GST Audit Checklist : User Guide on GST Audit

By | November 25, 2018
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(Last Updated On: November 25, 2018)

GST Audit Checklist

we have compiled GST Audit Checklist

Area wise working / checklist for annual return and GST audit in respect of  GST Registration, Invoicing Documentation, Goods Sent To Job Work, Supply of Goods & Services,  Time Of Supply, Input Tax Credit, Input Tax Service Distributor,  Classification Of Goods & Services,  GST Returns, GST Collections And Payment Verification, Reverse Charge, Value Of Supply, Place Of Supply,  GST Refund, Inward Supply, Maintenance Of Books Of Accounts and General points.

Checked ByYesNoNARemarks
1GST Audit Checklist for GST Registration Certificate
Have you checked whether the Supplier has applied for New Registration or has he Migrated?
Have you checked the registration details of:
Registered Person, Business Verticals, Factory / Warehouse / Godown, ISD and in respect of Other place of business?
Whether GSTIN is displayed in Name Board viz., Godown /Branches / other places of business?
Whether the additional place of business within the State is incorporated in Registration Certificate?
Whether the Separate Registration is taken for Input Service Distributor?
Whether any amendment is required to be made to the Registration Certificate?
Others, if any
2GST Audit Checklist for Invoicing documentation
Whether Tax Invoice or Bill of supply is issued as per GST law? Whether it contains all the relevant particulars as required under law?
Whether Tax Invoice for supply of goods is issued on or before the removal / delivery of goods?
Whether Tax Invoice for supply of services is issued within 30 days from date of supply of service?
Whether bill of supply is issued for exempt supplies/ non- GST supplies?
Whether the Revised Invoice is issued in case of New Registration?
Whether Receipt voucher is issued for receipt of advance?
Whether Self-invoice and payment voucher is issued in case of RCM transactions under section 9(4)?
Whether refund voucher is issued for refund of advance received?
Whether Credit note/ Debit notes are issued as per the provisions of the GST law as per section 34?
Whether Credit note/Debit Note is issued before 30th September of the Subsequent Financial Year?
Have you checked correctness of Tax Invoice /Bill of supply with the appropriate Supply Register/ GSTR 1?
Whether the Tax Invoice/Bill of supply is cancelled for genuine reasons, if any like Name of party /details where applicable?
Whether any Invoice cum Bill of supply is raised for specific transactions?
Whether the transport documents are maintained and verified?
Whether any copies of Credit Note and Debit Note are raised otherwise than as specified in section 34?
Whether the Delivery challan/E-way bill Register is maintained ?
Whether Series of documents issued as per clause 13 of GSTR 1 matches with Books of Account from July 2017 to March 2018?
Others if any specify
3GST Audit Checklist for Goods Sent to Job Work
Whether the conditions are fulfilled for claiming input tax credit on goods (including capital goods) sent for job work?
Whether the Principal has sent goods to the job worker under the cover of delivery challan?
Whether the registered person has furnished FORM ITC 04 for the quarters in which goods were sent out for job work?
In case the registered person has supplied goods directly from the place of business of job worker, whether he has satisfied the conditions laid down in proviso to Section 143 (1) of GST Act?
In case the job worker is unregistered, and such job worker has supplied any waste/ scrap generated during the job work from his place of business directly, whether the registered person has paid tax on such supply?
Have you checked any goods are sent for job work and returned within specified time?
Others if any specify
4GST Audit Checklist for Supply
Whether the kind of outward supplies like
Taxable supply, Exempted supply, Zero- rated supply, NIL rated supply, Supplies to SEZ unit / developers / Deemed Export and Merchant Export etc. are appropriately classified under GST law?
Whether any transactions which falls within the scope of supply has not been identified by the Registered Person?
Have you checked Interstate supply as per section 7(5) of IGST Act 2017?
Have you checked Intra State supply as per section 8 of IGST Act 2017?
Whether the Zero-rated supply is verified as per the provisions of the law?
Whether the supplies made by registered person falls within the meaning of Composite /non-composite/ Mixed supply? If yes, whether the same has been offered to tax as per section 8 of CGST Act?
Have you checked for sale of capital goods and the GST charged and as to whether they are included in the returns filed ?
Whether Interstate supply is regarded as Intra state supply and vice versa?
Whether abatement provisions, if any, are applicable (like one third for land) is compiled with?
Whether the transactions are correctly classified as supply of goods or supply of services?
Have you checked the deemed supply as per schedule I?
Are there any transactions wherein the goods sent for job work not received back is treated as supply?
Others if any specify
5GST Audit Checklist for Time of supply
Whether Time of supply provisions have been complied as per Section 12 and 13 of the CGST Act?
In case of change in rate of tax in respect of goods or services, whether the time of supply has been determined as per Section 14 of GST Act?
Whether time of supply is compiled for continuous supply of goods/Continuous supply of services should be verified?
Whether Time of supply is complied for Reverse charge?
Whether Time of supply is compiled for goods sent on approval?
