Removal of GST Audit and certification of reconciliation statements

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Finance Minister, in the Union Budget 2021 proposal, introduced several measures on further simplification of GST laws with an eye on ‘ease of doing business’ coupled with strict measures to curb tax evasion.

One such initiative includes removal of mandatory requirement for getting the reconciliation statements in Form GSTR 9C certified by a chartered accountant or a cost Accountant (more commonly termed as GST Audit) at the time of filing annual returns in form GSTR 9, a move which is welcomed by the industry. Industry feels this would reduce the compliance burden considerably.

Pursuant to this amendment getting notified with passing of the Finance Bill 2021, the aforesaid requirement for conducting GST Audit has been replaced and merged with filing of annual return in form GSTR 9 along with reconciliation statement on a self-certification basis by the tax payer.

Removal of GST audit and certification by professionals apparently seems to be a boon for the industry by reduction in compliance burden and costs, however, there is a flip side to it as well that has been talked about in the report.

Key highlights 

Impact on taxpayers

  • Onus shifted from professionals to taxpayers for demonstrating correctness of GST filings vis-à-vis financials
  • Higher possibility of departmental scrutiny/audits
  • Stringent penal provisions for non-compliance with respect to incorrect tax filings, payments and credits 

Way forward – steps for taxpayers

  • Periodic review of compliances
  • Preparation of reconciliations with audited accounts and self-certification
  • Establishing a proper audit trail during department scrutiny and Investigations