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GST Audit for taxpayers with Annual turnover above 2 crores

Need for GST Audit and meaning

Audit under GST involves examination of records, returns and other documents maintained by a GST registered person. It also ensures correctness of turnover declared, taxes paid, refund claimed, input tax credit availed and assess other such compliances under GST Act to be checked by an authorized expert.

GST is a trust-based taxation regime wherein a taxpayer is required to self-assess his tax liability, pay taxes and file returns. Thus, to ensure whether the taxpayer has correctly self -assessed his tax liability a robust audit mechanism is a must. Various measures are taken by the government for proper implementation of GST and audit is one amongst them.

GST Audit Checklist:

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

1. Checking of GSTR 3B in relation to GSTR 1 & 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. 

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.

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. 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).

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