GST Audit Checklist

we have compiled GST Audit Checklist

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;

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 : 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.?

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 has been used in respect of supplies taxable supplies only as per Rule 42 and 43 of CGST Rules ?

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.
Amount of GST Input Tax credits received from Input Service Distributor, if any together with address of the unit from which it is received.

GST Audit Checklist : 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 : 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 :-

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?

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 2017“output 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 Charge. It 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;

(b) the 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 : 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 :-

Are anti-profiteering guidelines issued under Section 171 complied?

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

Goods and Service Tax in India

Tuesday, July 24, 2018

GST Audit Checklist : User Guide on GST Audit

GST Audit Checklist

GST Audit Checklist : Invoice

HSN Codes

Invoice Series

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

GST Audit Checklist : Registration

GST Audit Checklist : Input Tax Credit

GST Audit Checklist : Refund of Export of Services

GST Audit Checklist : Import of Services

GST Audit Checklist : Accounts and Records

GST Audit Checklist : GST Returns

GST Audit Checklist : GST Reverse Charge

GST Audit Checklist : GST Payments

Related Post on Audit

No comments:

Post a Comment

Blog Archive