Annual GST Audit Checklist: An Ultimate Guide

GST Audits are a key part of the GST compliance process and are required for businesses with a turnover of more than Rs.2 crore. The annual GST Audit Checklist is important to ensure that all aspects of GST compliance are covered. This checklist will help you ensure that your business complies with GST regulations for the 2021-22 financial year.

The GST Audit Checklist provides a summary of the key areas that need to be reviewed as part of the GST Audit. It is important to ensure that all these areas are covered to maintain GST compliance.

Are you a GST-registered business with a turnover of more than Rs.2 crore? If so, you must complete a GST audit every year. This article aims to provide you with a checklist to help you through the process.

What is a GST Audit?

The GST Audit is a mandatory annual check for businesses registered under the Goods and Services Tax (GST) regime. The audit is conducted to ensure that businesses are complying with the GST laws and regulations. The turnover limit for a business to be eligible for a GST audit is Rs.2 crore.

What is the turnover limit for a GST audit?

The turnover limit for GST Audit is Rs.2 crore. This means businesses with a turnover of more than Rs.2 crore must undergo an annual GST Audit.

What is included in the GST Audit?

The GST Audit involves reviewing all aspects of GST compliance, including registration, invoicing, payments, and returns. Ensuring that all aspects of GST compliance are correctly followed is important to avoid any penalties or fines.

Why GST Audit is needed?

First, it’s important to note that the requirement for GST audit and submission of GSTR-9C as certified by the CA/CMA is removed as per the Finance Act, 2021. However, the GST Council has recommended that GSTR-9C may still be submitted as self-certified by taxpayers with an annual aggregate turnover of up to Rs.2 crore.

So what does this mean for businesses with turnover above Rs.2 crore? According to the GST Act, Sections 35(5) and 44(2), these businesses must get their accounts audited by a CA/CMA and submit a GSTR-9C form to the government.

If you’re unsure of what needs to be included in your GSTR-9C, the following checklist will help.

• Details of total turnover and taxable turnover for the financial year
• Details of exempt turnover for the financial year
• Details of input tax credit availed and utilized during the financial year
• GST paid or payable on inward supplies, including deemed supplies, during the financial year
• GST paid or payable on outward supplies, including deemed supplies, during the financial year
• Details of any refund claimed and received during the financial year
• Additional information, as required by the CBIC

Once you have completed your GST audit, be sure to submit your GSTR-9C form to the government by the due date. For more information, please visit the CBIC website.

GST Audit Procedure

A detailed audit is conducted to check more detailed aspects of the taxpayer’s compliance.

The GST Audit procedure is as follows:

1. The taxpayer is notified of the audit and the date by which it needs to be completed.
2. The auditor is appointed, and the audit begins.
3. The auditor checks whether the business is complying with the GST law and regulations.
4. The auditor checks the documents and records of the business.
5. The auditor conducts physical verification of the business premises.
6. The auditor prepares a report of the audit and submits it to the GST department.

The GST Audit is an important check on businesses to ensure that they are complying with the GST law. It is important for businesses to ensure that they are prepared for the audit and that their documents and records are in order. The GST Audit checklist can help businesses to prepare for the audit.

GST Audit Checklist

The GST Audit checklist is a detailed list of items that need to be checked during the audit. The checklist includes details of the business, such as its name, address, and GSTIN number. It also includes a list of documents that need to be checked, such as invoices, purchase and sales registers, and bills. The GST Audit checklist also includes a list of items that need to be checked during the physical verification of the business premises.

Here is the complete checklist for the GST Audit.

Understanding Of Client Business

BASIC DATA 

1. Name of the client
2. Constitution Type – Private, Public, Section 8
3. Registered Office 
4. Branches / Warehouses / Factory address
5. Nature of Business
6. Supply list, including HSN and rate

MANAGEMENT

1. Key Shareholders 
2. Key Management Personnel (KMP) / Other Company Officers 
3. Directors and Constitution of the Board 
4. Independent Directors and Committees of the Board 
5. A list of all Related Parties and the nature of their relationships is provided.

INDUSTRY DYNAMICS 

1. The industry in which the client operates
2. Seasonality / Trends in the Industry 
3. Present state and prognosis for the industry 
4. Client state vs. industry benchmarks 
5. Key Competitors
6. Key Suppliers 
7. Key customers and marketing relationships 

ACCOUNTING SYSTEMS AND INTERNAL CONTROLS 

1. Standard Operating Procedures
2. Delegation of Powers 
3. The IT environment in the entity 
4. Financial Reporting Protocols 
5. Management Reporting Protocols 

Registration

1. Obtain the list of registrations in the pre-GST regime and ensure migration.
2. Is registration required in every state where supplies are made?
3. Whether compulsory registration is required, u/s. 24 of CGST Act is obtained?
4. Whether the entity was registered as a composition dealer at any time during the year?
5. Whether additional places of business within a state are added to the registration certificate
6. Whether registration for ISD has been obtained for the transfer of ITC in respect of services
7. Whether GSTIN is displayed on Name Boards

Supply

1. GST is paid based on provisions of Sections 12 & 13 of the CGST Act.
2. Whether there was any change in the rate of tax and provisions of Section 14 of the CGST Act been complied with?
3. Whether any goods were sent on an approval basis, and provisions of time of supply compiled on the same?
4. Were any goods sent on a job work basis and not returned within the prescribed time and provisions of time of supply compiled on the same?

