New Delhi: The format for annual returns and audit is likely to be approved by GST Council in its meeting on 21 July. The industry is expecting some reconciliation with annual income tax returns, as the government aims to check tax evasion. 2017-18 is the first year when businesses will have to file annual returns (GSTR-9), and that has to be done by 31 December 2018. Businesses with turnover of over ₹ 2 crore will have to file audit reports along with the annual returns. The goods and services tax (GST) was rolled out on 1 July 2017.
The revenue officers have readied a draft of the GST annual return form, which will taken up for discussion at the GST Council meeting. Once that’s done, GST Network (GSTN), the IT backbone for the indirect tax, will finalize software to enable firms to file their annual returns.
Tax experts expect the GST annual return form to be in line with the erstwhile value added tax (VAT) regime, with some columns for reconciliation with ITR and audit report. They expect the forms to be made available online by October so that the annual returns are filed by 31 December.
“Considering the fact that the key objective of GST is to expand the tax base, it is expected that the GST annual return would require some information related to annual accounts and income tax returns, in addition to the details which were required to be submitted in the erstwhile VAT annual returns,” Deloitte India partner M.S. Mani said.
The GST annual return form may also have a provision to rectify errors that a firm may have committed in monthly filings. “Given it’s the first year of GST, the industry would expect the annual return format to be simple and, if possible, only require PAN-based data reconciliation with the financials and not state-wise or GSTIN-wise data reconciliation with financials. The said demand essentially being on account of most company IT systems not being configured to extract state-wise financials,” said EY India tax partner Abhishek Jain.
Under the VAT regime, companies were required to file returns in every state they were registered in. Thus, linking their annual returns with ITR was not feasible.
“Some of the industry expectations are online forms with least manual intervention, clarity on the need for annual state-wise financial statements and, finally, deferment of GST audits in the first year,” said AMRG and Associates partner Rajat Mohan.
With GST being a PAN-based registration, it would be easier to reconcile sales and purchases with that reported in ITR.
According to ITR forms notified by the income tax department, businesses filing ITR-4 (presumptive income from business and profession) will have to give information regarding turnover/gross receipt reported for GST as well as GSTIN. In ITR-6 which is to be filed by companies, businesses have to specify GST paid or refunded or credit outstanding.
Over 1.14 crore businesses are registered under GST. Of these, about 18 lakh businesses have opted for the composition scheme.
With inputs from PTI