported, such as between e-way bill data and tax invoices, over the entire the entire fiscal year. This is to ensure the accuracy of the declarations made on annual returns and will also help avoid duplications.

  • The annual return requires splitting of total amount of input tax credit (ITC) into three categories: inputs, input services, and capital goods. This was not required in forms GSTR-3B or GSTR-1, however businesses will need to compile this data before filling out GSTR-9. Every bill in which a taxpayer has claimed an input credit should be reflect this information in form GSTR-2A. These input tax credits should be paid within 180 days, otherwise the ITC on these invoices will need to be reversed. Furthermore, take special care while reporting the ITC claim because any unutilised ITC cannot be claimed later or reversed, even in the annual return. GSTR-9 also calls for expense head wise bifurcation of ITC availed. 

  • Part VI in the annual return calls for all taxpayers to provide a summary of outward and inward supplies according to HSN. In previous forms GSTR-3B and GSTR-1, only taxpayers with an annual turnover of Rs 1.5 crore or more were required to classify their supplies in this way. For those who’ve not maintained purchases according to HSN, this will likely be a disconcerting task.

  • Identify the adjustments required for unbilled revenue. This is a new requirement for GST’s annual return.

  • While reconciling the GST paid by electronic cash or credit ledger, taxpayers should also account for any GST paid by way of a reverse charge mechanism on applicable expenses. 

  • If filing a refund application for the said period, details regarding the refund must be reported separately in Part VI of the annual return.

GST audits are going to be phenomenally different from traditional VAT, excise, service tax, or other, similar audits. The requirement to have an auditor certify that GSTR-9C returns are true and correct casts much higher responsibility on him or her as compared to other statutory audits. 

Technology will play a crucial role in GST audits considering the multitude of challenges, such as reconciling the classification of data between books of accounts with what is reported on GST forms in order to ensure the correct application of GST provisions. 

Indirect tax automation or GST automation will be pivotal in helping businesses adhere to GST reporting requirements. Automated GST compliance software will help taxpayers handle voluminous amounts of data from multiple sources and formats and provide businesses the means to verify whether the figures in their books of accounts and those reported in their GST annual returns are synchronised. 

Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application Avalara TrustFile GST can help you with GST compliance automation, contact us through https://www.avalara.com/in/products/gst-returns-filing.


Avalara Author
CA Priya Madrecha (CA,CS)
Avalara Author CA Priya Madrecha (CA,CS)
Priya is a Chartered Accountant by profession and also a qualified Company Secretary. She is a Partner at Madrecha & Co. in Mumbai. She is a moderator for gstindia.net, a forum on Goods and Services Tax. An ex-consultant at KPMG, she specializes in taxation. Priya is an avid reader and has a flair for writing.