Date: 12th
July 2018
To
Mr. Upender Gupta,
Commissioner GST,
Department of Revenue, Government of India,
GST Policy Wing, North Block,
New Delhi.
Respected Sir,
Sub:
Recommended Draft Reconciliation Form 9-C for Audit under section 35(5) of CGST
Act.
With reference to the above subject, we take this
opportunity to present to you our recommendations on simplified format of GST
Audit Report. The preliminary draft format of audit report was discussed with
the Commissioner Goods and Service Tax, (Maharashtra State) and some of the
State Department Officers. After incorporating their inputs, on 4th
July 2018, a detailed discussion was held on the said draft report with your
goodselves, Mr. Siddharth Jain and your two other team members for your inputs.
Based on the above interactions and inputs, we are
enclosing herewith the revised draft after incorporating your suggestions. Our
attempt is to devise a simple yet a complete report which serves the purpose of
all the stakeholders. As discussed, though the main report has been kept
simple, various fields in the said report may be explained to the tax payers
and tax professionals to facilitate the effective and complete reporting
through a detailed instruction/guidance sheet to facilitate the filling of main
form. We are in the process of preparing the same and it will be submitted to
your office based on your feedback on the contents of the form. We reiterate
the philosophy and principles underlying our recommendations as below
We refer to the following provisions of the Goods and
Services Act, 2017
1. Section 35(5) of the CGST Act, 2017 (The Act)
prescribes certain obligations for every registered person whose turnover
during a financial year exceeds the prescribed limit of Rs. 2,00,00,000 (specified registered
persons/auditee). The obligations are to get his accounts audited by a
chartered accountant or a cost accountant (auditor) and to submit a copy of the
audited annual accounts along with the reconciliation statement under section
44(2) of the Act and such other documents in such form and manner as may be
prescribed. Rule 80(3) requires the reconciliation statement to be duly
certified. The said section 44(2)
further provides that the annual return along with a copy of the audited annual
accounts and a reconciliation statement reconciling the value of supplies declared
in the return be furnished for the financial year with the audited annual
financial statement and such other particulars as may be prescribed.
2. On a conjoint reading of the above provisions, it
appears that specified registered persons are required to undertake two
distinct obligations:
a. Get his accounts audited by a chartered accountant
or a cost accountant (auditor) and submit a copy of the audited annual accounts
b. Submit a reconciliation statement reconciling the
value of supplies declared in the return furnished for the financial year with
the audited annual financial statement, and such other particulars as may be
prescribed.
3. In connection with the above, we would like to
highlight that in most of the cases, the accounts of the auditee would be
audited under some other Statute, the most common being Companies Act, 2013 and
Income Tax Act, 1961. It is therefore recommended that the audit under the
relevant statute and the submission of the said audited annual accounts should
be considered as sufficient compliance with the first obligation mentioned
above. Currently also, this is an accepted practice under all the VAT
Legislations and also under the Income Tax Act, 1961. Considering the fact that
the only benchmark for the obligation to get the accounts audited is turnover
above Rs. 2 crores, it appears that in most of the cases, there will be audited
annual accounts under relevant statute available for submission to the GST
Authorities. If the said audited annual
accounts are accepted by the GST Authorities, the additional obligation on the
auditee would be to submit a reconciliation statement in Form 9C duly
certified by the auditor. Till date, the contents of Form 9C are not
prescribed and no draft format is placed in public domain for their comments.
4. In this connection, Bombay Chartered Accountants’
Society being the largest voluntary body of chartered accountants (with a
membership of around 9000 members) in India, we wish to recommend a format of
the reconciliation statement, for your kind perusal. The same is enclosed as Annexure
“A” to this communication. The broad parameters underlying the said format are
explained hereunder.
