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Checklist for preparation of GSTR-3B

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Savita Joshi

INSTRUCTIONS FOR PREPARING

♦ The comments indicate suggested answers , however it can be suitable modified on case to case basis.

♦ This is to be completed on the basis of financials of the client for the month.

♦ To download and attach GSTR -2 A for the month as availble on GST website on the date of preparation.

♦ To prepare a gist of important observations based on the findings of the checklist and the same needs to be sent to clients alongwith return working

Client Name

Prepared By

Month

Supervised By

Area of accounting		Aspects of GST calculation	Hints for checking	Suggested Comments–Strike off which are not applicable
PURCHASES		To check for assessable value and GST rates: especially applicability of IGST or state GST based on GSTIN	In case of a dealer registered in Maharashtra if GSTIN is other than 27 then it should appear as Interstate purchase –27 being state code of Maharashtra) AND all GSTIN beginning with 27 should be having CGST and SGST as taxes,	Checked for state codes of the purchases based on GSTIN. If GSTIN begins with if GSTIN is other than 27 then treated as Interstate.
EXPENSES		Turnover discount or quantity discount allowed to customers / dealers	i. Pls confirm whether it was pre decided and not a post facto entry, GST is reversed or not	No discount given for the month/ Discount given but GST not reversed/ Discount given and GST is reversed
			ii. If in case GST is to be reversed then it should be issued only before the due date of filing GSTR -3 B of September next	No discount given for the month/ Discount given but GST not reversed/ Discount given and GST is reversed
INCOME-DIRECT	a	To scrutinise the relevant HSN and services descriptions along with the assessable value	Special focus wherein the rate is below ‘18% and 12%.’	Verified the same with relevant HSN / SAC
	b	Supply shown as NIL rated by the client	Items should be covered in Schedule 1 of GST rate schedule(notification No.1/2017)	There are no such items for the month/ Shown under the tab of NIL rated
	c	Supply shown as Exempt by the client	Items should be covered in Schedule III of GST rate schedule and if it is by way of notification then to check the relevant notification covering such ‘Exempt supplies’	There are no such items for the month/ Shown under the tab of Exempt supplies
	c.1		Reversal of common inputs is required in the ratio of taxable supplies to exempt supplies on a monthly basis and later on a yearly basis	Reversal of common inputs is made / not made
	d	Non GST supplies means goods and services on which GST is NOT applicable BUT VAT IS APPLICABLE	i. Non GST supplies means goods and services on which GST is NOT applicable viz alcohol from human consumption, petrol ,oil etc i.e. goods on which VAT is chargeable. DO NOT REPORT ANY OTHER SUPPLY AS NON GST SUPPLY	There are no such items for the month/ Shown under the tab of Non GST supplies
	d.1		ii. The amount which is presented as Non GST Supplies should be cross checked with the amount shown in VAT Return.	Verified the same with relevant VAT return and it is matching / not matching
	e	Income from Rent, Interest collected from debtors, reimbursements , commission , write back off certain balances etc	To thoroughly check the indirect incomes of the books of accounts and also credits, if any appearing in expenses accounts	Checked and there is no income liable for the month/ Considered for GST
BLOCKED CREDITS	a	GST on immovable assets except for plant and machinery	To check GST availed on asset additions especially Capital WIP account	No such case/ checked and input clubbed with expenses
	b	GST if claimed on Hotel expenses, Insurance , rent a cab , immovable property, works contract , etc is not permissible in general	Non availability of Input due to blocked credits viz: Hotel expenses, Insurance , rent a cab , immovable property, works contract , etc	Checked for the same and Rs — treated as Blocked credit ( working attached ) / No such case
REVERSAL OF GST	a	Rule 42 J	Rule 42 J applicability is checked on the expenses in the nature of Personal (+) Business expenses and 5% reduction of common input needs to be done	Rule 42 J applicability is checked wrt sales the AND reduction is done/ Not done
