The document outlines the procedure for preparing Form GSTR-9C, which includes a reconciliation statement of gross turnover, taxable turnover, tax paid, and input tax credit (ITC). It emphasizes the importance of accurate reconciliation between financial statements and GST returns for compliance and identifies potential areas for discrepancies. Auditor's certification is also addressed, highlighting the need for thorough documentation and management representation in the reconciliation process.

1. CA Sandesh Mundra

2. CA Sandesh Mundra
Form GSTR -9C
Part A – Reconciliation Statement Part B - Certification
Broad Heads of Reconciliation Statement
• Reconciliation of gross turnover.
• Reconciliation of taxable turnover.
• Reconciliation of tax paid.
• Reconciliation of Input Tax Credit (ITC)
• Reconciliation of ITC declared in GSTR
9 with ITC availed on expenses as per
books
• Auditor’s recommendation on
additional liability due to non –
reconciliation.
1. Certification in cases where
the reconciliation statement
(Form GSTR-9C) is drawn up
by the person who had
conducted the audit.
2. Certification in cases where
the reconciliation statement
(Form GSTR-9C) is drawn up
by a person other than the
person who had conducted
the audit of the accounts.
Two kinds of
formats –
when audit
is conducted
by auditor
and when it
is not

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Special points on certification
• Classification aspect considered as noticed during audit and subject to information / declaration /
management representation received from client. It should be specified that all aspects of
classification not considered.
• Difference of opinion to be mentioned in certificate.
• Any non compliance of provisions of this Act to be mentioned in certificate.
• Management Representation that figures are true and correct

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Why Reconciliation?
• GSTR 9C – Journey from Financial statements to Annual Return is true and correct.
• Turnover under GST is as per Time of supply provisions.
• Time of supply for services is earlier of invoice or payment.
• Time of supply for goods is issuance of invoice.
• Turnover in Financial Statement is as per IND AS or AS.
• GST Reconciliation is a reconciliation between turnover as per time of supply and turnover as
per financial statements.

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Lets check an example

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What is different from earlier regime?
• Reconciliation with 26 AS only at the time of assessments. Now it is a part of GST
Audit.
• Prerequisites reconciliation. – 1 and 3B / 2A and 3B / Annual Return and 3B
• Mistakes committed in the first year.
• GST came in the middle of the financial year.

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Turnover maze
S.N Particulars Situation 1 Situation 2 Situation 3 Situation 4
1Accounting of Invoice 17-18 17-18 17-18 Ap 18 - Se 18
2GSTR 1 - Invoice 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
3GSTR 3B - Invoice 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
4
Amendment in GSTR 1 -
Invoice 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
5
Amendment in GSTR 3B -
Invoice 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
6Accounting of Credit note 17-18 17-18 17-18 Ap 18 - Se 18
7GSTR 1 - Credit note 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
8GSTR 3B - Credit note 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
9
Amendment in GSTR 1 - Credit
note 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
10
Amendment in GSTR 3B -
Credit note 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18

11. CA Sandesh Mundra
Turnover maze
S.N Particulars Situation 1 Situation 2 Situation 3 Situation 4
1Accounting of Invoice 17-18 17-18 17-18 Ap 18 - Se 18
2GSTR 1 - Invoice 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
3GSTR 3B - Invoice 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
4
Amendment in GSTR 1 -
Invoice 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
5
Amendment in GSTR 3B -
Invoice 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
6Accounting of Credit note 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
7GSTR 1 - Credit note 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
8GSTR 3B - Credit note 17-18 17-18 Ap 18 - Se 18 Ap 18 - Se 18
9
Amendment in GSTR 1 - Credit
note 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
10
Amendment in GSTR 3B -
Credit note 17-18 Ap 18 - Se 18 Ap 18 - Se 18 Ap 18 - Se 18
Reporting
Annual Return R as 17-18
R as 17-18 with
disclosure of
amendment NR NR
Audit Report R as 17-18 NR
Auditor's
recommendation NR

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Audit Report Format – Part I
• If the accounts are required to be audited under any law viz. Companies Act or Income
Tax Act, mention yes.
• Discrepancy as to what constitute the word audit