Others if any specify
6GST Audit Checklist for Input Tax Credit
Have you checked the input tax credit availed with invoices from vendors like Bill of Entry, Tax Invoice, Debit Note, Self-Invoice, ISD Invoice?
Have you checked entries in Inward supplies records for input tax and reconciled with Invoices from the vendors?
Have you checked the inward supplies records with Monthly return and ascertained reasons for variations, if any?
Have you made a list of restricted input tax credit items as per the GST law?
Have you tallied monthly return with Input tax credit receivable, if any?
Have you reconciled tax collections with payments and transfer of the balance to appropriate accounts?
Have you checked adjustment of tax set-off by relevant journal entries?
Have you checked that input tax credit on capital goods is correctly availed?
Whether Input Tax credit is reversed for the sale of capital goods as specified in GST law?
Any Reversal of input tax credit for the goods sent for job work?
Whether the recipient of supply has effected payment for such inward supply within 180 days from the date of Invoice?
Whether input tax credit availed is debited to recoverable account for availing re-credit?
Whether the supplier has availed both benefits of depreciation and input tax credit?
Whether the documents (tax invoice/ debit note) on the basis on which input tax credit is claimed contains the mandatory details of recipient such as Name, GSTIN, Address and all other particulars as prescribed?
Whether Input tax credit is reversed against the receipt of Credit Note?
Whether input tax credit is bifurcated in to eligible, ineligible, blocked and common credits?
Whether the common credits are reversed as per Rule 42 of CGST Rules?
Whether input tax credit is availed on capital goods? If yes, whether credit is reversed as per Rule 43 of CGST Rules?
Whether reconciliation of input tax credit between GSTR 3B and GSTR 2A is done?
Whether Transitional Credit is availed as per the provisions of the law?
Whether any ineligible transitional credit is reversed as per the law?
Have you tallied monthly return with Input tax credit receivable?
Any Reversal of Input Tax Credit for change in scheme from composition to Regular?
Others if any specify
7GST Audit Checklist for Input Tax Service Distributor
Whether separate registration is taken as per Provisions of law?
Whether any tax is payable under reverse charge and obtained separate Registration?
Whether eligible and ineligible input tax credit is apportioned as per the GST law?
Is there is any reversal of Input tax credit and credit note is issued?
Whether the calculation of Turnover for allocating the input tax credit is as per the law?
Whether the ISD invoice containing the relevant particulars is issued correctly as per the provisions of the law?
Others if any specify
8GST Audit Checklist for Classifications
Whether the classification of goods/ services is in conformity with the Schedules / Notifications?
Whether the HSN classification is verified to confirm the rate of tax on goods and services?
Whether the HSN details for inward and outward supply are verified?
Whether the SAC code/HSN code is as per the law?
Whether the HSN/SAC classification is same as followed in erstwhile law if applicable?
Is there any specific Advance Ruling applicable?
Whether there has been any change in rate of tax during the period by way of amendment in rate of tax notification or exemption notification?
Others if any specify
9GST Audit Checklist for Returns
Whether the copies of GST returns filed by the registered person are reviewed?
Whether reconciliation of GSTR 9 with GSTR1 and GSTR 3B is done?
Whether interest which was due, has been paid while filing the Return?
Whether any late fee which is due is paid while filing the return or any late fee which was waived?
Whether transitional credit Returns are filed within the due date?
Whether transitional credit Returns are not filed due to technical glitches?
Whether the amendments details are filed correctly in the Returns?
Others if any specify
10GST Audit Checklist for GST collections and payment verification
Have you checked whether tax payable is paid within the prescribed time as per GST law?
Have you checked whether tax is being collected beyond tax payable? If yes, whether Sec. 76 is complied.
Whether the tax payer charged wrongly IGST in place of CGST/SGST or vice versa?
Have you followed the provisions of Rule 35 of the CGST Rules in respect of collection of taxes?
Is there any excess collection of taxes?
Others if any specify
11 GST Audit Checklist for Reverse Charge
Whether Reverse charge tax is paid under 9(4) of the CGST Act 2017 up to 12th October 2017?
Whether Reverse charge tax on notified supplies under section 9(3) and 9(5) of the CGST Act 2017 is duly paid?
Whether Reverse charge tax has been paid wrongly in lieu of CGST/SGST as IGST or vice versa?
Whether corresponding input tax credit is availed on Reverse charge?
Whether conditions of paying tax for RCM are fulfilled?
Others if any specify
12 GST Audit Checklist for Value of Supply
Whether all the inclusions to the value of supply as per section 15 of the Act have been verified?
Whether discount offered to customers (pre/ post supply) is not included in the value of supply after fulfillment of conditions under section 15(3) of the Act?
Whether valuation rules have been applied as per the GST law ?
Whether the registered person has claimed any pure agent deduction as per Rule 33?
In case the value of supply is inclusive of GST, whether the taxable value and tax amount is determined as per Rule 35 of CGST Rules, 2017?
In case of exports, whether the rate of exchange of currency is determined as per Rule 34 of CGST Rules, 2017 ?
