Just few days left for the deadline of GST audit and most of the companies have not yet started working on this. GST audit being for the first time will bring many challenges to every company. It’s better to start early, so as to have sufficient time to discuss various divergences and error points.
This article list the way which will help you to complete almost 80% work of your audit. Here we go:
1. Read the Financial statements, Notes on Accounts and Board Report thoroughly. Eg – Related party and transactions, wherein many would have missed to pay tax on deemed supply.
2. Then carefully examine the points in Tax Audit Report and Income tax computation. This will bring to your knowledge about exceptions to care about while handling gst audit.
3. Agreements with various parties – Clients and Vendors. This might be relevant to check Time, Value and Place of supply.
4. Understanding the Accounting Software – Many software vendor are providing various pre-defined gst summary reports, this will help to extract the relevant data and information in seconds.
5. Sample Invoices of all type of transactions – To understand the invoicing pattern and nature of supply – This will also help you to check classification, whether GST tax rate is correctly applied.
6. Reading Expenses side – As reverse charge mechanism plays it’s role on this side.
7. Bifurcating turnover – Area wise, Product wise/HSN wise – then to Taxable, Nil and Exempted turnover. HSN wise breakup and compare it with prescribed rate of tax is necessary.
8. Summary of Return filed. GSTR – 3B, 1 and 2A. Dealing with the differences between inter-related figures is a major concern to be dealt and disclose.
9. List of ITC claimed purchases – Check if any blocked credit has not been taken, other state vendor has not charged CGST/SGST, filtering wrong GST number given by vendors, asking party confirmation statement for major vendors and dealing with missed credits.
10. In audit report, sufficient division has been provided wherein auditor can express its view and provide reason for unreconciled difference. It’s suggested to have a list of discrepancy from day one, so that necessary disclosure can be made in the audit report.
Above is the suggested way to kick start the GST audit process, which at present is high priority.