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Pt.
II
Reconciliation of turnover declared in audited Annual Financial
Statement with turnover declared in Annual Return (GSTR9)
5 Reconciliation of Gross Turnover
ATurnover (including exports) for State / UT (Separate for multiple GSTN) as per FS
GTurnover from April 2017 to June 2017 (-)
LTurnover for the period under composition scheme* (-)
MAdjustments in turnover under section 15 and rules thereunder (+/-)
NAdjustments in turnover due to foreign exchange fluctuations (+/-)
OAdjustments in turnover due to reasons not listed above (+/-)
KAdjustments on account of supply of goods by SEZ units to DTA Units (-)
DDeemed Supply under Schedule I (+)
FTrade Discounts accounted for in the audited Annual Financial Statement
but are not permissible under GST*
(+)

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CUnadjusted advances at the end of the Financial Year* (+)
IUnadjusted Advances at the beginning of the Financial Year* (-)
ECredit Notes issued after end of the financial year but reflected in annual return* (+)
JCredit notes accounted for in the audited Annual Financial Statement but are not
permissible under GST
(-)
Addition for reasons not listed above
PAnnual turnover after adjustments as above
QTurnover as declared in Annual Return (GSTR9)
RUn-Reconciled turnover (Q - P)
• Careful examination of status of taxes paid on advance received for supply of goods with cut off
dates
• Advances received in 17-18 and invoice issued in 18-19 to be reported
• Credit notes allowed u/s 34 not to be added but commercial credit notes are required to be
added here

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Special notes for above table
• Whether turnover as per Financial Statements to include income other than Revenue
from operations? - Logical view
• Discounts not permissible under GST to be added and Discounts shown in face of invoice
are not to be added
• Due to turnover limit, if assessee shifted to normal from composition, turnover of
composition period to be reduced from above table.
• Whether deemed supplies not forming part of annual return required to be included in
reconciliation statement? One view to show them in Part-B instead.

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• Multiple presence – GSTN wise books of accounts are required – GSTN wise books of accounts may
not be audited individually – Problem to intensify if GST auditor is not preparing reconciliation
• How to identify related party transactions? – Inter-branch adjustments/cost center
accounting/extracting data from GSTR 1.
• How to identify employer-employee transactions? – Through appointment letter
Special notes for above table

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6 Reasons for Un - Reconciled difference in Annual Gross Turnover
A Reason 1
7 Reconciliation of Taxable Turnover
AAnnual turnover after adjustments (from 5P above)
BValue of Exempted, Nil Rated, Non-GST supplies, No-Supply turnover
CZero rated supplies without payment of tax
DSupplies on which tax is to be paid by the recipient on reverse charge basis
ETaxable turnover as per adjustments above (A-B-C-D)
FTaxable turnover as per liability declared in Annual Return (GSTR9)
GUnreconciled taxable turnover (F-E)
8 Reasons for Un - Reconciled difference in taxable turnover
A Reason 1
• Reasons for Unreconciled Turnover:-
• Invoices/Debit notes not declared in GSTR 1 & 3B both
• Credit notes not declared in GSTR 1 and 3B both
• Invoices cancelled in books after issue but credit note not issued in time
• Taxable turnover to be extracted from column 4N of GSTR 9

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Pt.
III
Reconciliation of tax paid
9 Reconciliation of rate wise liability and amount payable thereon
Tax payable
Description Taxable Value Central tax State tax
/ UT tax
Integrated
Tax
Cess, if
applicabl e
1 2 3 4 5 6
A 5% and RC
C 12% and RC
E 18% and RC - -
G 28% and RC
L Interest/Late Fee/Penalty
PTotal amount to be paid as per tables above 0 0 - 0
QTotal amount paid as declared in Annual Return (GSTR 9)
R Un-reconciled payment of Amount and reasons thereof -
• If data for separate rates not available in books then, auditor may not fill data in above table and
disclose this or auditor may fill data as per client and give appropriate disclosures
• Filling of above information for deemed supplies and Section 15 additions when they do not
become part of turnover but part of tax register. Value can be derived by reverse working.