Whether rate of tax charged for the supplies is as per the GST rate notifications issued/ amended from time to time?
Whether CGST/SGST/IGST are charged in accordance with place of supply provisions?
Whether the tax collected from the customers has been entirely remitted to Government?
Others if any specify
13 GST Audit Checklist for Place of supply
Whether the supply is inter-State/Intra State has been identified based on the policy document of the entity?
Whether the conditions for inter-State supply are fulfilled as per IGST Act, 2017?
Whether the conditions for intra-State supply are fulfilled as per IGST Act, 2017?
Whether the conditions for export of goods are fulfilled?
Whether the conditions are fulfilled for export of services?
Whether there are any imports of goods/import of services?
Whether the Zero-rated supply is with or without payment of taxes?
Whether the conditions for location of supplier are fulfilled?
Whether the supplier is intermediary under the GST Act and the conditions are fulfilled?
Whether the supplier has declared sale in course of Imports, Non-territory supply, High Sea supply in the Return correctly?
Whether the conditions for location of recipient are fulfilled?
Whether the wrong payment of tax i.e. IGST in lieu of SGST/CGST is claimed as refund?
Whether the wrong payment of tax i.e. SGST/CGST in lieu of IGST is claimed as refund?
Whether the Supply by SEZ to DTA is treated as inter-State subject to fulfilment of conditions?
Others if any specify
14 GST Audit Checklist for Refund
Whether the Supplier is eligible for Refund as per section 54?
Whether the supplier has applied for Refund and whether it is sanctioned?
Whether any Refund is Rejected or pending before the Authority?
Whether the Refund is Re-credited to Electronic Credit Ledger?
Whether the Manual /Electronic documents for Refund are verified?
Whether the Accounting impacts are given for Refund applied, pending, rejected or appealed?
Whether any Refund is wrongly applied like input services/Capital goods credit for inverted duty structure?
Whether Refund and Input Tax credit is claimed for the same transactions?
Whether interest on delayed refund is receivable?
Others if any specify
15 GST Audit Checklist for Inward supply
Have you checked purchase invoice/ delivery challans with purchase register?
Have you checked the HSN Classification for inward supplies?
Have you checked Inward supply with the Monthly returns?
Have you checked whether any input tax is added to the cost of purchase where input tax credit is not allowable?
Have you made a list of inward supply invoices for which there are no corresponding entries in inward supply records and GST return?
Have you checked that inward supplies are classified between intra-State, inter-State, Imports etc.?
Have you checked that purchases of capital goods are booked as fixed assets and the GST is paid thereon? Have you checked Assets which have depreciated 100%?
Have you checked sale / deletion of fixed assets?
Others if any specify
16 GST Audit Checklist for Maintenance of Books of Accounts
Whether books of accounts are maintained as specified in section 35 r/w Rules 56, 57 and 58 of the GST Law?
Whether Books of accounts are maintained electronically / Manually?
Whether books of accounts are maintained at each place of business?
Whether books of accounts are maintained Manually or Electronically? If the same is maintained Electronically, whether the software used complies with the requirements of the law?
Whether the copies of Agreements/Agent agreement and other supporting documents are obtained?
Whether the copies of Audited Financial Statements for each registration wise are obtained?
Whether Transporter/Warehouse keeper has maintained the books of Account as per the law ?
Whether the Register E-way Bill/Delivery challan is maintained as per the law?
Whether E- Way bills are used for Valid purpose?
Whether the register of ITC-01, ITC-02, ITC-03 and ITC-04 is maintained as per the GST law?
Whether the supplier maintains the Cash/Bank Register for recording the transactions entity wise?
Whether the books of Accounts maintained centralized or decentralized?
Others if any- specify
17 GST Audit Checklist for General
Whether the registered person has complied with Anti-Profiteering clause?
Whether reliance is placed on any notifications / clarifications / advance ruling / judgement in respect of rate of tax charged and collected. Whether any conflicting Advance Ruling order is applicable?
Are there any department inspection proceedings for Transitional Credits or any other demands created?
Have you checked for any adverse points in reports issued by Internal/ Statutory auditors or any other such reports?
Have you checked for any adverse points in reports in the previous year?
Have you checked that assessment orders / appeal orders/notices issued by the department, if any?
Is there any judicial pronouncement that could be applicable to the dealer?
Have you discussed any adverse issues arising out of the audit with the client?
Have you obtained the letter of appointment / issued the letter of acceptance of audit?
Have you come across any unusual transactions?
Have you checked miscellaneous receipts / other income?
Have you come across any huge or unusual inward or outward supply transactions / tax credits / tax payments etc.?
Have you noticed any comments on internal controls, periodicity of updation of accounts / records etc.?
Whether the registered person has availed the facility of digital signature?
Whether the Auditor has used appropriate Audit tools?
Others if any – specify
Place:Reviewed by – Manager / Partner / Proprietor
Date:

GST Audit Checklist : Invoice

HSN Codes

HSN code would be required to be mentioned in the Tax Invoices to be issued in the new financial year 2018-2019 in the manner stated below – Refer notification no. 12/2017-CT dated 28.06.2017

  • Taxpayers with turnover of upto Rs.1.5 crore may not mention HSN Code in the tax invoices
  • Taxpayers with turnover of more than Rs.1.5 crore but upto Rs.5 crore shall mention 2 digit HSN code in the tax invoices
  • The taxpayers with turnover of more than Rs.5 crore shall use 4-digit HSN code in the tax invoices

Invoice Series

GST Tax Invoice series must be unique for the Financial Year. Rule 46(b) of CGST Rules 2017 narrates such provision as folloe

Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,—

(b)a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters-hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

Time for issue of Tax Invoice

Taxpayers should ensure that Tax Invoice and other documents are issued as per the provisions mentioned in Section 31 of CGST Act 2017

Time of Supply under GST

GST Audit Checklist :Carry forward of Cenvat /VAT Credit : TRAN 

Audit Checklist :

Auditor should check :-

  • 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 ?

GST Audit Checklist : Registration

Audit Checklist :

Auditor should check :-

  • Is Certificate of registration prominently displayed in all locations where business was done?
  • Is GSTIN no. Included along with the name of the business in displays?

GST Audit Checklist : Capital Goods

As per Section 16(3) of CGST Act 2017

Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.

Audit Checklist :

While calculating depreciation on the capital goods (other than building), if the ITC has been claimed, then auditor has ensure that the tax amount should to be ignored.

