pri Check List for Scrutiny of Books for Tax Audit Purpose Check List for Scrutiny of Books for Tax Audit Purpose

Check List for Scrutiny of Books for Tax Audit Purpose
For Assessment Year 2021-2022

Step 1: Check and Verify the opening Balances of each ledger as per previous year signed Balance-sheet

a) Is there any difference in Opening Balance Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Name of Ledger Amount as per Last year Balance Sheet (in ₹) Amount as per Books of Accounts (in ₹) Difference (in ₹)
 
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 2: Check whether the assessee is carrying on any profession or business?

a) If assessee is carrying on Profession, whether his Gross receipts exceed ₹50 Lakhs? Yes/No

b) If assessee is carrying on Business, whether both payments and receipts exceeds 5% in cash only Yes/No

c) If answer of (b) above is affirmative, check whether his turnover exceeds ₹ 1Crore Yes/No

d) If answer of (b) above is nugatory, whether his turnover exceeds₹ 5Crore Yes/No

e) On the basis on all above points, whether assessee is required to have Tax Audit under section 44AB of Income Tax Act, 1961 Yes/No

Step 3: Check, in case of company, whether there is any change in shareholding pattern as compare to last year from MCA SH-4 (if filed)

a) Whether there is any change in shareholding pattern as compare to last year Yes/No

b) If answer of (a) above is affirmative, the provide the following details:

S.No. Name of Shareholders New Shareholding pattern
  No. of Shares held % of shareholding
 
 
 

Step 4: Check whether the assessee is registered under GST?

a) Whether assessee is registered under GST Yes/No

b) If answer of (a) above is affirmative, then provide the following Details:

S.No. State GSTIN
 
 
 
 

Step 5: Reconcile Outward Supply (Sales/Gross Receipts) from GSTR-1, GSTR-3B and Books of Accounts

a) Is there any difference in Between GSTR- 1, GSTR-3B and Books of accounts Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Month Difference Between Reason of Difference Amount Involved (in ₹) How the same has been rectified
  TV IGST CGST SGST
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 6: Reconcile ITC claimed as per GSTR-3B and Books of Accounts

a) Is there any difference in ITC as per GSTR-3B and Books of accounts Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Month Difference Between Reason of Difference Amount Involved (in ₹) How the same has been rectified
  IGST CGST SGST
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 7: Reconcile ITC claimed as per GSTR-2B and Books of Accounts

a) Is there any difference in ITC as per GSTR-2B and Books of accounts Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Month Difference Between Reason of Difference Amount Involved (in ₹) How the same has been rectified
  IGST CGST SGST
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 8: Reconcile ITC claimed under RCM as per GSTR-3B and Books of Accounts

a) Is there any difference in ITC under RCM as per GSTR-3B and Books of accounts Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Month Difference Between Reason of Difference Amount Involved (in ₹) How the same has been rectified
  IGST CGST SGST
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 9: Cross –Verify the GST Credit Ledger or GST Liability Ledger Balances as per GST Portal and Books of Accounts

a) Is there any difference in GST Credit Ledger or GST Liability Ledger as per GST Portal and Books of Accounts Yes/No

b) If there is any difference, as stated in (a) above, kindly fill the details:

S.No. Month Difference Between Reason of Difference Amount Involved (in ₹) How the same has been rectified
  IGST CGST SGST
 
 
 

c) Whether the difference has been rectified? Yes/No

Step 10: Check whether there is any expense on which GST should be charged on RCM

a) Whether there is any expense on which GST should be Charges on RCM Yes/No

b) If answer of (a) above is affirmative, then provide the details as follow:

S.No. Month Nature of Expense Amount(in ₹) Reason for not charging the same
  IGST CGST SGST
 
 
 

c) Whether the same has been rectified and how? Yes/No

Step 11: Check whether there is any expenses on which ITC is not allowed but claimed in books

a) Whether there is any expenses on which ITC is not allowed but claimed in books Yes/No

b) If answer of (a) above is affirmative, then provide the details as follow:

S.No. Month Nature of Expense Amount(in ₹) Reason for the same
  IGST CGST SGST
 
 
 

c) Whether the same has been rectified and how? Yes/No

Step 12: Check whether there is any expense in books of accounts on which TDS should be deducted but not deducted or deducted but at the rate lower than the specified

a) Whether there is any expenses on which should be deducted but not deducted Yes/No

b) If answer of (a) above is affirmative, then provide the details as follow:

S.No. Nature of Expense Amount of Expense(in ₹) Amount of TDS(in ₹) Reason for the same
 
 
 
 

c) Whether the same has been rectified and how? Yes/No

d) Whether there is any expense on which TDS should be deducted at rate lower than the specified Yes/No

e) If answer of (d) above is affirmative, then provide the details as follow:

S. No. Nature of Expense Section Amount of Expense (in ₹) Amount of TDS deducted (in ₹) Amount of TDS should be deducted (in ₹) Amount of Difference(in ₹)
 
 
 
 

f) Whether the same has been rectified and how? Yes/No

Step 13: Check payment made towards TDS as reflected in Books of accounts against TDS Challans.

a) Is there, any payment towards TDS as reflected in books of accounts against which no challan has been found? Yes/No

b) Is there, any payment in which interest has been paid along with TDS amount as per the challan but the same has not been bifurcated while booking the entry of the same

c) If answer of (b) above is affirmative, kindly fill the detail:

S.No. Month Amount of TDS(in ₹) Amount of Interest(in ₹)
 
 
 
 

d) Verify whether the TDS due for the payment for the month has been paid as per the due date.

e) If answer of (d) above is negatory, whether the Interest has been paid along with related challan Yes/No

f) Check whether assessee has filed TDS returns with in due dates Yes/No

g) If answer of (f) above is negatory, whether the Interest has been paid along with related challan Yes/No

h) If assessee had paid or liable to be paid Interest for late payment of TDS or late filing of returns, kindly provide the detail:

S. No. TAN Amount of Interest should be charged (in ₹) Amount of Interest Paid (in ₹) Date of Payment
 
 
 
 

Step 14: Whether assessee is liable to collect TCS?

a) Whether assessee’s total turnover in previous financial year exceeds₹10 crore Yes/No

b) If answer of (a) above is affirmative, then whether in current financial year, at any time after 01st October, 2020, sale of goods to a buyer exceeds ₹50 lakhs Yes/No

c) If answer of (b) above is affirmative, then whether assessee has collected TCS on (Total Sales Value-₹50 Lacs)Yes/No

d) If answer of (c) above is affirmative, then whether payment of TCS and filing of TCS retun made within due dates as prescribed Yes/No

e) If answer of (d) above is negatory, whether Interest has been paid along with respective challan Yes/No

Step 15: Whether assessee is liable to deduct ESIC and EPF

f) Whether provisions for ESIC and EPF are applicable to assessee? Yes/No

g) Is answer of (a) above is affirmative, whether same has been deposited with in the due dates to the department Yes/No

h) If answer of (b) above is negatory, then provide the details:

S.No. Nature of Fund Employer Contribution/ Employee Contribution Amount of Contribution (in ₹) Due Date of Payment Actual Date of Payment
 
 
 
 

Step 16: Check whether expenses has been charged in proper heads they belongs to.If No, then provide the details:

S.No. Name of Ledger Nature of expense Head of expense to which it relates Head of expense in which it should charged Amount involved(in ₹)
 
 
 
 

Step 17: Whether assessee has obtained loan from Banks or NBFCs or from any other person

a) Whether assessee has obtained any loan from Banks or NBFCs? Yes/No

b) If answer of (a) above is Yes, then obtain Loan statement of each financial support and verify the balances outstanding in books of accounts and the respective loan statement and If there is any difference then fill the required column:

S.No. Name of Ledger Balance as per Loan Statement (in ₹) Balance as per Books of accounts (in ₹) Amount of Difference (in ₹) Reason of Difference
 
 
 
 

c) Whether the same has been rectified? Yes/No

d) Whether assessee has obtained loan or accepted any deposit from any other person Yes/No

e) Is answer of (d) above is Yes, whether the same has been obtained by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account Yes/No

f) If answer of (e) above is negatory, then whether the loan accepted/account balance as on the date of acceptance/loan accepted and balance on date of acceptance exceeds ₹20,000 Yes/No

g) If answer of (f) above is Yes, the fill the following details (Section 269SS)

S.No. Name of Lender/ Depositor Address of Lender/Depositor PAN of Lender/ Depositor Amount of Loan/ Deposit taken or accepted during the Year(in ₹) Maximum Amount Outstanding during the year(in ₹)
 
 
 
 

h) Whether assessee had paid loan or deposit by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account Yes/No

i) If answer of (h) above is negatory, then whether the loan/deposit paid together with Interestor account balance as on the date of payment/loan payable and balance on date of payment exceeds ₹20,000    Yes/No

j) If answer of (i) above is Yes, the fill the following details (Section 269T)

S.No. Name of Lender/ Depositor Address of Lender/ Depositor PAN of Lender/ Depositor Amount of repayment (in ₹) Maximum Amount Outstanding during the year(in ₹)
 
 
 
 

k) In case where assessee is a Company, Check DPT-3 (if filed) to verify the balances

Step 18: Check whether there are creditors who are outstanding for more than 180 days from the date of transaction

a) Whether there are creditors outstanding for more than 180 days Yes/No

b) If answer of (a) above is affirmative, then reverse the proportionate ITC so availed and provide the following details:

S.No. Name of Creditors Amount Outstanding (in ₹) Proportionate IGST(in ₹) Proportionate CGST(in ₹) Proportionate SGST(in ₹)
 
 
 
 

c) Check whether in previous year any ITC has been reversed due to non-payment to creditors. If yes, then check whether in current year the payment has been made to that creditor and f the payment has been made, whether the ITC claimed in books or not.

d) Obtain Balance confirmation from the creditors outstanding from more than 1 year.

e) Prepare list of Creditors having debit balances

f) Prepare list of creditors with negligible amount that can be write off from the books

Step 19: Whether previous year provisions has been paid or reversed? If not then reverse previous year provisions

Step 20: Check whether current year provisions for Expenses like electricity, salary, Telephone, Internet, Legal and Profession, ROC, Audit Fees has been created or not.

Step 21: Check whether Provision for Income Tax for the current financial year has been created or not in the books of accounts

Step 22: Check whether there are creditors who are outstanding for more than 180 days from the date of transaction

Step 23: Check whether assessee has purchased fixed assets during the period?

a) Whether assessee has purchased fixed assets during the period? Yes/No

b) If answer of (a) above is affirmative, then obtain all purchase bills and provide the following details:

S.No. Name Assets Date of Purchase Amount Involved(in ₹)
 
 
 
 

c) Check from the fixed asset bill whether it should be capitalise or should transfer to repair and maintenance

d) Check whether any fixed asset is purchased in cash for more than ₹10,000 and if yes, then check whether depreciation has been claimed or not and if depreciation has been claimed then provide the following details:

S.No. Name Assets Date of Purchase Amount of Fixed Assets (in ₹) Amount of Depreciation (in ₹)
 
 
 
 

e) Check whether depreciation on fixed assets has been charged in books of accounts as per companies Act (for companies) or as per Income tax act (in all other cases)

Step 24: Check whether assessee has balance in closing stock from goods imported Into India?

a) Check whether assessee has balance in closing stock from goods imported Into India Yes/No

b) If answer of (a) above is affirmative, then whether proportionate expenses related to import has been added in closing stock. If not, then same should be computed and included in the valuation of closing stock

Step 25: Check whether there are debtors standing in books of accounts?

a) Check whether there are debtors outstanding in its books of accounts Yes/No

b) If answer of (a) above is affirmative, then prepare a list of debtors having negligible balances which can be write off from the books of accounts

c) Prepare a list of debtors having outstanding closing balance is in credit

d) Check whether debtors having credit balances has been either paid or adjusted against transaction within 365 days from the day when the balance become credit in nature

e) If not, the same should be treated as deposit and check whether the same is declared as deposit in books of account and DPT-3 as well

f) Check whether any sum from outstanding debtors/from advances given has been received in excess on ₹2,00,000 otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account 84[or through such other electronic mode as may be prescribed Yes/No

g) If answer of (f) above is Yes, then provide the details as follow (Section 269ST):

S.No. Name of Payer Address of Payer PAN of Payer
 
 
 
 

h) Obtain balance confirmation from debtors outstanding from long period

Step 26: Check whether there is any difference in TDS Receivable, Advance Tax Paid as reflected in Form 26AS and as reflected in Books of accounts. If yes, then provide the following details:

S.No. Name of Party Section Income as per 26AS (in ₹) Amount of TDS as per 26AS (in ₹) Amount of TDS as per books of accounts (in ₹) Amount of Difference (in ₹)
 
 
 
 

Step 27: In case of Cash and Cash Equivalents, check and verify the following:

a) Verify the Bank Balance as reflecting in books of accounts with Bank statement and if there is any difference, obtain the bank reconciliation statement.

b) Verify whether Balance of Cash as on the last day of the year in negative or not

c) Verify whether there is any payment made in cash in excess on ₹10,000 during the year

Step 28: Provide following details for GP/NP ratio:

Particulars Current Financial Year Previous Financial Year
(a)     Turnover (₹)
(b)     Gross Profit (₹)
(c)      GP Ratio (b/a) (in %)
(d)     Net Profit (₹)
(e)     NP Ratio (d/a) (in %)

Author Bio

Qualification: CA in Practice
Company: N/A
Location: New Delhi, IN
Member Since: 18 Apr 2020 | Total Posts: 3
Myself ACA Sakshi qualified in November 2018 exams View Full Profile

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4 Comments

  1. krishna says:

    VERY NICE ARTICLE MAM ,
    THANK YOU FOR THE HARDWORK TO PREPARE ALL THE REQUIRED POINTS IN DETAILS WITH EVERY ASPECTS AT ONE PLACE

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