(i) On a reading of Section 44(2) it is evident that
the primary emphasis of the certification of the reconciliation statement
appears to be the reconciliation between the value of supplies declared in the
return furnished for the financial year with the audited annual financial
statement. We have therefore suggested a detailed reconciliation between the
turnover as reflected in the return with the turnover as reflected in audited
financial statements. The said reconciliation statement will be handy to the
Department authorities in clearly explaining the reasons for any variation in
the turnover and will assist them in identifying consequent leakages if any in
output taxes.
(ii) We believe that the elaborate transaction level
uploads and matching requirements on the GSTN Portal has provided the
Department with more than sufficient details on many of the other parameters
for a correct assessment. Such parameters were not available under the earlier
regimes where the data upload was not at a transaction level. Our
recommendation as regards additional particulars to be provided in Form 9C
therefore considers this aspect and avoids duplication of efforts and any
ambiguity. Simultaneously a conscious attempt is made to keep the format simple
for the auditee to compile and the auditor to certify at the threshold of the
new legislation. Nevertheless,
information necessary for the GST Authorities to identify cases of non-payment
of taxes and wrong claim of credits is included in the additional particulars
in Form 9C.
5.In the backdrop of
the above objectives, the recommended format of reconciliation statement under
Form 9C includes the following:
a. Statement of Reconciliation
between return turnover and turnover in audited financial statements for entity
as a whole
b. Statement of
Calculation of Outward Tax Liability and the manner of discharge of the
said tax liability & Statement of
Liability under Reverse Charge Mechanism for Inward Supplies specified under
Section 9(3) & 9(4) – to be prepared for each GSTIN
c. Reconciliation of Input Tax Credit as per Books and
as per GST Returns along with detailed breakup of blocked and apportioned
credits under Section 17 and reversals and reclaims of credits – to be prepared
for each GSTIN
6. We believe that the above format is simple,
utilitarian and sure to serve the purpose of the revenue to check leakages. In
our view, any reconciliation format which extends beyond 4 to 5 pages can be
surely cumbersome and onerous for the auditee to compile given the challenges
of the implementation of the GST law. It
may also increase the costs of small and medium sized auditees and may result in
undue hardship and avoidable duplication. We therefore strongly recommend that
redundant additional information requiring elaborate certification and
verification of documents (especially on the side of inward supplies) should be
avoided especially in view of the nascent stage of the law, various other
difficulties faced in basic implementation of the law and also the fact that
GST was introduced in the middle of the year and many transition provisions
were not suitably aligned. The above along with a plethora of notifications,
periodic clarifications and systems related issues in the initial months of
implementation may compound the challenges of the auditee. Therefore, the
format recommended by us may be considered with or without modifications as
felt appropriate at this initial stage.
7. We would also like to highlight that it is very
common for any law to start with baby steps and then bring in additional
obligations after the law stabilises and the industry matures and also based on
experiences of the initial years. The mention of a few precedents may not be
out of place:
a. The initial format of the tax audit report under the
Income Tax Act consisted of only a few pages (4-5) and it was only after 10 to
12 years that the format was made more elaborate. Even today, the tax audit
report under the Income Tax Act, 1961 does not require a certification of
computation of income nor a certification/compilation of payment of taxes.
b. Many States have simple VAT Audit Reports running
into 3 to 4 pages.
We therefore believe that it would be more appropriate
for the Government to notify a simple but functional reconciliation certificate
and then gradually build upon the same in subsequent years rather than start
with an ambitious document running into dozens of pages.
We are sure the
above recommendation having practical applicability would be considered while
drafting and notifying Form 9C. We would be more than happy to meet you in
person to explain and discuss the detailed format.
Thanking You
Yours truly,
CA. Sunil Gabhawalla CA.
Deepak Shah
President,
Chairman,
Bombay Chartered
Accountants’ Society Indirect Taxation Committee
Note:
For full representation, visit our website www.bcasonline.org
Representation
Date: 15th
July 2018
To
Mr.
Upender Gupta,
Commissioner
GST,
Department
of Revenue, Government of India,
GST
Policy Wing, North Block,
New
Delhi.
Respected
Sir,
Sub: Recommendations on the
Proposed Draft Amendments in the GST Act.
