With various states now putting in place Omicron curbs, the MSME sector's working capital cycle is set to be severely hit again.

Bringing some relief to Covid-battered businesses on compliance front, the government on Wednesday extended till February 28 the deadline for them to file GST annual returns for 2020-21 fiscal ended March 2021.
"The due date for furnishing annual return in FORM GSTR-9 & self-certified reconciliation statement in FORM GSTR-9C for the financial year 2020-21 has been extended from 31.12.2021 to 28.02.2022," the Central Board of Indirect Taxes & Customs (CBIC) tweeted on Wednesday.

Tax experts believe that the government's decision would offer some breathing space to resource crunched businesses, particularly MSMEs, that are yet to emerge out of the pandemic's widespread fallouts. Industry reports say Covid has brought havoc to the working capital cycles of a majority of MSMEs in the last two years. With various states now putting in place Omicron curbs, the MSME sector's working capital cycle is set to be severely hit again.
"This extension would offload the work pressure on millions of MSME taxpayers and tax professionals, who were hard-pressed to meet several deadlines during the festivities. Now it is on MSME taxpayers to use this additional time judiciously and make good all the annual compliances without expecting any subsequent leeway," said Rajat Mohan, Senior Partner AMRG & Associates.
Vikas Singh Chauhan, Director at MSME dominated Home textile Exporters Welfare Association (HEWA), believes the development would minimize the error chances, reduce the cost factor for MSMEs as they now get more time to reconcile the data before filing. "Any filing done in haste is not advisable for MSMEs. Every MSME exporter was busy till November on fulfilment of Xmas and new year orders. Now as most overseas buyers are taking time off for new year holidays, I think reconciliation of revenuedata for GST filing can be planned better, well in time, and systemically too," Chauhan said.

Notably, GSTR 9 is an annual return to be filed yearly by taxpayers registered under the Goods and Services Tax (GST). It consists of details regarding the outward and inward supplies made or received under different tax heads. GSTR-9C is a statement of reconciliation between GSTR-9 and the audited annual financial statement.
As per the current GST rules, furnishing of the annual return is mandatory only for taxpayers with aggregate annual turnover above Rs 2 crore while reconciliation statement is to be furnished only by the registered persons having aggregate turnover above Rs 5 crore.

"The extension of two months provided to furnish the GST annual returns will enable all businesses, especially smaller ones, to complete the process of reconciliations with the accounts and tax returns and thereafter submit the GST annual returns. It may be noted that these returns are to be filed separately in respect of each state where the business operates and is registered, hence for multi-state registrants, it is a complex compliance activity," said M S Mani, Partner, Deloitte India.