Comprehensive Guide to GST Section 44: Annual Return Filing, Forms, Deadlines & Exemptions

Section 44 of the CGST Act governs the filing of annual returns under India’s GST framework and plays a vital role in year-end tax reconciliation and compliance. Applicable to most registered persons, it mandates electronic filing of the annual return (GSTR-9) along with a self-certified reconciliation statement (GSTR-9C, for turnover above ₹5 crore), streamlining the process post-2021 by replacing the need for audit certification.

Specific exemptions apply to ISDs, TDS/TCS entities, non-residents, casual taxpayers, and small taxpayers (turnover ≤ ₹2 crore), as notified for various financial years. Government departments audited by CAG or local authority auditors are also exempt. Section 44(2), added in 2023, restricts filing after 3 years from the due date unless extended by notification. Rules 68 and 80, along with forms GSTR-9, 9A, and 9C, detail procedural compliance. This section reinforces transparency, accountability, and error correction, forming the cornerstone of GST’s annual compliance structure.

Unpacking GST Section 44: A Comprehensive Guide to Annual Returns

The Goods and Services Tax (GST) regime in India mandates various compliances, and among the most significant is the filing of annual returns under Section 44 of the Central Goods and Services Tax (CGST) Act, 2017. This section, along with its associated rules and forms, forms the backbone of year-end reconciliation and ensures accountability in the GST ecosystem.

Understanding Section 44(1): Who Needs to File and What it Entails

Section 44(1) of the CGST Act, as substituted with effect from August 1, 2021, by the Finance Act 2021, lays down the fundamental requirement for filing annual returns.

General Obligation: Every registered person under GST is generally required to furnish an annual return for each financial year. This return must be filed electronically within the prescribed time, in the prescribed form, and in the prescribed manner.

Key Components of the Annual Return: The annual return may include a self-certified reconciliation statement. This statement is crucial as it aims to reconcile the value of supplies declared in the monthly/quarterly returns (GSTR-1, GSTR-3B) furnished for the financial year with the taxpayer’s audited annual financial statement. This self-certification aims to reduce compliance costs and streamline the process compared to earlier requirements for external auditor certification.

Exemptions from Filing Annual Return (Section 44(1) Provisos): While the general rule mandates annual return filing, certain categories of registered persons are specifically exempted:

• Input Service Distributors (ISD): Entities that receive input services and distribute the Input Tax Credit (ITC) among their units.
• Persons paying tax under Section 51 (TDS Deductor): Those liable to deduct Tax Deducted at Source (TDS) under GST.
• Persons paying tax under Section 52 (TCS Collector): E-commerce operators required to collect Tax Collected at Source (TCS).
• Casual Taxable Persons: Individuals who undertake occasional business transactions in a state or union territory where they have no fixed place of business.
• Non-Resident Taxable Persons: Non-residents who occasionally undertake transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who have no fixed place of business or residence in India.

Furthermore, the Commissioner holds the power, on the recommendations of the GST Council, to exempt any class of registered persons from filing the annual return through notification.

Specific Exemptions based on Turnover: Over the years, the government has regularly provided exemptions for small taxpayers based on their aggregate turnover. As per recent notifications:

• Financial Year 2023-24: Registered persons whose aggregate turnover is up to two crore rupees are exempt from filing annual return for the said financial year (Notification No. 14/2024-Central Tax, dated 10.07.2024).
• Financial Year 2022-23: Similar exemption for turnover up to two crore rupees (Notification No. 32/2023-Central Tax, dated 31.07.2023).
• Financial Year 2021-22: Similar exemption for turnover up to two crore rupees (Notification No. 10/2022-Central Tax, dated 05.07.2022).
• Financial Year 2020-21: Similar exemption for turnover up to two crore rupees (Notification No. 31/2021-Central Tax, dated 30.07.2021).

Government Departments Exempted: Departments 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, are also exempt from filing the annual return.

Understanding Section 44(2): Time Limit for Filing and Extensions

Section 44(2), inserted by the Finance Act 2023 with effect from October 1, 2023, addresses the time limit for furnishing the annual return and provisions for extending this period.

Default Due Date: A registered person is generally not allowed to furnish an annual return for a financial year after the expiry of a period of three years from the due date of furnishing the said annual return. The general due date for filing GSTR-9 for a financial year is December 31st of the subsequent financial year.

Government’s Power to Allow Late Filing: The government, on the recommendations of the Council, may, by notification and subject to specified conditions and restrictions, allow a registered person or a class of registered persons to furnish an annual return even after the expiry of the three-year period from the due date. This provides a window for taxpayers who have missed the regular extended due dates due to genuine reasons.

Relevant Rules and Forms for Section 44 Compliance

To facilitate the filing of annual returns, specific rules and forms have been prescribed:

• Rule 68: Notice to non-filers of returns: This rule deals with the issuance of FORM GSTR-3A, which is a notice to return defaulters for not filing their returns.
• Rule 80: Annual return: This rule governs the specifics of annual return filing and refers to the following forms:
  • FORM GSTR-9: Annual Return (For Regular Taxpayers): This is the primary annual return form for most registered persons. It consolidates the information provided in monthly/quarterly returns (GSTR-1 and GSTR-3B) and requires reconciliation with the books of accounts.
  • FORM GSTR-9A: Annual Return (For Composition Taxpayer): This form is specifically designed for taxpayers who have opted for the Composition Scheme.
  • FORM GSTR-9C: Reconciliation Statement: This statement, which may be self-certified, is crucial for taxpayers whose aggregate turnover exceeds a certain threshold (currently Rs. 5 crore). It reconciles the value of supplies declared in the annual return (GSTR-9) with the audited annual financial statements. Prior to the Finance Act 2021 amendment, GSTR-9C required certification by a Chartered Accountant or Cost Accountant; however, it is now self-certified by the taxpayer.

