Suggestive Check List for GST Audit

Suggestive Check List for GST Audit
Suggestive Checklist for GST Audit
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Suggestive Check List for GST Audit

In this article we will discuss suggestive check list for GST Audit for the Finacial Year 2017-18.

Check List for Cenvat Credits Carried forwards from Pre-GST Regime

Un-utilized Cenvat Credits as on 30-06-2017 is correctly carried forward in TRAN-1;

Un-availed Cenvat Credits on capital goods is correctly carried forward in TRAN-1;

Input Tax Credits in Stocks of RM, SFG and FG is correctly carried forward in TRAN-1

Tax Credit in respect of invoices where rate of taxes is not shown separately and filing of TRAN – 2;

Effect of Un-utilized Cenvat Credit of KKC & SBC as on 01-07-2017?

[Kansai Nerolac Paints Ltd. – GST/ARA-18/2017-18/B-25 – Dated 05-04-2018]

Service tax paid under RCM for the tax liability arises after 01-07-2017

Goods at job workers / agents place as on 30-06-2017

Procedural Check List for GST Audit

Display of registration certificate at prominent location at his principal place of business and at every additional place of business. [Rule 18(1)];

Display of GSTIN on the name board exhibited at the entry of his principal place of business and at every additional place of business. [Rule 18(2)];

Tax invoices are issued pursuant to Section 31 r.w. Rule 46 to 55A

Debit Notes and Credit Notes are issued pursuant to Section 34 of CGST Act;

Whether the books of Accounts maintained are centralized or decentralized?

Whether books of accounts are maintained Manually or Electronically? If the same are maintained Electronically, whether the software used complies with the requirements of the law?

Whether E- Way bills are used for Valid purpose?


Checklist for Outward Supply

Tax Liability is discharged after taking in to considerations –

(i)                  Rate schedules;

(ii)                Notifications (change in rate of taxes);

Tax liability discharged on receipt of advances towards supply of goods or services;

[No Tax liability on advances received towards supply of goods from 15-11-2017 – N. No. 66/2017 – Central Tax – Dated 15-11-2017];

Goods sent to branches in other States – Tax invoice to be issued;

Goods sent to job worker – must be returned within 180 days;

Goods distributed free of charge & distributed as free sample;

Exports of goods & services, supplies to SEZ

• Copy of LUT / submission for condonation

• Proof of Export within a period of 3 months from date of invoice

• Copy of Export Invoice with IGST / without IGST / Necessary declaration

• Copy of IEC Certificate / RCMC certificate

• Copy of FIRCs (Service Provider) / Receipt within a period of 1 year / Condonation

• Copy of sample shipping bill (Goods)

• Copy of RFD-01A filed for FY 1718

• Copy of Refund order received, if any , reason for non receipt of receipt

• Few sample extract from ICEGATE website (Export of Goods)

• Outward supply of Goods to SEZ Proof of said goods have been admitted in full in the Special Economic Zone for authorized operations, as endorsed by the specified officer of the Zone

• Outward supply of services to SEZ Evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone

• Treatment of ITC involved in Capital Goods purchased

Reconcile the outward supply as per financial statements with GSTR-3B and GSTR-1 filed every month / quarter;

Reporting of Exempt and NIL rated, and Non-GST outward supplies;

Determination of supply of services to branches – Cross Charges;

MRL on instance of all Schedule I transactions

MRL on how transaction with related parties / distinct person satisfies test of valuation rules

List of related parties / employees and Transaction with them

Have you checked sale / deletion of fixed assets?


Checklist for Inward Supply

Recording of all inwards supplies in the month in which invoice for supply of goods or services or both is received

Recording of import transaction in books of accounts;

IGST paid challans

Few tracking of Import on ICEGATE

Copy of sample Bill of Entries

Tax liability to be discharged under Reverse Charge Mechanism

(i)                  supplies are procured from Un-registered persons till 12-10-2017 – S. 9(4);

(ii)                (ii) specified goods or services – S. 9(3)

Conditions for availment of ITC is complied – S. 16(2)

(i)                  Possess tax invoice or debit note or other duty paying documents;

(ii)                Received the goods or services;

(iii)               Supplier had paid tax on such supply and claimant had filed the return;

(iv)               Pays invoice value to the supplier within 180 days

Reconcile the inward supplies with GSTR-2A from the system to ensure that supplier had uploaded return and paid the tax liability;

If goods are procured from merchant exporters at concessional rate – 0.1%, check the compliance of all conditions

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 whether any input tax is added to the cost of purchase where input tax credit is not allowable?

Have you checked that inward supplies are classified between intra-State, inter-State, Imports etc.?

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?

Determine whether any ITC are to be apportioned – [S. 17(1) to S. 17(4)]

(i)                  Goods or Services are used partly for effecting taxable supplies and partly for exempt supplies; – Rule 42

(ii)                Goods or Services are used partly for business and partly for other purposes;

(iii)               Capital goods are used partly for effecting taxable supplies and partly for exempt supplies; – Rule 43

Banking and Financial Institutions including NBFC have option to avail credits equal to 50% of eligible ITC on inputs, capital goods and input services and balance will lapse.

Determine whether any ITC are under block credit – [ S. 17 (5)]

(i)                  Motor vehicle and other conveyances except specified;

(ii)                Food & Beverages, outdoor catering, beauty treatment, health services, cosmetic & plastic surgery etc.;

(iii)               membership of a club, health and fitness centre;

(iv)               rent-a-cab, life insurance and health insurance except it is notified by Government;

(v)                WCS when supplied for construction of immovable property (other than P&M);

(vi)               Goods or services used for construction of immovable property (other than P&M);

(vii)             Supplies for which tax is discharged under composition scheme – S. 10;

(viii)           goods or services or both used for personal consumption;

(ix)               goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample.


Checklist for Reversal of Input Tax Credits under special circumstances

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 overwise reversal of ITC has been made?

Where a registered taxable person avails Input Tax Credits – [S. 18(4), 29(5) & R. 44]

(i)                  opts to discharge tax liability under composition scheme;

(ii)                goods or services supplies by them are wholly exempt;

(iii)               whose registration is cancelled;

then ITC availed in respect of

(i)                  inputs held in stock and inputs contained in SFG or FG

(ii)                capital goods

should be reversed on the immediately following the day in which option to pay tax u/s. 10 is exercised or date on which it become wholly exempt.


Checklist for General Aspects

Whether the registered person has complied with Anti-Profiteering clause?


Have you obtained the letter of appointment / issued the letter of acceptance of audit?

Are there any departmental 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 or in previous year?

Whether the registered person has availed the facility of digital signature?

Whether the Auditor has used appropriate Audit tools?

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