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11 Additional amount payable but not paid (due to reasons specified under Tables 6,8 and 10 above)
To be paid through Cash
Description
Taxable
Value
Central tax State tax
/ UT tax
Integrated tax Cess, if applicabl
e
5%
12%
18% -
28%
3%
0.25%
0.10%
Interest
Late Fee
Penalty
Others
(please specify)
• If sufficient credit available the, file DRC 03 and pay interest in cash

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Pt. IV Reconciliation of Input Tax Credit (ITC)
12 Reconciliation of Net Input Tax Credit (ITC)
A
ITC availed as per audited Annual Financial Statement for the State/ UT (For multi-GSTIN units under same
PAN this should be derived from books of accounts)
BITC booked in earlier Financial Years claimed in current Financial Year (+)
CITC booked in current Financial Year to be claimed in subsequent Financial Years (-)
DITC availed as per audited financial statements or books of account
EITC claimed in Annual Return (GSTR9)
FUn-reconciled ITC
13 Reasons for un-reconciled difference in ITC
A Reason 1 <<Text>>
• ITC booked in earlier year to include transitional credit booked in earlier years but availed during FY 17-18.
• In first year of GST, column B may not have any adjustments other than transitional credit.

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14 Reconciliation of ITC declared in Annual Return (GSTR9) with ITC availed on expenses as per audited Annual Financial Statement or books of
account
Description Value Amount of
Total ITC
Amount of eligible ITC
availed
APurchases
BFreight / Carriage
CPower and Fuel
DImported goods (Including received from SEZs)
ERent and Insurance
F
Goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples
GRoyalties
HEmployees' Cost (Salaries, wages, Bonus etc.)
IConveyance charges
JBank Charges
KEntertainment charges
LStationery Expenses (including postage etc.)
MRepair and Maintenance
NOther Miscellaneous expenses
OCapital goods
PAny other expense 1
QAny other expense 2
R Total amount of eligible ITC availed
S ITC claimed in Annual Return (GSTR9)
T Un-reconciled ITC
15 Reasons for un - reconciled difference in ITC
A Reason 1 <<Text>>

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Special notes for Table 14
• Table requires expense wise reporting of total and eligible ITC. Eligible ITC = Total ITC – Blocked –
Reversed
• Expense wise reversals to be calculated by applying reversal ratios
• Govt. wants to develop statistics of expenses incurred and ITC involved relevant for subsequent
assessment procedure
• This information may also help in reopening of income tax assessments

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16
Tax payable on un-reconciled difference in ITC (due to reasons specified in 13 and
15 above)
Description Amount Payable
Central Tax
State/UT
Tax
Integrated
Tax
Cess
Interest
Penalty

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Pt. V Auditor's recommendation on additional Liability due to non-reconciliation
To be paid through Cash
Description Value
Central
tax
State tax
/ UT tax
Integrated tax Cess, if
applicable
1 2 3 4 5 6
5%
12%
18%
28%
3%
0.25%
0.10%
Input Tax
Credit
Interest
Late Fee
Penalty
Any other amount paid for supplies not
included in Annual Return
Erroneous refund to be paid back
Outstanding demands to be settled
Other (Pl. specify)

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Special caution points
• In Part A of the audit report, auditor is supposed to certify figures. In Part B of the audit report,
auditor has to give qualification on figures. Improper drafting.
• What if ITC on capital goods is expensed out in P/L Account?
• Separation of figures for each and every GSTN from financial statements.
• Sale of fixed asset is taxable turnover under GST however it is not sales in Financial Statements.

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• In financial statements of Agents, supply on behalf of principal needs to be added.
• Off balance sheet and non balance sheet items to be analysed for supplies without consideration.
• Track of financial credit notes.
• Claim depreciation vs credit on capital assets.
Special caution points

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• Lease – FS – Interest and leasing charges. In GST – full amount is taxable.
• Treatment of Govt. grants.
• Related party disclosures.
• IND AS 115 – Element wise accounting VS Time of supply – No correlation
• Liability of auditor on future litigations
Special caution points

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Let us make an audit report

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www.smaca.insandesh.mundra@smaca.in
Sandesh Mundra & Associates
Chartered Accountants
304, Super Plaza,
Sandesh Press Road, Vastrapur,
Ahmedabad - 380054  +91-079-40032950