Documents Related To Supply

1. Does the invoice have all the prescribed particulars as required under Section 31 and the rules made thereunder?
2. A bill of supply is issued for exempt supplies/   non-GST supplies.
3. Whether the time limit for the issue of the invoice has been adhered to?
4. Whether receipt voucher is issued for receipt of advance?
5. Whether “Self Invoice” is raised in case of RCM transactions
6. Are credit notes/ Debit notes issued per the GST law’s provisions as per Section 34?
7. No tax is reversed if Credit notes/ Debit notes are not issued as per Section 34.
8. Are the Delivery challans maintained?
9. Does the document as per books of accounts match with GSTR 1?

Place of supply

1. Whether inter-state transactions are determined as per Section 7 of the IGST Act?
2. Whether intra state transactions are determined as per Section 8 of the IGST Act?
3. Whether the place of supply of goods in case of domestic supply has been determined as per Section 10 of the IGST Act?
4. Whether the place of supply of services in case of domestic supply has been determined as per Section 12 of the IGST Act?
5. Whether the place of supply of goods in case of international supply has been determined as per Section 11 of the IGST Act?
6. Whether the place of supply of services in case of international supply has been determined as per Section 13 of the IGST Act?
7. Whether the wrong payment of tax i.e. IGST in lieu of SGST/CGST is claimed as a refund?
8. Whether the wrong payment of tax i.e. SGST/CGST in lieu of IGST is claimed as a refund?

Reverse Charge

1. Whether Reverse Charge has been paid on all inward supplies notified u/s. 9(3) of the CGST Act and u/s. 5(3) of the IGST Act?
2. Whether Reverse Charge has been paid, u/s. 9(4) of the CGST Act and Section 5(3) of the IGST Act on supplies received from the unregistered person until 12th October 2017?
3. Whether ITC has been availed of the tax paid under reverse charge?
4. Whether expenses on which RCM is payable reconcile with RCM as declared in GSTR 3B?

GST  Payments & Input Tax Credit

1. Whether monthly ITC reconciles with GSTR 3B?
2. Whether Transitional credits claimed reconciles with books of accounts?
3. Whether reconciliation of ITC  between  GSTR  3B  and GSTR 2A is done?
4. Whether returns of ISD have been filed?

Job Work

1. Whether goods sent on job work have been received within the prescribed time?
2. Whether the documents prescribed for job work has been maintained?
3. Whether FORM  ITC  04  has been filed quarterly?

Filing of Returns

1. Whether returns as applicable have been filed within the due dates?
2. In case of late filing, whether late fees have been paid?
3. Whether late fees waived have been credited in the cash ledger?
4. Whether transitional credit Returns are filed within the due date?
5. Whether any amendments/omissions/corrections in returns have been made between April 2018 to September 2018?

Refund

1. Whether the Supplier is eligible for Refund as per Section 54?
2. Whether refund application has been made?
3. Whether the calculation of refund is as per the Rules prescribed?
4. Whether refund order has been received or is rejected or pending?
5. Whether Refund rejected, has been re-credited to Electronic Credit Ledger?
6. Whether the Returns filed for refund have been appropriately accounted in the books of account?  
7. Whether rejection for refund has been recorded appropriately?

Accounts & Records

1. Whether books of accounts are maintained as specified in Section 35 r/w Rules 56, 57, and 58 of the GST Law?
2. Whether books of accounts are maintained electronically/Manually?
3. Whether books of accounts are maintained at each place of business?
4. Whether documents/agreements are available?
5. Whether   Transporter/Warehouse keeper has maintained the books of Account as per the law?
6. Whether the   Register E-way Bill/Delivery challan is maintained as per the law?
7. Whether E-Waybills are used for Valid purposes?
8. Whether the register of ITC-01, ITC-02,  ITC-03, and  ITC-04  is maintained as per the GST law?
9. Whether the books of Accounts maintained are centralized or decentralized?

Miscellaneous

1. Whether the registered person has complied with the Anti-Profiteering clause?
2. Whether there was a reduction in the rate of GST and the provisions of Anti-Profiteering were complied with?
3. Whether there was saving on account of ITC (in comparison with the previous tax regime) and the provisions of Anti-Profiteering complied?
4. Whether any advance ruling was applied? Whether the advance has complied?
5. Are there any departmental inspection proceedings for Transitional Credits or any other demands created?
6. Any adverse remarks by Statutory Auditor / Internal Auditor have been raised and whether those are rectified?

Document List required for GST Audit

1. Financial Statements of the Business for the Previous Financial Year
2. GST Returns filed for the Previous Financial Year
3. Reconciliation of turnover as declared in GST Returns and Books of Accounts
4. Details of Input Tax Credit availed and utilized in the previous Financial Year
5. Copy of Registration Certificate under GST
6. Proof of Payment of Tax
7. E-Way Bill Registration (If Applicable)
8. Copies of Purchase Invoices
9. Copies of Sales Invoices
10. Copies of Debit and Credit Notes
11. Copies of Challans or other Documents evidencing payment of tax
12. Copies of Documents and Records in accordance with Section 35 of the CGST Act and Rules 56, 57, and 58 of the CGST Rules.
13. Any other relevant document which may be considered necessary by the Statutory Auditor or Internal Auditor.

This is a basic list of documents that are generally required for a GST Audit. It is not an exhaustive list and other documents may be required depending on the specific circumstances of the case.

Conclusion

GST Audits are conducted to ensure that businesses are complying with the provisions of the GST Law. The GST audit is conducted every year for those GST-registered businesses (GSTIN) having turnover of more than Rs.2 crore (GST audit turnover limit), by the sale of goods or services in the financial year. 

The documents listed above are typically required for a GST Audit. It is important to ensure that all documentation is in order and up-to-date, in order to avoid any issues during an audit.

This article provides a basic overview of the Annual GST Audit and the documents which are generally required for the same. So, these are some key points that you need to keep in mind while conducting a GST Audit. If you have any further questions, please do not hesitate to contact us. Thank you for your time.