GST Audit Checklist : Input Tax Credit

Audit Checklist :

Auditor should check :-

  • List of major Input services /inputs on which the company takes Input Tax Credit
  • Check to ensure SGST ITC is not utilized against
  • Whether the person has taken the Input Tax Credit in respect of input and capital goods  and Services on the basis of proper duty paying documents, containing all particulars as prescribed by CGST Rules read with section 31 of the CGST Act, 2017, i.e.,serially numbered invoice / bill not exceeding sixteen characters,  containing the requisite information like, Name, address and GST Number of  recipient, Name, address and Goods and Services Tax No. of supplier , date of   issue, HSN  code of goods , Services , etc.?
  • In case the registered recipient has failed to make payment (full or part) to the registered supplier within a period of 180 days from the date of invoice, proportionate input tax credit to the extent of such non-payment has to be reversed by the registered recipient – Section 16(2) of CGST Act read with Rule 37(1) of CGST Rules 2017

Section 17(1) of CGST Act  Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.

Audit Checklist :

Auditor should check :-

  • Input tax credit has been used in respect of supplies  affected for Business purpose only as per Rule 42 and 43 of CGST Rules?

Section 17(2) of CGST Act : Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

Audit Checklist :

Auditor should check :-

Input Tax Credit : Blocked

Section 17(5) of CGST Act , provides list of supply on which Input Tax Credit can not be claimed.

Audit Checklist :

Input Tax Credit : Matching

Audit Checklist :

  • Month wise reconciliation of ITC availed in the Books vs. GSTR 3B should be done.
  • Month wise reconciliation of ITC (B2B) availed in GSTR 3B Vs. ITC auto-populated in Form GSTR 2A should be done. Any variance should be adjusted in Form GSTR 3B for March’2018 or in subsequent months GSTR 3B return.
  • Timing difference and value difference should be identified and appropriate action to be taken

Input Tax Credit : Input Service Distributor

Audit Checklist :

Auditor should check :-

  • Whether ITC distributed is in compliance to Section 20 of the CGST Act 2017 (Input Service Distributor ) If answer to above is negative, provide the discrepancy in the distribution and reasons thereof.
  • An ISD should ensure that ITC is distributed to the recipients in the same month it is available for distribution – Rule 39 of CGST Rules 2017
  • Amount of GST Input Tax credits received from Input Service Distributor, if any together with address of the unit from which it is received.
  • Reconciliation of ITC (B2B) auto-populated in Form GSTR 6A Vs. Books should be done

Input Tax Credit Checklist

Refer GST Input Tax Credit Review Audit – 

GST Audit Checklist : Refund

General Point of Refund

Audit Checklist :

  • A registered person making normal taxable supply cannot claim refund of unutilised ITC as on 31st March 2018. The same has to be compulsorily carried forward to the next tax period.
  • Taxpayers having excess balance in electronic cash ledger which is not planned to be utilised in the the near future may be claimed as refund.

Refund of Export of Services

Section 2(6) of IGST Act  :- export of services” means the supply of any service when,—

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

Case Law : GST applicable on Overseas Education Advisory to students in India : AAR

Audit Checklist :

Auditor should check :-

  • Are services provided outside India? If Yes, Please specify nature of Service and amount involved
  • Value of services exported
    • With payment of IGST and claimed refund
    • Without payment of IGST under the cover LUT or Bond and claimed refund
  •  whether a transaction is export of service, then only claim the benefit of refund claim on export where export is made with/without payment of tax but after furnishing bond of LUT in the latter case
  • If export is made  without IGST , Check LUT / Bond has been given before Export
  • Check refund claim
  • Is the payment for services exported received by the service provider in convertible foreign currency within the time limit prescribed by RBI? If not, give details.

GST Audit Checklist : Import of Services

Section 2(11)  of IGST Act 2017 “import of services” means the supply of any service, where—

(i) the supplier of service is located outside India;

(ii) the recipient of service is located in India; and

(iii) the place of supply of service is in India;

Audit Checklist :

Auditor should check :-

  • Whether IGST has been paid on ‘import of services’?

GST Audit Checklist : Job Work

As per Rule 45(3) of CGST Rules 2017

The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding the said quarter or within such further period as may be extended by the Commissioner by a notification in this behalf:

Provided that any extension of the time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.

