Balance sheet and profit and loss account

[PANKAJ CHUGH]

Hi

Kindly guide on following

1. Dealer has rental income for an amount of rain 2.5 crore during the FY.

Whether he is required to prepare balance sheet and profit and loss account for Gst purpose.

Thanks

[Rajagopalan Ranganathan]

Sir,

The answer is yes since the rental income from renting of immovable property exceeds the limit of ₹ 20 lakhs per year if the immovable property is rented for commercial purpose. You have to take registration and discharge gst.

[Himansu Sekhar]

As per Rule 85(3) Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

No where it is mentioned in the CGST Act to prepare the Balance sheet mandatorily.

[PANKAJ CHUGH]

Sir,

Thanks for your reply.

However, as per section 35 of cgst act which deals with maintenance of books of accounts does not talk about balance sheet and profit and loss account.

Please have a look and revert.

Thanks

[KASTURI SETHI]

GSTR 9C return is based on Annual Financial Statement which is to be filed under Rule 80(3) of CGST Rules read with Section 35(5) of CGST Act. Annual Financial Statement is the statement which consists of trading, profit and loss statement and balance sheet prepared annually. GSTR 9, 9A 9C return is based on Annual Financial Statement which includes, inter alia, balance sheet. Also see the legal definition of 'Annual Financial Statement'. Hence balance sheet is covered in the CGST Act & Rules.. I also support the views of both experts.

[MUKUND THAKKAR]

Balance sheet is summary of Books of Account. Agree with Inputs of all experts.

[Ganeshan Kalyani]

Yes, audited financial statement is required to be uploaded with 9C. Annual financial statements are prepared as required under Income Tax and uploaded in the Registrar of Company (ROC). Annual Financial Statement consists of Balance Sheet, Profit & Loss A/c, Cash Flow statement amongst other report. Thus, when GST annual return provision provides for audited financial statement then it means the books are to be maintained and get audited.

[DR.MARIAPPAN GOVINDARAJAN]

It is usual for a business entity to prepare profit and loss account and balance sheet that may be utilized for income tax purposes. Let the same useful to GST also.

[Himansu Sekhar]

Very useful discussion.

[PANKAJ CHUGH]

Thanks all the friends for their valuable comments.

[Ganeshan Kalyani]

You are welcome Sir.

AI Summary

Annual Financial Statement requirement: audited accounts including balance sheet and profit and loss must support GST annual return filings.
Registration and GST liability arise where rental income from commercial immovable property exceeds the prescribed threshold. Registered persons whose aggregate turnover crosses the audit threshold must furnish audited annual accounts and a reconciliation statement in FORM GSTR 9C. The CGST Rules' Annual Financial Statement incorporates trading accounts, profit and loss statements and a balance sheet, so audited financial statements prepared for other statutory filings satisfy GST annual return and audit requirements.