We have read with detail the draft of the 46
amendments proposed to be carried out in the GST Act and are happy to note that
many of the said amendments are in the right direction. However, we believe
that a few amendments (notably, those proposed at Sr. 29 & 30 dealing with
the manner of cross-utilisation of credits and at Sr.37 dealing with denial of
transition credit for accumulated balances of cess) could be avoided since they
conflict with the basic philosophy of free flow of credits. We also would like
to highlight that in certain amendments, there are certain further
recommendations from our side, which we have tried to incorporate in a tabular
format.
In addition to the proposed amendments, we
believe that there are certain pressing issues facing the industry which also
require immediate attention and legislative amendment. We shall send you a
separate comprehensive representation on all such issues in due course.
In the meantime, we request you to kindly
consider our representations made above favourably and oblige. If need be, we
would be more than happy to meet you in person to discuss the above
recommendations
Thanking You
Yours truly,
CA. Sunil Gabhawalla CA.
Deepak Shah
President,
Chairman,
Bombay Chartered Accountants’
Society Indirect Taxation Committee
Note:
For full representation, visit our website www.bcasonline.org
Representation
Date: 16th July, 2018
The Chief General Manager-in-charge,
Reserve Bank of India,
Foreign Exchange Department,
Foreign Investment Division,
Mumbai – 400 001
Subject:
Issues relating to filing of Entity Master File
We appreciate Reserve Bank
of India’s (RBI’s) effort to simplify reporting under Foreign Exchange and
Management Act, 1999 (FEMA). However, in the process of simplifying the
compliance procedures, technical impediments and procedural hitches have
cropped up in filing the Entity Master Form (EMF). The most pressing issues
which need to be addressed immediately by the RBI are as follows:
Key technical impediments:
1. A company is required to
report inflow from the inception of the company. Moreover, the RBI has also
mentioned that if there is no Foreign Direct Investment (FDI) currently, then
FDI has to be reported as NIL. However, the RBI needs to provide clarity on two
aspects:
“Whether foreign investments received under
Foreign Exchange Regulation Act, 1973 (FERA) regime are required to be
reported?”
“If a company has NIL FDI today, whether
previous foreign investments received needs to be reported?”
It is pertinent to note that obtaining such
historic data may be arduous. Also it is not possible to collate data for an
indefinite past.
2. Provide guidance on companies in the
process of liquidation:
“Whether an entity with FDI is required to
file EMF even if it is under liquidation?”
It
is important to recognize that it is difficult to obtain such data as an
official Liquidator.
3.
Provide clarity in the cases of companies undergoing a scheme of amalgamation /
de-merger :
“Whether separate reporting is required for
the merged or demerged entity or the resulting company should prepare a
consolidated report?”
4.
Provide guidance on reporting venture capital from foreign investors:
“How to report investment by Foreign Venture
Capital Investor (FVCI) and whether investment by FVCI needs to be reported
even for those cases where Form FC-GPR has not been filed earlier?”
Key procedural hindrances:
1. The website1 for filing EMF is
functioning slowly. The website keeps crashing and it takes at-least 30 minutes
before the website starts responding again. The signing up procedure which
requires validation of an entity user by the RBI consumes valuable time. The
sign up procedure can be streamlined by allowing the Directors of the company
to be the entity user for filing of EMF.
2. The EMF website does not provide for “Save
as Draft” option i.e. all the information is required to be submitted at one
go. The only solution is a “Reset” button which is available to reset the wrong
inputs. Additionally, there is no “timer” for letting the entity user know when
the session expires. The EMF was available only a week before and therefore it
is a herculean task for any client to collate the data immediately and submit
all the data in one go. It is recommended that a “Save as Draft” option be
immediately implemented to ensure unencumbered reporting.
In view of the above mentioned hardships, we
request your good selves to extend the deadline to submit the EMF to 31st
August, 2018.
We
would be glad to meet in person to explain the above points and some other
relevant issues which will help RBI to implement the new requirement seamlessly.