Audit Checklist :

GST Audit Checklist : Accounts and Records

Taxpayer has to  maintain accounts and records in terms of Section 35 -36 of the CGST Act, 2017 read with Rule 56 to 58 of the CGST Rules, 2017.

Audit Checklist :

Auditor should check :-

  •  List of Books of Accounts maintained
  •  Places where accounts

GST Audit Checklist : GST Returns

Audit Checklist :

Auditor should check :-

  • Whether GST returns are filed on due Date ? : Refer  GST return Due dates
  • 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.
  • The deductions from the total turnover including deduction on account of sales /supply returns claimed in the returns which are to be in conformity with the provisions of the law.
  •  The adjustment to turnover of outward supplies and inward supplies has to be based on the entries made in the books of account maintained for the year.
  • The classification of outward goods/services supplied and inward supplies, rate of tax applicable and computation of output tax and input tax , Input Tax Reversals and net tax payable as shown in the return has to be certified as correct.
  • Whether the registered person have filed the applicable returns on timely basis as notified by the Government?
  • Is GSTR 1 / GSTR 3B Returns etc  tallied with books of accounts?
  • Return filing cycle :Auditor should check with the aggregate turnover for the FY 2017-2018 and the projected aggregate turnover for the FY 2018-2019 in order to determine the return filing cycle for the FY 2018-2019:
    • If the aggregate turnover is above Rs.1.5 crore then the taxpayers have to file monthly return.
    • If the aggregate turnover is upto Rs.1.5 Crore then the taxpayers have an option to file the quarterly
    • Taxpayer can choose any of the option, but once selected the option cannot be changed for the financial year.

GST Audit Checklist : GST Reverse Charge

Under Reverse Charge Mechanism , obligation to discharge  GST lies on the service receiver/ recipient of supply. RCM under GST depends on the nature of supply and/or nature of supplier .

Compulsory Reverse Charge based on nature of Supply : Section 9(3) of CGST Act / Section 5(3) of the IGST Act specify categories of supply of goods or services or both as notified by Government on recommendations of the Council on which RCM is applicable.

Reverse charge on certain specified supplies of goods :  Notification No.4/2017-Central Tax (Rate) & 4/2017 Integrated Tax (Rate) Dated  28th June, 2017 with Amendments

Reverse charge on certain specified supplies of Services : Notification No. 13/2017- Central Tax ( Rate ) & 10/2017 Integrated Tax (Rate)  dated 28.06.2017 with Amendments

Intra-State inward supplies received from unregistered person

Compulsory Reverse Charge  based on nature of supplier. : Section 9(4) of CGST specify  that if supply of taxable goods or services or both by an unregistered supplier to a registered person  then GST shall be paid by recipient under Reverse Charge Mechanism .

w.e.f 01.07.2017 Reverse charge mechanism under section 9(4) CGST will be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds  Rs 5000 in a day.   [Notification No.8/2017-Central Tax (Rate) dated 28.06.2017]

Note- w.e.f 13.10.2017 , Section9 (4) of CGST Act and applicability deffered till 30.06.2018

[ Notification No.38/2017-Central Tax (Rate)  dated 13.10.2017 and 10/2018  Central Tax (Rate) 23rd March, 2018 ]

Inter State inward supplies received from unregistered person

Compulsory Reverse Charge  based on nature of supplier  : Section 5(4) of the IGST Act specify  that if supply of taxable goods or services or both by an unregistered supplier to a registered person  then GST shall be paid by recipient under Reverse Charge Mechanism .

Note- w.e.f 13.10.2017 : Govt has exempted the inter-State supply of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the integrated tax leviable u/s 5(4) of IGST Act

Thus  Section 5(4) of CGST Act and applicability deffered till 30.06.2018

[ Notification No. 32/2017 – Integrated Tax (Rate) dated 13th October, 2017 and Notification No. 11/2018-Integrated Tax (Rate) ,dt. 23-03-2018

Audit Checklist :

Auditor should check :-

  • Whether registered person has followed the requirement of reverse charge  under Section 9(3)  and 9(4) of the CGST and u/s 5(3) and  5(4) of IGST Act for each GST registered places ?
  • Whether registered person  has made  GST payment under reverse charge on supplies received from unregistered supplier from  1st july 2017 to  12 th October 12,2017 for
    •  Intra Sate Purchases from unregistered person  if aggregate value of supplies of goods or services or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds Rs. 5000/- in a day
    • Inter State Purchases from unregistered person
  • Whether in respect of each inward supply where no tax has been paid, is there is a clear disclosure made to the auditors as to the reasons for the tax position taken in each case? Auditor may examine, if the tax position taken requires to be reported in the audit report or other communication?

