To whom GST Audit will be applicable have been already discussed in our previous article, now let’s move ahead towards the workings for GST Audit.
As you all know, GST Audit will apply every year for those GST registered business (GSTIN) having turnover more than Rs 2 crores, by the sale of goods or services in the financial year. Do u know how to calculate this turnover of 2 crore to check the applicability of GST Audit?
Let’s discuss it.
The aggregate turnover is calculated by taking together the value in respect of the activities carried by all the entities of the concerned person on a pan- India basis.
| Aggregate turnover | = | Value of all taxable supplies + exempt supplies + Export supplies of all goods and services |
Items included while calculating turnover for GST Audit
- All taxable (inter-state and intra-state) supplies other than supplies on which reverse charge is applicable
- Supplies between separate business verticals.
- Goods supplied to/received from job worker on principal to principal basis.
- Value of all export/zero-rated supplies.
- Supplies of agents/ job worker on behalf of the principal.
- All exempt supplies. E.g. Agricultural produce supplied along with branded ready-to-eat food.
- All taxes other than those covered under GST Eg: Entertainment Tax paid on the sale of movie tickets.
Items excluded while calculating turnover for GST Audit
- Inward supplies on which tax is paid under reverse charge.
- All taxes and cess charged under Goods and Service Tax like CGST, SGST or IGST, Compensation Cess.
- Goods supplied to or received back from a Job Worker.
- Activities which are neither supply of goods nor service under schedule III of CGST Act.
When can you say job work is on principal to principal basis?
It’s simple as we are already aware that if the goods are not send back within the time limit of 1 year/ 3 year for inputs and capital goods respectively, the same has to be treated as supply and has to be considered in the turnover of 2cr for the purpose of audit.
Forms for Annual return and GST Audit:
| Irrelevant of the applicability to GST Audit all taxpayers are require to file the following return. | Form to be filed |
| A Regular taxpayer filing GSTR 1 and GSTR 3B | GSTR-9 |
| A Taxpayer under Composition Scheme | GSTR-9A |
| E-commerce operator | GSTR-9B |
| Over and above for those to whom GST Audit is Applicable GSTR – 9C is required to be filed. | |
| i.e.Taxpayers whose turnover exceeds Rs. 2 crores in FY | GSTR-9C |
Checklist before starting GST Audit
- Have you noted that The Financial year (FY) for the purpose of this first annual return in GST will comprise only 9 months, i.e., 1/7/17 to 31/3/ 18?
- Have you ensure that monthly or quarterly returns are in sync with books of accounts?
- Are you handy with all tax invoices issued during the period 1/7/17 to 31/3/18?
Because GSTR-9C requires state-wise data, also keep a list of state-wise figures of turnover handy.
- Are you handy with a list of all debit and credit notes issued during the period mentioned above?
- Have you reconcile advances received with the amount of GST paid?
| For Goods
from 1/7/2017 to 15/11/2017 |
For Services
from 1/7/2017 to 31/3/2018 |
Note: For period 15/11/2017 to 31/3/2018 Exemptions are available only in cases of the supply of goods, and not for the supply of services.
- In case of multiple storage branches, have you reconcile stock transfers amongst branches?
- Have you bifurcated total amount of input tax credit (ITC) into three categories: inputs, input services, and capital goods?
Note: This was not required in forms GSTR-3B or GSTR-1, however businesses will need to compile this data before filling out GSTR-9. Every bill in which a taxpayer has claimed an input credit should reflect this information in form GSTR-2A. These input tax credits should be paid within 180 days; otherwise the ITC on these invoices will need to be reversed. Furthermore, take special care while reporting the ITC claim because any unutilised ITC cannot be claimed later or reversed, even in the annual return. GSTR-9 also calls for expense head wise bifurcation of ITC availed.
- Do you have a Summary of outward and inward supplies according to HSN?
- Have you identified the adjustments required for unbilled revenue?
Note: This is a new requirement for GST’s annual return.
- While reconciling the GST paid by electronic cash or credit ledger, have you considered GST paid by way of a reverse charge mechanism on applicable expenses?
- If filing a refund application for the said period, have you reported details regarding the refund separately in Part VI of the annual return.
Consequences of not filing Annual Return:
1. Notice to defaulters
Section 46 of the CGST Act provides where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within 15 days in such form and manner as may be prescribed.
2. Late Fee for delayed filing-
Rs. 100/- per day for delay
Or
0.25% of the turnover in state/UT.
Whichever is lower.
Section 47(2) of the CGST Act provides for levy of a late fee of Rs. 100/- per day for delay in furnishing annual return in Form GSTR 9, subject to a maximum amount of quarter percent (0.25%) of the turnover in the State or Union Territory. Similar provisions for levy of late fee exist under the State / Union Territory GST Act, 2017.
On a combined reading of Section 47(2) and Section 44 (1) of the CGST Act, 2017 and State / Union Territory GST Act, 2017 a late fee of Rs.200/- per day (Rs. 100 under CGST law +Rs. 100/- under State / Union Territory GST law) could be levied which would be capped to a maximum amount of half percent (0.25% under the CGST Law + 0.25% under the SGST / UTGST Law) of turnover in the State or Union Territory.
3. General Penalty for Contravention of Provisions
Any person, who contravenes any of the provisions of this Act or any rules made there under for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to Rs 25,000/-. An equal amount of penalty under the SGST/UTGST Act would also be applicable. To sum up a penalty of up to Rs.50,000/- could be levied.
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