Historical Context and Evolution of Section 44

It’s important to note the evolution of Section 44:

• Substitution in 2021: Section 44 of the CGST Act 2017 was substituted with effect from August 1, 2021, by the Finance Act 2021. The key change was the introduction of the “self-certified reconciliation statement” in place of the mandatory audit and certification by a professional for GSTR-9C. This was aimed at simplifying compliance for many taxpayers.
• Insertion of Section 44(2) in 2023: Sub-section (2) was inserted by the Finance Act 2023 with effect from October 1, 2023, to specifically address the time limit for furnishing annual returns and provide the government with the power to allow filing beyond the three-year period.

Importance of Annual Return and Reconciliation

Filing the annual return under Section 44 is not merely a procedural formality; it serves several critical purposes in the GST framework:

• Comprehensive Data Compilation: GSTR-9 provides a consolidated view of all outward supplies, inward supplies, ITC availed and reversed, and tax paid for the entire financial year, offering a complete picture of the taxpayer’s GST liability.
• Reconciliation and Error Correction: The reconciliation statement (GSTR-9C) helps identify discrepancies between the returns filed throughout the year and the taxpayer’s financial records. This allows for self-correction of errors or omissions that might have occurred during the year.
• Audit Trail: The annual return and reconciliation statement provide a crucial audit trail for tax authorities to verify the accuracy of the taxpayer’s declarations and compliance with GST laws.
• Enhanced Transparency: The detailed reporting fosters greater transparency in tax compliance and discourages tax evasion.
• Reduced Litigation: By reconciling data and identifying differences, taxpayers can proactively address potential issues, thereby reducing the likelihood of disputes and litigation with tax authorities.

In conclusion, GST Section 44, with its evolving provisions and associated forms, is a critical component of GST compliance. While exemptions and simplifications have been introduced to ease the burden on smaller taxpayers, understanding the requirements and ensuring timely and accurate filing of the annual return and reconciliation statement remains paramount for all registered persons under GST.

FAQs on Section 44 of the CGST Act

What is Section 44 of the CGST Act?
Section 44 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the requirement for filing annual returns by registered taxpayers under the GST regime.

Who is required to file an annual return under Section 44?
Every registered person under GST, other than those specifically exempted, is required to file an annual return for each financial year electronically.

What forms are used for filing the GST annual return?
The primary forms are GSTR-9 for regular taxpayers, GSTR-9A for composition taxpayers, and GSTR-9C for reconciliation (if applicable).

What is GSTR-9?
GSTR-9 is the annual return form for regular taxpayers that consolidates data from monthly/quarterly GST returns filed during the financial year.

What is GSTR-9A?
GSTR-9A is the annual return form applicable to taxpayers who have opted for the Composition Scheme under GST.

What is GSTR-9C?
GSTR-9C is a reconciliation statement that compares data reported in GSTR-9 with the taxpayer’s audited annual financial statements. It is self-certified if turnover exceeds ₹5 crore.

Who is exempted from filing GSTR-9?
ISDs, persons liable to deduct TDS under Section 51, persons liable to collect TCS under Section 52, casual taxable persons, and non-resident taxable persons are exempt.

Are government departments required to file an annual return?
No, government departments or local authorities whose accounts are audited by CAG or statutory auditors are exempt from filing annual returns.

What is the turnover threshold for exemption from annual return filing?
Taxpayers with aggregate turnover up to ₹2 crore are exempt from filing the annual return for FY 2020-21 to FY 2023-24 as per respective notifications.

What is the due date for filing the GST annual return?
The annual return is due by December 31st of the financial year following the year to which the return relates.

Can the annual return be filed after 3 years?
Generally, no return can be filed after 3 years from the due date. However, the government can allow late filing via notification on the recommendation of the GST Council.

What is Section 44(2)?
Section 44(2), effective from October 1, 2023, limits the time for furnishing annual returns to three years from the original due date, unless extended by notification.

Is certification by a Chartered Accountant required for GSTR-9C?
No, post the 2021 amendment, GSTR-9C must be self-certified by the taxpayer instead of being certified by a CA or CMA.

What is the purpose of filing an annual return under GST?
The annual return provides a consolidated summary of GST transactions for the year, facilitates reconciliation with financial records, and ensures transparency and compliance.

What is Rule 80 under CGST Rules?
Rule 80 prescribes the manner, forms, and conditions for furnishing the annual return and reconciliation statement under GST.

What is Rule 68 under CGST Rules?
Rule 68 relates to issuing FORM GSTR-3A, which is a notice to taxpayers who fail to file their GST returns.

What happens if a taxpayer fails to file the annual return?
The taxpayer may receive a notice and be subject to penalties or late fees as per GST law.

Has the format or requirement of GSTR-9C changed over time?
Yes, the requirement for CA/CMA certification was removed in 2021. Now, GSTR-9C is self-certified, reducing the compliance burden for large taxpayers.

Is filing GSTR-9 mandatory for all taxpayers?
No, exemptions apply based on turnover and category. Taxpayers must check eligibility each year based on government notifications.

What is the benefit of filing the annual return and GSTR-9C?
It ensures complete disclosure of tax liability, aids in correcting errors, supports audit processes, and helps avoid future litigation.