Input Tax Credit Can be used to pay Output Tax

Section 49(4) of CGST Act 2017 : The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed.

Tax Payable under Reverse charge is not Output Tax

Section 2(82) of CGST Act 2017output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludestax payable by him on reverse charge basis;

Thus Input Tax credit can not be used to pay output Tax under Reverse ChargeIt has to be paid in cash/Bank.

Section 2(62) of CGST Act 2017:-

input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes

(a) the integrated goods and services tax charged on import of goods;

(bthe tax payable under the provisions of sub-sections (3)and (4)of section 9;

(c) the tax payable under the provisions of sub-sections (3)and (4)of section 5 of the Integrated Goods and Services Tax Act;

(d) the tax payable under the provisions of sub-sections (3)and (4)of section 9 of the respective State Goods and Services Tax Act; or

(e) the tax payable under the provisions of sub-sections (3)and (4)of section 7 of the Union Territory Goods and Services Tax Act,

but does not include the tax paid under the composition levy;

You can take Input Tax credit  after Reverse Charge has been  paid  through cash/Bank.

Audit Checklist :

Auditor should check :-

  • Whether the credit taken under reverse charge mechanism is only after making payment of GST?

GST Audit Checklist  : GST Payments

Audit Checklist :

Auditor should check :-

  •  Whether payment and ledger entries is made in terms CGST Act and payment rules given in CGST Rules, 2017?
  •  If Tax is paid belatedly, specify interest paid on delayed payment under Section 50 of the CGST Act,2017
  • Whether Tax wrongfully collected and paid to Central or State Government (interstate supply considered as intra state supply or vice versa)? If Yes, state the details of transaction (quantum)

GST Audit Checklist  : Composition Scheme

Audit Checklist :

  • Check whether the whether registered person opting composition scheme is eligible to opt for GST Composition Scheme . Read Composition Scheme under GST – Analysis
  • Check Whether registered person opting composition scheme are having multiple registrations in different states with the same PAN (Distinct persons)? If yes, all other entities registered with the same PAN must also opt for composition scheme.
  • Check correct GST has been paid under GST Composition scheme. GST Composition Scheme Rate Reduced w.e.f 01.01.2018 [ Video by TaxHeal ]
  • Check whether registered person opting composition scheme has filed quarterly returns in GSTR 4. Read GSTR 4 Due Dates.
  • Check whether  registered person opting composition scheme has Issued Bill of supply for every supply in lieu of tax invoice.
  • Check whether  registered person opting composition scheme mention the words ―composition taxable person, not eligible to collect tax on supplies‖ at the top of every bill of supply issued by you.
  • Check whether  registered person opting composition scheme  mention the words ―composition taxable person‖ on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
  • Check whether taxpayer has file GST CMP 4 if he had opted out of the Composition Schme? Taxpayer can opt out of composition scheme anytime by filing FORM GST CMP-04 in terms of Rule 6(3) of CGST Rules. on GST Common Portal ( www.gst.gov.in)  within seven days of occurrence of any such event warranting exit from the scheme.
  • On withdrawal from the composition, take Credit of tax paid on the stock lying with you by filing Form GST ITC-01 within 30 days from the date when the option for withdrawal was exercised, on the common portal, containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock.
  • GST composition Scheme changes w.e.f 13.10.2017

GST Audit Checklist : Anti-profiteering guidelines

Section 171 (1) of CGST Act :  Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

Audit Checklist :

Auditor should check whether anti-profiteering guidelines issued under Section  171 of CGST Act 2017 complied?

GST Audit Checklist GST Ready Reckoner (6th Edition 2018)

Note :  along with above GST Audit Checklist , you should refer all the relevant circular and notifications on Govt website of CBEC 

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