GST Audit

Similar to the other laws, there is a requirement for certain categories of taxpayers to undergo annual audit under GST.  As per Section 35(5) of the CGST Act read with rule 80(3) of the CGST Rules, “every registered taxpayer whose turnover exceeds INR 2 crores in a financial year is required to get the accounts audited by a practicing Chartered Accountant and submit a copy of the audited annual accounts and reconciliation statement in Form GSTR 9C.”

Accordingly, every taxpayer having turnover exceeding INR 2 crores is required to submit GSTR 9C duly certified by a practicing Chartered Accountant or a Cost Accountant along with GSTR 9.  This certification is required once for every financial year.

In addition to the above, the GST law also has provisions for a department audit/ special audit by a practicing Chartered Accountant or Cost Accountant on a need basis.

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1. Reconciliation between books and monthly/ quarterly returns (GSTR 1)
2. Valuation of supply
3. Sales returns
4. Classification and rate of tax applicable
5. Export of goods and services
6. Sale of Capital assets

• 1. Availing Eligible Input: Assist in maximization of credit availment under GST law.
  2. Payment to supplier: Verification of payments made to suppliers vis-à-vis claim of Input Tax Credit
  3. Reconciliation between books and returns: Verification of ITC claimed as per books and the GST monthly/ quarterly returns (Input claimed in GSTR 3B)
  4. Reversals of excess ITC and interest: Analysis of ineligible transactions and reversal of excess ITC claimed and computation of interest.
  5. ITC reversal: Reversal of ITC on sample sales, wastage etc. and exceptional events like damages, fire accidents etc.
  6. Reverse Charge Mechanism: Scrutinizing ledgers and verification of payment of GST under Reverse Charge Mechanism on taxable transactions.

1. Filing returns: Compliance regarding timing of filing returns and implication of delay
2. Interest and Penalty: Computation of interest and penalty in case of delays in tax payment
3. Place and time of supply: Determination of the place and time of supply of goods and services under GST law
4. Notifications and circulars: Identification of applicable notifications and circulars to the business of client

1. Ledger scrutiny: Analysis of transactions for identification of eligible ITC and payment of tax on output liability
2. Process controls and compliance: Review of the organization structure established for ensuring GST compliance.
3. Maintenance of records: Review of adequacy and efficacy of records maintained under GST.
4. Job work: Review internal control mechanism in case of Job Work, Sale on approval basis, Sales returns etc.

• Input Tax Credit
  • Monthly return comparisons with books
  • ITC mismatches, reversals and reclaimed during the year
• Output Liability
  • Monthly return comparisons with books
  • Reconciliation between value of supplies as per annual return with audited financial statement
  • Percentage of supplies from RCM
• Internal Control
  • Vendor wise compliance rating
  • Recommendations on efficiency and effectiveness of internal control
• Compliance
  • Transitional Compliance
  • Cost of non -compliance matrix
  • Annual Return in GSTR Form 9C
  • Other statements and reports as mandated timely by GST law