We request for an appointment at any convenient time to your good selves.
Thanking You,
CA Hinesh
Doshi CA
Sunil Gabhawalla
President President
For The Chamber of Tax
Consultants For
Bombay Chartered Accountants’ Society
Representation
Date: 21st July, 2018
The Chairman
Central Board of Direct Taxes,
Ministry of Finance,
Government of India,
North Block,
New Delhi-110001.
Respected Sir,
Subject:
Representation and request for relaxation in levy of fee under section 234F of
the Income-tax Act
Vide the Finance Act, 2017, a new section 234F has been
made applicable whereby a fee is mandatorily levied for failure to furnish the
income tax return u/s. 139(1) in respect of income tax returns required to be
filed for A.Y. 2018-19 and onwards.
The above provision for levying of fees is a genuine
hardship and cause of worry and great concern for the non-corporate assessees.
In this respect we have to represent as under:
1. Section 234F has been introduced with a view to
ensure that returns are filed within the due dates specified in section 139(1).
However, fees proposed under section 234F will be leviable on all assessees who
have furnished return beyond the due date specified under section 139(1)
irrespective of the reason for such delay and whether all the taxes have been
paid through TDS or advance tax. The earlier provisions of section 271F
provided for discretionary levy of penalty of Rs. 5,000/- by the Assessing
Officer but the fee u/s. 234F is a compulsory fees to be paid without
considering any reasonable cause of the assessees.
Also, the assessee can not justiy his cause of delay
under any appeal.
2. The time period for filing of ITR has also been
reduced from 2 years to 1 year and the interest u/s. 234-A, 234-B and 234-C
continue to be levied. When the interest for late filing of ITR u/s. 234-A is
already being levied, the fee u/s. 234F is a double whammy and is an injustice
to the assessee.
3. Unfortunately, this new section 234F does not give
you any opportunity to justify the reason for late filing of returns. Whatever
may be the practical difficulties, calamities, medical emergencies, if one is
late in filing the income tax returns, one has to bear the brunt of it.
4. As per the present TDS provisions under the Act ,
the TDS payable as on 31/03/2018 is to be paid by 30/04/2018, the relevant
quarterly e-TDS statement for Q4 is required to be filed by 31/05/2018 and the
TDS certificates are to be issued by 15/06/2018. Once the assessee receives the
TDS certificates by 15/06/2018 he is practically left with only one and a half
months to file his income tax return that becomes due by 31/07/2018. Besides it
is often seen that a TDS deductor either does not file his quarterly e-TDS
statements, or files it late or files a wrong statement, consequently making
the innocent deductee suffer for his TDS credit. This in turn causes forcible
delay in filing his personal returns.
5. For A.Y. 2018-19, The Schema for the online return
filing for ITR 2 and ITR 3 have been updated and changed as late as on 7th
July, 2018 and for ITR 5 the same have been updated and changed as late as on
13th July, 2018 making it difficult for the assessees and tax
professionals to file the ITRs within the due date.
6. Further, the due date of filing of ITR u/s. 139(1),
in the present case by 31/07/2018, gives the time for filing of ITR for 4
months i.e. from 1st April, 2018 to 31st July, 2018.
However, the new online tax filing utility was not available as on 1st April,
2018 and also considering the various other contradictory provisions such as
the TDS certificate receipt due date of 15th June, 2018 and the
amendment and updation of Schema till as late as 13th July, 2018,
for all practical purposes, the ITR filing available time is limited to less
than a month.
7. The small and SME businessmen are also presently
coping up with the GST filing difficulties and hence, may not be able to cope
up with the ITR filings by 31st July, 2018.
8. Of late there has been heavy rainfall since the
first week of July in most parts of the country and hence it is also becoming
administratively difficult for the assessees to comply with the various
statutory deadlines including the ITR filing deadline by 31st July,
2018.
