The GST Act stipulates three types of audits namely – audit review for filing GSTR-9 and self-certification of GSTR-9C, departmental audits, and special audits u/s 65 and 66 of CGST Act, 2017 respectively.
Section 2(13) of the CGST Act, 2017 defines “Audit” as the examination of records, returns, and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder.
The current turnover limit for filing of GSTR 9 and 9C is INR 2 crore. Hence, any assesse whose annual turnover exceeds INR 2 crore is required to file GSTR 9 and self-certification in Form GSTR 9C.
In this blog, we have tried to enlist the top 5 to-do’s for any organisation to become ready for GST audits.
Prepare a Summary
The first step in preparing for the GST audit exercise is to make summaries and statements in accordance with the format of GSTR-9 and GSTR-9C. Depending on the optional and mandatory fields, a summary for each section should be prepared. The summary should be double-checked to ensure its correctness and accuracy. Further, to prepare such a summary, the organisation needs to check if their ERPs are competent enough to give out the requested data in the required format.
Carry out the Reconciliations with Respect to Turnover, ITC & Procurements
Indisputably, the GST regime and its compliances revolve around reconciliations. As a part of the GST audit exercise, a reconciliation needs to be prepared between the GST returns filed and annual financial statements. The importance of reconciling the turnover, the ITC availed and procurements cannot be insisted upon enough. Any variations found should be deeply analysed and reasons thereof should be mentioned. This is the most gruesome and at the same time most important step of the entire GST audit exercise.
Re-assess all Tax Positions Adopted
GST audit should not be considered merely as a compliance measure. It gives an opportunity to the taxpayers to rectify any mistakes or slip-ups and gives a 360-degree view of the compliances undertaken throughout the year. Therefore, to best utilise this opportunity, the taxpayers should also re-assess the tax positions adopted by them throughout the year and validate the same with the help of the GST auditor.
Be wary of the Reporting Requirement
There are certain reporting requirements in GSTR-9 which are different from the reporting done while filing GSTR-3B and GSTR-1. Therefore, such data may not be readily available with the organisation. Hence, the tax team may have to spend some additional time and effort in collating such information. Some examples of this could be the break-up of input tax credit availed as inputs, input services, and capital goods, or HSN summary of inward supplies, etc.
Review & Discuss Comments by the GST Auditor
Once the audit exercise is complete, the auditor/reviewer shall provide his/her comments on the correctness and accuracy of the figures stated in GSTR-9 and GSTR-9C. These comments should be addressed at the earliest; any tax dues discovered as a part of the process should be discharged with interest, any ITC not availed/ excess availed should be treated accordingly. Wherever possible, the auditor/reviewer’s comments should be resolved.
The first step in preparing for the GST audit exercise is to make summaries and statements in accordance with the format of GSTR-9 and GSTR-9C. Depending on the optional and mandatory fields, a summary for each section should be prepared. The summary should be double-checked to ensure its correctness and accuracy. Further, to prepare such a summary, the organisation needs to check if their ERPs are competent enough to give out the requested data in the required format.
Carry out the Reconciliations with Respect to Turnover, ITC & Procurements
Once the audit exercise is complete, the auditor/reviewer shall provide his/her comments on the correctness and accuracy of the figures stated in GSTR-9 and GSTR-9C. These comments should be addressed at the earliest; any tax dues discovered as a part of the process should be discharged with interest, any ITC not availed/ excess availed should be treated accordingly. Wherever possible, the auditor/reviewer’s comments should be resolved.
Conclusion
The GST audit process is a time-consuming activity; especially the data collation and reconciliations. Hence, the earlier one starts, the better it becomes to close the audits within the stipulated timeline. A taxpayer must prepare and furnish GST audits for all registrations across before the due date. It should also be kept in mind that there are no provisions to revise the GST audit return as yet; this makes it all the more imperative to file accurate and correct returns to avoid any consequences. Another vital point is that the late fees for not filing GSTR 9 within the stipulated timeline are INR 100 per act, per day, i.e. 200 per day of default subject to the maximum of 0.25% of turnover.
Author
Komal Vithalani
Content Writer
Komal Vithalani, a Chartered Accountant and Commerce graduate, is a dedicated professional committed to delivering value with years of expertise in navigating the complexities of indirect tax laws. Her practical excellence includes managing perplexed litigations, dispensing tactical tax advice, conducting thorough compliance checks, supervising audits, and crafting articulate and insightful content. At Cygnet, Komal seamlessly blends her profound understanding of tax regulations with cutting-edge tax technology. Leveraging her competence, she adeptly transforms complex tax tech jargon into concise, impactful, and engaging content. This not only aids readers in comprehending tax-related topics with enlightening clarity but also ensures the delivery of narratives that resonate broadly.