GSTR-9 Annual Return 2025-26: Common Mistakes Leading to GST Notices

The Goods and Services Tax (GST) regime in India mandates all registered taxpayers to file their annual return in Form GSTR-9. For the Financial Year 2025-26, this filing is a critical compliance requirement that, if not handled with precision, can lead to significant scrutiny and the issuance of GST notices. Understanding and avoiding common pitfalls is paramount to maintaining a healthy compliance record and preventing demands for tax, interest, and penalties under the Central Goods and Services Tax (CGST) Act, 2017.

The Importance of Accurate GSTR-9 Filing

GSTR-9 serves as a comprehensive summary of all outward and inward supplies made during a financial year, including tax paid, input tax credit (ITC) claimed, and any refunds or demands. It reconciles the data filed in monthly or quarterly returns (GSTR-1 and GSTR-3B). Discrepancies between these returns and GSTR-9 are often the primary reason for GST notices. As per data released by the Central Board of Indirect Taxes and Customs (CBIC), a significant percentage of notices issued relate to mismatches and non-compliance identified during the annual return scrutiny process.

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Common Mistakes Leading to GST Notices

1. Discrepancies in Turnover Reporting

A frequent error involves mismatches between the total turnover declared in GSTR-1, GSTR-3B, and GSTR-9. Businesses often fail to reconcile the values of outward supplies, including exempt, non-GST, and zero-rated supplies, across all returns. Any difference, even minor, can trigger a notice under Section 61 of the CGST Act, 2017, requiring explanations for the discrepancies.

2. Incorrect Input Tax Credit (ITC) Reconciliation

One of the most critical areas for errors is the reconciliation of ITC claimed in GSTR-3B with the ITC available as per GSTR-2A and GSTR-2B. Businesses often claim ITC based on their books of accounts without verifying the matching entries in the supplier's GSTR-1, which reflects in GSTR-2A/2B. Non-reconciliation can lead to disallowance of ITC and demands for recovery under Section 73 or 74 of the CGST Act, 2017. It's essential to disclose all ITC details accurately in Table 6 and Table 7 of GSTR-9.

3. Errors in Reporting Tax Paid and Payable

Misreporting the tax paid through cash or credit ledger in GSTR-9 compared to GSTR-3B filings can also attract notices. This includes incorrect classifications of tax (CGST, SGST, IGST, Cess) or discrepancies in the amount of tax reported as payable versus actually paid. Such errors can lead to short payment of tax and subsequent interest and penalty liabilities.

4. Failure to Disclose Amendments or Adjustments

Businesses often overlook reporting amendments made to GSTR-1 or GSTR-3B filings after the original submission, or other adjustments like credit/debit notes, write-offs, or sales returns, in the GSTR-9. These retrospective changes must be accurately reflected in the annual return to ensure a complete and consistent data picture. Non-disclosure can lead to discrepancies that are easily flagged by the GST system.

5. Incorrect Disclosure of HSN/SAC Summary

The HSN (Harmonised System of Nomenclature) or SAC (Service Accounting Code) summary of outward supplies, as required in Table 17 of GSTR-9, must align with the GSTR-1 filings. Errors in categorisation or aggregate values can lead to scrutiny, especially for businesses with high turnover. Ensuring the accuracy of HSN/SAC codes is crucial for data consistency across all returns.

Checklist for Accurate GSTR-9 Filing for FY 2025-26

• Reconcile GSTR-1 with GSTR-3B: Ensure outward supply details match.
• Reconcile GSTR-3B with GSTR-2A/2B: Verify ITC claimed against available ITC.
• Verify Electronic Ledgers: Match cash and credit ledger balances.
• Review Books of Accounts: Cross-check all figures with audited financial statements.
• Categorise Supplies Correctly: Ensure proper classification of all types of outward and inward supplies.
• Update HSN/SAC Summary: Ensure accuracy and consistency with GSTR-1.
• Account for Amendments: Include all post-filing adjustments made in GSTR-1 and GSTR-3B.

Scenario: Avoiding an ITC Disallowance Notice

Consider a manufacturing company in Indore, "Global Engineering Pvt. Ltd.", which claimed ITC of Rs. 25 lakhs in FY 2025-26 based on their purchase invoices. During the GSTR-9 preparation, their internal team noted a discrepancy: Rs. 2 lakhs of ITC claimed was not reflecting in their GSTR-2A/2B due to one supplier failing to upload their GSTR-1. Instead of simply carrying forward the discrepancy, Global Engineering proactively contacted the supplier to rectify their GSTR-1. Simultaneously, they identified the specific ITC of Rs. 2 lakhs and decided to reverse it in their GSTR-9 if the supplier failed to update, thereby avoiding a potential notice under Section 74 of the CGST Act, 2017, for wrongful ITC claim, which could attract tax, interest, and a 100% penalty.

FAQs on GSTR-9 Annual Return and GST Notices

Q1: Who is required to file GSTR-9?

All registered taxpayers under GST, with a few exceptions like Input Service Distributors, Non-Resident Taxable Persons, persons paying tax under Section 10 of the CGST Act (Composition Scheme), and those covered under Section 51 (TDS) or Section 52 (TCS) of the CGST Act, 2017, are required to file GSTR-9 annually. However, for specific financial years, the government may provide exemptions based on turnover thresholds.

Q2: What is the deadline for filing GSTR-9 for FY 2025-26?

The due date for filing GSTR-9 for a financial year is typically 31st December of the subsequent financial year. Therefore, for Financial Year 2025-26, the deadline would generally be December 31, 2026. However, it is always advisable to refer to the latest notifications from the CBIC for any extensions or changes.

Q3: What happens if I file an incorrect GSTR-9?

Filing an incorrect GSTR-9 can lead to the issuance of GST notices. These notices could be for clarification (Section 61), demand for tax and interest for non-fraud cases (Section 73), or demand for tax, interest, and penalty for fraud/wilful misstatement (Section 74) of the CGST Act, 2017. Depending on the nature and magnitude of the error, penalties can range from 10% of the tax due to 100% or more, along with applicable interest.

Q4: Can I revise GSTR-9 after filing?

Currently, there is no provision to revise the GSTR-9 annual return once it has been filed. Therefore, utmost care must be taken to ensure accuracy before final submission. Any errors identified post-filing generally need to be addressed through a clarification in response to a notice or through subsequent year's returns if provisions allow.

Q5: When should I seek assistance from a GST consultant near me?

It is highly recommended to engage a qualified GST consultant near me or a Chartered Accountant, especially if your business has complex transactions, a high turnover, or you foresee difficulties in reconciling your returns. An expert can ensure accurate reconciliation, identify potential discrepancies, and help in responding to any GST notices. For specific GST litigation in Indore or across India, Accorg Consulting's experts can provide comprehensive support. Contact our experts for tailored advice.