	b	Rule 42 (1)	Requires reduction of GST on common inputs in case of taxable and exempt supply– in the ratio of exempt sales to total sales for the month. Please note that this is also to be calculated again on the basis of annual ratio	Rule 42 applicability is checked wrt sales the AND reduction is done/ Not done
	c	Rule 43(1)	Requires reduction Input of Fixed assets partly used for taxable supply and partly for exempt supply	Rule 43 applicability is checked wrt sales AND reduction is done/ Not done
	d	Rule 37 (2)	Based on Input credit register or fiancials needs to find out such cases . If payment not made within 180 days then input needs to be reversed	As per observations no reversal is required/ Reversal made for Rs –and interest paid—
	e	Rule 36 (4)	Requires to consider Input on the basis of GSTR -2 A — maximum 110% of the input as appearing in GSTR -2 A or as appearing in books whichever is less needs to be considered as Input	Checked and applied Rule 36 (4) / Not applied Rule 36 (4) based on client communication received dated on our **** mail id
	f	Reversal for samples, free gifts , loss of goods	The GST if any on such goods cannot be claimed. To check sales promotion expenses , marketing expenses for such cases	Checked and reversed / Not reversed input in respect of such goods
DEBIT/ CREDIT NOTES	a	Debit note issued during the month for rate revision on sales	The rate revision can be made lawfully made till the due date of the return filing for the next September month from the end of financial year ie within approximately six months from the end of FY	No such case/ considered in GST R–1 of ** month and GSTR 3 B of ** month
	b	Credit note for sales returns ,if any	Credit notes for reduction in GST liability to be issued before the due date of return of next September from the end of financial year	No such case/ considered in GSTR 1 of ** month and GSTR 3 B of ** month
	c	Adjustment of input set off on account of purchase returns evenif debit note from supplier is pending	In GST only supplier can issue debit / credit notes . However in case of purchase returns its advisable to reverse GST immediately without waiting for supplier’s documents	No such case/ adjustment of input is made in GSTR -3 B
MISCELLANEOUS	a	Observations of previous month having impact on current month	To read observations of all earlier months and work out the adjustments ,if any	Read the observations of all previous months and given effects / No adjustments required
	b	In case input set off is below Rs 500/- in case of a one off transactions or say non recurring transactions	Pls write mail stating whether this should be claimed or expensed out	Included in observations to be sent to client/ No such case
	c	‘Time of supply’ to be followed while raising an invoice including invoice for RCM GST	Please read the provisions given in Appendix . Generally Invoice for goods is to be raised before Or at the time of removal of goods and for service within 30 days , however in case of advance for service at the time of advance or actual receipt whichever is earlier	Verified in case of supply of service/ RCM on test check basis a / Not verified in case of supply of service / RCM / Confirm with observations in checklist by audit staff
	d	Any specific observation apart from above	If there is any specific issue then please mention it clearly by adding a line item	Yes mentioned in the observation sheet / No such case
	e	Suspense Account	If Suspense A/c is appearing in the books of accounts then please ascertain whether there is a possibility that that those entries are liable to GST or otherwise	No such case/ mail sent on — that GST working is subject to entries appearing in suspense account
	f	Mandatory declaration for computerised invoice	Invoice should contain a declaration that ‘ This is a computer generated invoice and does not require signature’	Checked at the time of audit / This line is not printed on the invoice
	g	Purchases from Composition dealer	Invoices issued will have a title as ‘Bill of Supply’ and should not be having title as ‘Tax Invoice’. Rates of Composition dealer are 1%, 2% & 5%. Input GST is NOT available on such purchases and GST should be debited to P & L account	Checked at the time of audit / No purchases from Composition dealer.
	h	Incorrect availment of credit	In case of wrongly availed credit , if any the payment is to be made in DRC 03 challan alongwith interest and penalty	No such case / GST is paid on ——
	i	Self Invoices under RCM	Invoice to be generated on self for entire RCM GST transactions at every month end	Self Invoices prepared by the client/Self invoices not prepared by the client and this point is included in the observation sheet.
