GST Audit Services

It is mandatory for the taxpayer or company to have GST Audit performed in the following scenarios-

• Every business owner having a turnover of the company above Rs. 2 Crores during a financial year is liable to have a GST Audit. The audit turnover limit is same for each and every registered taxpayer all over India. Since every state has a separate GST Act, the GST Audits are performed state wise as per the GST rules of that state.
• Normal/general audits are conducted by the CGST commissioner or SGST commissioner or a person appointed by him for each and every instance and situation, prescribed in the GST Act.
• The taxation department can conduct Special GST Audit whenever they feel right.

Normally, following are involved:

• With the help of a comprehensive GST Audit Checklist, the authorized officer and the officials check all the books and accounts of the taxpayer, during a GST Audit.
• They are required to verify each and every document, maintained records and books, returns and statements furnished by the taxpayer to check whether correct values are shown in returns, correct input tax has been claimed, calculation of GST has been properly done, returns have been filed within time limit, there is no loss to revenue and above all there has been no fraud conducted by the registered person.
• The authorities also need to verify whether proper books, challans, invoices prescribed under the Act and Rules have been maintained in case of normal dealers as well as in special cases like that of Exporters, Job Workers, Intermediaries etc.
• The GST Auditors have to analyse the information and interpret it. They have to record it in form of audit notes. Once all the information is recorded the same after auditing is to be provided to the taxpayer for future references.

Reconciliation of GST Return in GST Audit:

Every registered taxpayers have to file GST Returns within due date prescribed. GST Return filing is required to be done twice on monthly basis and once on annual basis in case of suppliers having total turnover of more than Rs 1.5 crore during a year. For small suppliers having annual Turnover below Rs 1.5 crore, GST return need to be filed on monthly and quarterly basis and no need to file annual return.

This means that total 25 GST Returns has to be filed by the taxpayer in a year having turnover more than Rs 1.5 crore and total 16 GST returns has to be filed by the taxpayers having turnover less than Rs 1.5 crore. The timelines of GST Returns to be filed are as follows:

• GST Return for outward supply is to be filed in GSTR-1 by 10^thof every next month for large taxpayers.
• GST Return for outward supply is to be filed in GSTR-1 by 31st of next month after end of quarter for small taxpayers
• A combined monthly GST Return is to be filed in GSTR-3 by 20^thof every next month.
• An annual GST Return in form GSTR-9 is to be filed on or before 31^stDecember of each financial year.

During a GST Audit of the company or the firm, the auditor has to make sure that the returns filed by them in GSTR-1, GSTR-3 reconciles with each other as well as with GSTR-9. It is a very important step in GST Audit that the filed returns filed and shown amounts are matching with the information in each of them.

In order to conduct proper GST Audit, following list of documents need to be verified:-

• Copies of GSTR-1 returns filed during a particular financial year.
• Copies of GSTR-3B returns filed during the fiscal year by the taxpayer.
• Copies of all the Debit and Credit notes.
• Copies of Bank statements for the entire fiscal year.
• Copy of Audited Annual Accounts.
• Reconciliation Statement reconciling the value of supplies declared in the Returns furnished for the financial year along with the audited Annual Financial Statements. Further, the aforesaid Reconciliation Statement shall be duly certified in Form GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
• Copy of balance sheet along with notes.
• Copy of Profit and loss account along with necessary notes.
• Copy of invoices of sales, purchase and expenses bill.
• In case of imports, a copy of imported bills of entry, shipping bills, IGMs.
• In case of initiated export, a copy of export bills, EGMs etc.
• Delivery challans, invoices for goods sent for job work.
• Copy of stock register
• Other mandated documents in prescribed form and manner.

GST Auditor:

GST Auditor is a person who is appointed by the taxation authorities or by a taxpayer when the necessary conditions to conduct a GST Audit is met. The person must be qualified and skilled and should have proper experience in order to be appointed as a GST Auditor as the GST laws and rules. Generally, practicing chartered accountants and Cost Accountants are appointed for conducting GST audit by registered person.

Since GST is a new legislation and normally taxpayers are not conversant with all the rules and regulations, there is bound to be some non-compliance or unintended mistakes in recording of transactions or computation of tax or filing of returns, therefore, it is very important that these should be highlighted at time of GST Audit.

Typically, GST Audit services should cover following:

• Checking the invoices on test check basis to determine whether HSN code, Place of supply, rate, serial no; of invoices etc have been correctly mentioned.
• Whether Transitional provisions have been complied properly. Whether the person have filed TRANS-1 and the said form has carried forward all the accumulated credits appearing as closing balance in the service tax returns/Excise /VAT returns ?
• Registration certificate properly displayed along with GSTIN
• Whether depreciation has been claimed on fixed assets or ITC claimed
• Whether ITC has been properly claimed on basis of duty paying documents and only for business purpose. Whether registered recipient has made payment to registered supplier within 6 months.
• Whether Input tax credit has been used in respect of supplies taxable supplies only.
• Matching of month wise ITC availed with GSTR3B.
• Whether Month wise reconciliation of ITC (B2B) availed in GSTR 3B Vs. ITC auto-populated in Form GSTR 2A has been done. Any variance should be adjusted in Form GSTR 3B for March’2018 or in subsequent months GSTR 3B return.
• Whether Timing difference and value difference has been identified and appropriate action taken.
• Analysis of payment of GST at time of export and import of goods.
• In case of job work whether ITC-4 has been filed in time
• List of books of accounts maintained and place where such accounts are kept.
• Analysis of GST returns to determine whether GST returns are filed on due Date. The total turnover of outward supplies declared in the returns including all the outward supplies taxable under GST Act effected during the year. The total turnover of inward supplies declared in the returns including all the inward supplies taxable under GST Act made during the year.
• Whether provisions of reverse charge properly applied.
• Whether anti-profiteering guidelines issued under Section 171 of CGST Act 2017 complied?
• Whether all the annexures relating to GST audit report has been prepared properly.