1) Definition of Audit under the CGST Act 2017
Section 2(13) of the CGST Act 2017 States that 2(13) ‘audit’ means ( Exhaustive Definition)
1) the examination of records,
2) returns and
3) 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
1) turnover declared,
2) taxes paid,
3) refund claimed and
4) input tax credit availed,
5) and to assess his compliance with the provisions of this Act or the rules made there under;
We will Deal in this video Basic Audit Guidelines & Procedures Regarding Audit Under Section 35(5).
TAXABLE TURNOVER UNDER GST-LAW
1. Classification ,
2. Valuation under Section 15 and Rules From 27 to 35 ,
3. Exemption Availed & Conditions Compliance ,
4. Verification of other incomes ( since they may be supply under GST regime)
5. Provisions of TOS/POS
6. Goods Sent to Job Worker / Sale on approval basis ( Deemed Supply )
7. Rate ( Applicable rate /change in rate /etc)
8. Supply to related person is not included in turnover when accounts consolidated and hence check Branch Accounts.
9. There may be more areas not covered up here.
Disclaimer: This is not an Exhaustive list, but an inclusive list.
For Example : Following is an Illustration for the above purpose.
Details of Outward Supply can be Classified
1) To whom it is supplied. DTA/SEZ/Export/Related Person.
2) Rate Wise ( Right rate / Change in rate)
3) Exempt / Taxable Outward Supply
4) Inter – Intra
5) Composite/Mixed/Continuous Supply ( and proper treatment for it)
& Hence Proper Audit wrt to GST law regarding above to be done.
MERE ILLUSTRATION FOR PRIVATE COACHING CENTER ON BIFURCATION OF TAXABLE TURNOVER
Essence of illustration is that : The Taxable Supply is completely different from main business of operation . And Reconciliation of Aggregate Turnover & T/o in Financial Statement needs to be done.
Aggregate Turnover also include Both Statement of P&L and Balance Sheet Aspect.
A. INWARD SUPPLY ,ITC CLAIMED THEREON ,RCM.
1. check for Prepaid Expenses in balance sheet ,Since as per Section 16(2) no ITC to be availed unless The Registered person has actually received goods/service ,therefore to be reversed.
2. Also in case of Insurance the Proportional amount to be reversed.
3. Payment for inward supply not made in 180 days ITC to be reversed. Check whether there exist any Outstanding Amount on account of Inward supply for more than 180 days?
1. Section 9(4)( Supply from Unregistered Person) for the period 07.2017-12.10.2017
2. Notified Goods /Services Under Section 9(3) to be checked.
it Is Advisable To Prepare Month Wise Statement Of Ineligible Credits With Corresponding Natural Accounts For Verification With Financial Accounts And Month Wise Statement Of Reversal Of Credit.
Dear professional Colleagues , kindly correct me if anything is off track by commenting below.