Key Points to consider before filing GST Returns for the month of September 2021

FY 2020-21 was completed and all the organization are occupied in preparation and submission of Annual filings for the year with various Statutory Authorities.

Due dates of the Annual filings for 20-21 are as follows:

Annual filing as per Companies Act, 2013 –

Annual Return (AOC 4) – December 29,2021

Form MGT -7                 – January 29,2022

Annual Filing as per Income Tax Act,1961 –

Form 3CD                        – 15th January,2022

ITR Filing                         – 15th February,2022      

Annual Filing as per GST Act, 2017  –

GSTR 9   (If Aggregate Turnover >2Cr)   – 31st December,2021

GSTR 9C (If Aggregate Turnover >5Cr)  – 31st December,2021  (Self Certified)

  • However for the purpose of GST, the due date of 31stDecember cannot be taken as deadline for all adjustments for the FY 20-21. There are several cases in GST where the last date is prescribed as due date of filing of September month of the succeeding year.

Adjustments relating to Input Tax Credit –

Uninterrupted and seamless chain of input tax credit (hereinafter referred to as, “ITC”) is one of the key features of Goods and Services Tax. ITC is a mechanism to avoid cascading of taxes. There were significant amendments made related to ITC in the last 2 years. One such provision is Rule 36(4).

Rule 36(4) – 

Rule 36(4) of CGST Rules, 2017 inserted vide Notification No. 49/2019 dated 09th Oct, 2019 and it was made applicable w.e.f. 09th Oct, 2019 –

36 (4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”.

Later on the rule was amended  –

10% w.e.f. 01.01.2020 vide Notification No. 75/2019 Central Tax dated 26th December, 2019 and 5% w.e.f. 01.01.2021 vide Notification No. 94/2020-Central Tax dated 22nd December, 2020.

And for proper implementation of the above rule GSTR 2B was inserted. Due to insertion of Rule 36(4) the input tax credit as availed in books of accounts does not match with the books. Therefore every entity has unclaimed input for the Financial year 2020-21.( Input availed in books of a/c but not availed in GSTR 3B). Once has to note that the last date to avail such credit is due date for filing September month return. Failure of which would result in lapse of such credit. But question arises whether the same can be availed even though the supplier did not file his return and 5% criteria is already utilized. There is no straight forward answer for the above question. The best option available with Tax Payer is to avail such credit in the September month return so that the statutory time limit prescribed is satisfied and not utilize such credit so as to avoid any interest in future.

The provisions related to above are discussed hereunder –

Last chance to avail any pending ITC of FY 2020-21 –

Section 16(4) : A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Therefore last date for availing input pending for the FY 20-21 is due date of filing September return. If the input is not availed as on that date then it is deemed to be lapsed and to be shown as lapsed in GSTR 9.

Compliance with Section 16(4) -In order to avoid such lapse of credit all the taxpayers has to perform an annual reconciliation for the Year 2020-21 and determine the credit that is un-availed for the year. The same has to be availed in this month so that the above subsection is complied with.

Non compliance with Section 16 (2) and Rule 36(4) –  After performing the reconciliation if the credit is availed irrespective of the status of filing of Supplier, it would result in non compliance with Section 16(2) read with Rule 36(4).

Solution – Therefore in order to avoid any litigation in future it is advisable to avail the credit and not to utilise the same so that in future interest liability can be avoided (if any).

Reversal of common credit used for taxable as well as exempted supply of goods or services for FY 2020-21:

In terms of Rule 42 of the CGST Rules, 2017, amount of reversal of common ITC on inputs and input services used for making both taxable and exempted supplies, shall be calculated finally for the financial year before the due date for furnishing of the return for the month of September following the end of the financial year to which such credit relates.

The above rule is only applicable to person engaged in both supply of Exempt and Taxable supplies. Input reversed in the year as per the rule is based on turnover of that particular month.   And at the end of the year after considering the final turnover of the year, one has to calculated the revised amounts that are liable be reversed.

Excess Credit Reversed – Any amount of credit extra reversed can be claimed as ITC in the return (GSTR 3B) to be filed for the September 2021.

Less Credit Reversed – In case of short reversal made, the differential amount of ITC can be reversed now with interest @ 18% per annum for the period starting from April 01, 2021 till the date of payment. Reversal can be made either through Form GSTR-3B or through Form GST DRC-03.

Adjustments related to Output Tax Payable:

Issuance of credit note as per Section 34(2) –

In terms of Section 34(2) of the CGST Act, any credit note in respect of the supplies made in the previous FY shall be declared in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted accordingly.

Therefore, Last date for issuing GST credit note for the FY 20-21 is up-to the month of September 2021. Post September Commercial Credit Note has to be issued (without GST). However the recipient has to reverse the Input as per Section 16 of the Act.  

Amendments / Rectification pertaining to outwards supplies details furnished in GSTR 1 during FY 2020-21 –

As per proviso to Section 37(3) of the CGST Act, any corrections in respect of the details already furnished in GSTR-1 shall be allowed  till furnishing return for the month of September following the end of FY to which such details pertain, or filing of relevant Annual Return, whichever is earlier.

Therefore ,for making amendment/ rectification in the details furnished in Form GSTR-1 of April 2020 to March 2021, the last date would be due date of filing September 2021 return.

Due date of September Return –

Taxpayers who have opted QRMP Scheme and whose principal place of business is in the state of Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh: 22nd October 2021

Taxpayers who have opted QRMP Scheme and whose principal place of business is in the state of Jammu and Kashmir, Laddakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha: 24th October 2021.

Taxpayers who are not in QRMP Scheme: 20th October 2021.

Therefore all the Tax Payers have to note the above points before filing GST Returns for the month of September.