Though we respect and acknowledge the Income Tax Laws
and the levying of the fees u/s. 234F, considering all the above difficulties
faced by small assessees, we humbly request to not levy the fees u/s. 234F for
returns filed for A.Y. 2018-19 and give necessary instructions/issue circular
in this regards. If our humble request is accepted, then necessary amendments
should also be made in the CPC’s return processing software so that at the time
of processing of the returns u/s. 143(1) wherever there is a delay in filing
the return, the fee u/s. 234F is not automatically levied.
We humbly request you to kindly take into consideration
all the facts and circumstances mentioned above and accede to our request in
the larger interest of thousands of tax payers of the country.
Thanking you,
Yours sincerely
Sunil Gabhawalla Chintan Doshi Raghavendra
T.N. Gyanesh Verma
President, Bombay Chartered President,
Ahmedabad Chartered President,
Karnataka State President,
Accountants’ Society Accountants’Association Chartered Accountants’ LucknowChartered Accountants’
Association Society
Representation
Date: 24th July 2018
To
The
Chairman
Central
Board of Direct Taxes
Task
Force on New Direct Tax Law
Department
of Revenue
Ministry
of Finance, Govt. of India
North
Block,
New Delhi
– 110001
Sir,
Sub: Representation on Important
issues/provisions in the Proposed New Direct Tax Law
We are pleased to submit herewith our
considered suggestions on important issues that may be addressed in the
proposed new Direct Tax Law.
We have made suggestions on following lines:
1) Path breaking suggestions for making the
law more taxpayer friendly by rewarding and encouraging compliances;
2) Suggestions for reducing litigations by
providing clarity;
3) Suggestions for “Ease of Doing Business
in India”.
We hope that these suggestions will find
your favour.
We would be glad to meet you in person and
explain/discuss various points arising from this representation or otherwise,
therefore we request you to grant an opportunity for the same.
Thanking you,
Yours truly,
For Bombay Chartered Accountants’ Society
CA Sunil
Gabhawalla CA
Mayur Nayak CA
Ameet Patel,
President Chairman
Chairman
International
Taxation Committee Taxation
Committee
Note: For the full representation, visit
our website www.bcasonline.org
Representation
Date: 24th
July, 2018
To
Mr. Rajiv Jalota
Commissioner SGST,
Government of Maharashtra
Mumbai
Respected Sir,
Sub:
Recommendations for Simplification of GST for Small and Medium Enterprises
(SME).
We have read with detail the recommendations of the 28th GST
Council Meeting and we are happy to note the efforts taken by the Council to
simplify business processes especially for the Small and Medium Enterprises
(SMEs). In particular, we appreciate the following steps, which we believe are
steps in the right direction:
1. Recommendation of a new
process requiring the filing of a single return.
2. Increase in the Eligibility
Limit for Composition Scheme upto Rs. 1.5 crores and permission to opt for
composition even in cases where there are insignificant value of services
rendered.
3. Eligibility to issue single
debit/credit note against multiple invoices.
4. Reopening of the GST Migration
Window in certain cases.
While the above steps clearly suggest the intent of the Government to
resolve possible issues and usher in a tax-payer friendly regime, there are
certain issues which continue to bother the tax payers, more particularly the
small and medium enterprises (SME).
Accordingly, we
would like to make recommendations, which, if carried out, will significantly
ease the compliance burden at the SME level, bring in certainty and clarity of
provisions and reduce the cost of doing business.
In addition to the recommendations, we
believe that there are certain pressing issues facing the SME Sector in terms
of challenges on the GSTN Portal which also require immediate attention and
process amendment. We shall send you a separate comprehensive representation on
all such issues in due course.
In the meantime, we request you to kindly
consider our representations made above favourably and oblige. If need be, we
would be more than happy to meet you in person to discuss the above recommendations.
Thanking You
Yours truly,
CA. Sunil Gabhawalla CA.
Deepak Shah
President,
Chairman,
Bombay Chartered
Accountants’ Society Indirect
Taxation Committee
Note: For full
representation, visit our website www.bcasonline.org