	j	Input Credit Register	To prepare a register similar to CENVAT credit register for linking the entries of Input credit in books of accounts to its claim in GSTR -3 B and also mentioning the dates of payment to the vendors	Input Credit Register is obtained from the client/Input credit register is not obtained from the client and this is included in the observation sheet
	k	Reclaim of Input in case payment made to creditors after 180 days	The GST to be reclaimed in the month in which payment to vendors where the input was reversed due to non payment earlier is made	As per mail dated—– received from client input of Rs —- is reclaimed / No such case
	l	Notices and Orders appearing on GST website	Whether there are any Notices and Orders appearing on GST website	They are not appearing/They are appearing and screenshot is attached
	m	Receipt of export proceeds	Must receive within 12 months as per FEMA , else liable to GST	Received within 12 months / not received within 12 months and list is prepared for such outstanding . Also additional GST liability is calculated
	n	Claim as per Tran1/ tran 2 if any	This was at the early stage at the introduction of GST to transfer input available for VAT or Sevice tax or Excise to GST	Not relevant for current period / Tran -1 filed on the basis of AAR
	o	Adhar Linking	Adhar of the onwer/ authorised person needs to be linked with GSTIN	It has been linked / It has not been linked
	p	Q R code for invoicing	It is applicable if the turnover exceeds Five hundred crores	It is not applicable / applicable and followed
	q	E invoicing under GST	It is applicable if the turnover exceeds One hundred crores	It is not applicable / applicable and followed
	r	presentation in GSTR -3 B –In case of supply to SEZ	It is to be shown under ‘Zero rated’ Tab in the GSTR -3 B return and B 2 B in GSTR -1	There are no SEZ supplies for the month/ SEZ supplies shown under the relevant Tab
	s	In case of interstate supply to URD , composition taxable person and UIN holders	Place of supply to be mentioned in Table 3.2 of GSTR 3B and Table 7 B of GSTR -1	No such case / verified with GSTR-1 / verified with GSTR 3 B and appearing correctly in both returns
	t	Communication from GSTIN regarding mismatch of data between ICEGATE and GST	In case of export of goods the GST returns act as proof of exports and refund of taxes . If applicable, The information is directly captured on ICEGATE from GST returns-therefore returns	Details shown in GSTR -1 -Table 6 A and 3.1(b) of GSTR -3 B under respective tables for exports of goods are matching / Not matching OR No exports for the month
RECONCILIATIONS	a	GSTR -1 and 3 B	In case of difference same to be analysed and corrections to be made in next return	Reconciliation made and there is no difference/ Reconciliation made and difference noticed which needs to be corrected
	b	GSTR 2 A and 3 B	In case of difference same to be analysed and corrections to be made in next return	Reconciliation made/ Reconciliation pending
	c	GSTR 3 B and books	In case of difference same to be analysed and corrections to be made in next return	Reconciliation made/ Reconciliation pending
	d	Imports as per books and as per ICEGATE	To verify the value of imports and IGST paid on ICEGATE site	No such case/ Verified on ICEGATE / Details of bill of entry are pending and hence could not be verified
	e	Exports and FIRC	To verify FIRC as proof of every exports made to countries other than Nepal and Bhutan. However it is indispensible for service exports there is some vindication in case of export of goods ,if it is not available	Verified with FIRCs and amount of exports is matching / not matching due to adhoc receipts or due to shortfall / excess in receipt
	f	Exports and STPI returns	In case of service exports of software– registration with STPI needs to be obtained	Cross matched with STPI returns and amount of exports is matching / not matching
	g	Exports and RBI return	Return of Foreign assets and liabilities is required for transactions between group companies overseas	Cross matched with FLA returns and amount of exports is matching / not matching
	h	GSTR 2-A and books of accounts	In case of inputs appearing in GSTR -2 A but not appearing in books which means certain purchases may have not been recorded.	mail sent to client specifying this fact / No such case for the month since reconciliation with 2 A is pending
