Introduction
Since the annual filing for FY 2017-2018 had begun, there has been a confusion with respect to late fees leviable on the Reconciliation Statement (GSTR-9C) filed along with the annual return (Form GSTR-9). The late fees on delayed filing of GSTR-9 were computed by the portal at the time of filing of the same and were required to be paid so as to enable the filing. However, there was no such requirement on the portal at the time of the delayed filing of the reconciliation statement in Form GSTR-9C.
The 55th GST Council Meeting, held on 21st December, 2024, had issued a clarification on the imposition of late fees on GSTR-9C and has recommended a waiver on late fees to be paid on GSTR-9C for financial years 2017-2018 to 2022-2023. Accordingly, notification no. 08/2025 Central Tax dated 23rd January, 2025, has been issued to waive the late fees on GSTR-9C. As per the notification, the late fees on GSTR-9C for the abovementioned periods shall be limited to the date of filing of GSTR-9 of the respective year if the GSTR-9C is filed before 31st March, 2025.
Let us discuss the applicability of late fees on the filing of GSTR-9C.
Position Till FY 2019-2020
Until 1st August, 2021, i.e., up to Financial Year 2019-2020, the taxpayers were required to get their books of accounts audited pursuant to Section 35(5), which read as under.
Section 35(5) - Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44, and such other documents in such form and manner as may be prescribed.
Further until 1st August, 2021, Section 44 read as under.
Section 44 - Annual Return
(1) Every registered person, other than an input service distributor, a person paying tax under section 51 or section 52, a casual taxable person, and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.
Provided that the Commissioner may, on the recommendations of the Council and for reasons to be recorded in writing, by notification, extend the time limit for furnishing the annual return for such class of registered persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and 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.
To summarize the above, till financial year 2019-2020, the taxpayers were required to submit an annual return in form GSTR 9 (pursuant to section 44(1)) and a reconciliation statement in form GSTR 9C (pursuant to section 44(2)). The reconciliation statement was required to be signed by a chartered accountant or a cost accountant.
Position FY 2020-2021 Onwards
With effect from 1st August, 2024, section 35(5) was omitted, and section 44 was amended entirely. The new section 44 reads as under
Section 44 - Annual Return
(1) Every registered person, other than an input service distributor, a person paying tax under section 51 or section 52, a casual taxable person, and a non-resident taxable person, shall furnish an annual return that may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing an annual return under this section:
Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority whose books of account are subject to audit by the Comptroller and Auditor General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.
(2) A registered person shall not be allowed to furnish an annual return under sub-section (1) for a financial year after the expiry of a period of three years from the due date of furnishing the said annual return.
Provided that the Government may, on the recommendations of the Council, by notification, and subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish an annual return for a financial year under sub-section (1), even after the expiry of the said period of three years from the due date of furnishing the said annual return.
Whether GSTR 9C is a return or merely a statement
Considering old as well as section 44, it is understood that GSTR-9 is a return, whereas GSTR-9C is merely a statement that is enclosed with GSTR-9. In old section 44, sub-section (2) provided for the furnishing of a reconciliation statement along with the annual return in GSTR-9 as per sub-section (1). Also in new section 44, the reference to GSTR-9C is made as 'self-certified reconciliation statement.'.
It means that GSTR-9C, i.e., the reconciliation statement, is part of the annual return (GSTR-9) and not a separate return as such. However, on the portal, both these forms are treated separately.
Late Fees on Annual Returns
Section 47(2) imposes late fees on delayed filing of annual returns. It reads as under
Section 47 - Levy of late fee
(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues, subject to a maximum of an amount calculated at a quarter per cent. of his turnover in the State or Union territory.
Section 47(2) talks about the levy of late fees on annual returns and nowhere mentions the reference to the reconciliation statement separately. Also, as discussed above, as per section 44, reconciliation is part of the annual return itself.
Therefore, the late fees under section 47(2) should be levied only on delayed filing of GSTR-9 and not on GSTR-9C. In my opinion, there should not be a separate levy of late fees on GSTR-9C, and it is part of GSTR-9 itself.
However, the question arises then what should be the penal consequences for the non-filing of GSTR-9C. As in the existing law, there are not late fees or penalties for non-filing of GSTR-9C; it should be subject to the general penalty under section 125, which is subject to the procedure to be followed in that particular section.
Conclusion
Though the government has come up with a notification of waiver of late fees on the delayed filing of GSTR-9C, it should first consider whether, as per existing provisions, late fees are leviable on GSTR-9C itself. We may see some litigation coming on this issue in the near future.
Disclaimer: This article is intended for informational purposes only. While every effort has been made to ensure the accuracy of the information, it should not be construed as professional advice. Readers are encouraged to exercise their own professional judgment and refer to relevant laws, rules, and notifications before taking any action. The author assumes no responsibility for any errors, omissions, or decisions based on this content.
The author can also be reached at amol@amolgkabra.in.
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