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

Checklist

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

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