	i	E way bill and books of accounts	E-Way bill ( if applicable ) needs to be cross checked with the data available as per books	No such case / Entries in books of accounts are cross checked with E-Way data available on GST Portal & Observations recorded.
	j	Position as per GST returns and as per books of accounts	To match the working with books i.e Check whether ITC Set off Entries are passed by client in books.	Verified the entries in Duties and taxes and the same are matching/ Verified the entries but NOT matching
	k	E-Credit Ledger balance and books –comparison	E-Credit Ledger balance to be cross matched with balance as per books in order to find out missing entries ,if any in books	Matched the same with books/ Not matching with books and difference mentioned in observations
	l	E-Cash Ledger balance and books- comparison	E-Cash Ledger balance to be cross matched with balance as per books in order to find out missing entries ,if any in books	Matched the same with books/ Not matching with books and difference mentioned in observations
	m	GST TDS	It is applicable in certain specific cases like mainly supply to Government	A TDS return needs to be filed on site in order to claim credit of GST TDS
	n	RCM paid and claimed	RCM paid for a month should be utilised as input , else it will be a cost	Verified for the quarter and no discrepancy found / will be verified at quarter end
	o	Reconciliation of total expenses considerd for RCM GST and expenses as per books–	In case there are any back dated entries in such accounts then RCM may be missed on such entries therefore / quarterly annual reconciliation is required	Verified for the quarter and no discrepancy found / will be verified at quarter end
	p	Income as per Form 26 AS and Income as per GST	Details of other income particularly Sec 194 C and 194 J needs to be carefully inspected	These incomes are considered / not considered for GST
	q	Expenses as per Form 27 Q , 26 Q and 24 Q and GST	Details of professional fees and especially TDS u/ s 195 for import of service needs to be verified. GST is applicable on import of service	The records are matching/ not matching
	r	Expenses as per cost records and GST	In case cost records are available then relevant extract need to be checked	The records are matching/ not matching
	s	Disclosure of information as per Schedule III and GST	Details of exports , imports , directors remuneration etc to be cross matched with GST records	The records are matching/ not matching
	t	E way bill and M-Parivahan	The vehicle numbers entered in E way bill will be linked with vehicle registration as per RTO and thus only genuine vehicle numbers will be accepted	This is for information only in case specific issue is raised by client
	u	ITC – 04 and books of accounts	GST applicable if goods sent outside for job work and not returned with 12 months in case of inputs and 3 years in case of capital goods. If not received then prepare a list and calculate additional liability	checked ITC – 04 and goods are received/ not received within stipulated period
	v	HSN / SAC and books of accounts for sales	HSN / SAC are entered in Inventory module of financials and needs to be verified at the time of vouching	Matched HSN / SAC as per books with GSTR -1is matching / not matching
	w	HSN/ SAC and books of accounts for purchases	HSN / SAC are entered in Inventory module of financials and needs to be verified at the time of vouching	HSN / SAC for purchases is available/not available in financials
	x	Goods sent on approval and GST thereon	To check whether such practice is being followed by the client or otherwise. This is not very common , and is followed in certain specific business lines	No such case / GST applied once goods are approved
	y	Inventory records as per books of accounts and GST returns	To verify GP ratio of earlier years and it should be more or less constant . In case cost records are available verify standard input /output ratio. To verify quantity records on test check basis on random sample basis	GP ratio is fairly same / Cost records are not applicable / applicable. Quantity details matched for major purchases of ****** and found correct / incorrect
	z	Cross charge in case of group entities	in case certain services are commonly used within a group then cross charge is applicable . However it may not be obvious from the plain financials	There are no group entities / Services are shared by group entities and GST charged/ not charged