GST Audit Checklist, Rules & Applicability

  • Blog|GST & Customs|
  • 3 Min Read
  • By Taxmann
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  • Last Updated on 2 December, 2022

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When a taxpayer has the registration under GST, all the records maintained by him would pass through GST audit. Here, the main goal is to check the veracity of the declaration of information in records and know their compliance with the GST rules. 

1. GST Audit Applicability

GST audit applicability has strong mechanism for audit that could fully make examination of the records to make sure full compliance of tax rules. So the most challenging part of important audit checkpoints is reconciliation of records in the books to avoid GST evasion.

2. Important Rules of GST Audit

As per the GST audit checklist, stricter rules are now in force that makes it absolutely necessary to make analysis of the data gaps between GST returns. It has strictly asked the business houses to conduct periodic checks and install internal controls. This would for sure do away with the data gaps and make sure the necessary compliance with the GST rules. 

Taxmann’s GST Audit and Annual Return – F.Y. 2019-20 caters to handle the preparation and filing of GSTR 9, GSTR 9A/4, and GSTR 9C for FY 2019-20 which is currently supposed to be filed till 28th February 2021. This book serves as a ready referencer for all the professionals like CA and their Articles, CS, CWA, Advocates, etc. in handling audit and annual return assignments.

3. Mandatory Internal Audits

GST authorities have now begun issuing show-cause notices to business houses for strict compliance of GST norms. Internal audit of the GST records could bring succor to a business in order to run check on the operating efficacy of internal financial controls and know important areas of risk and finally adopt necessary measures to minimize risks. 

4. GST Audit Checklist

The following are the mandatory GST Audit checklist that requires strict compliance:

4.1 Checking of GSTR 3B in relation to GSTR 1 and GSTR 2A. 

Two important points get covered under this heading:

a) Interest and penalties in GST Act:

 Under this recipient could claim extra input tax credit. And for this, it is compulsory for him to make a payment of interest @ 24%. This is applicable on the excess tax amount. Auditors need to reconcile the GSTR 3B with GSTR 2A to make sure that the organization would not claim extra tax credit. If it has been paid in excess, company would pay interest and the tax amount on the applicable date. When the GST authorities come to know about the data gaps between GSTR 3B and GSTR 2A, the tax payers might have to pay the interest and penalty. 

b) Amendment in GSTR:

 When the auditor comes to know about the data gaps, he would recommend the management to make amendment of the invoices at summary levels in GSTR 1. 

4.2 Checking Particulars of Invoice

It is very clear that there are specific rules related to the details in the invoices. If the format of the invoice varies, he would advise the management to make amendment of the invoice and include the requirements of the GST rules.

4.3 Reversal of Input tax credit for non-payment in 180 days

 At this stage the GST auditor has to check the following details:
 
a) Difference between invoice date and date of payment. And this would not exceed 180 days. 
 
b) The amount of payment needs to remain equal with invoice amount and GST. If the payment amount is less than invoice amount plus GST, the input tax credit to the extent of short payment would get reversed.

4.4 Reviewing e-way bill and matching with invoices

 This step consists of three stages, such as:
 
a) Results of any mismatch shown in the e-way bill in relation to invoice. As it is a familiar fact that an e-way bill is not alterable and it is not possible to delete it. But it is permissible for cancellation within 24 hours of its generation. When the goods get shifted without e-way bill, the designated authority could impose fine for this.
 
b) Important points:
    • Whenever it is necessary for business, e-way bill is quite unavoidable.
    • And details given in the e-way bill need to match with invoice.
c) Movement of goods in non-motorized vehicles:
Whenever transportation takes place in non-motorized vehicles, the necessity of issuing e-way bill does not arise.  As some businesses are taking to this practice in order to avoid the e-way bills, internal auditors need to closely scrutinize the e-way bill is more worth more than fifty thousand rupees.
 

5. Cross-checking the stock pending with job-workers on 30th June, 2017

As it is mandatory that goods lying with job workers on 30th June 2017 need to get received within a period of one year. The capital goods lying with job workers require to be brought back before 30th June 2019 (within a period of two years).

Dive Deeper:
All about GST Audit you should know
Types of GST Audit
Can GST Practitioners conduct GST Audit?

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