GST Audit Checklist

Conducting a GST audit is a meticulous process that ensures compliance with GST regulations and helps identify areas of improvement in tax management. Here’s a comprehensive checklist to guide you through a thorough GST audit:

1. Basic Information and Registration Details

• Verify GST registration certificate.
• Ensure the correct GSTIN is used on all documents.
• Confirm that business details such as name, address, and business nature are accurately reflected in the GST registration.

2. Tax Invoices and Documentation

• Review all sales and purchase invoices for compliance with GST invoicing rules.
• Ensure that tax invoices include mandatory details: supplier and recipient GSTIN, invoice number, date, HSN/SAC codes, item description, quantity, taxable value, tax rate, and amount.
• Verify that credit and debit notes are issued in accordance with GST rules and properly recorded.

3. Returns Filing

• Check that all GST returns (GSTR-1, GSTR-3B, GSTR-9, and any other applicable returns) are filed accurately and on time.
• Cross-verify the data reported in GSTR-1 with GSTR-3B and GSTR-9.
• Ensure reconciliation of outward supplies between GSTR-1 and the accounting records.

4. Input Tax Credit (ITC)

• Verify eligibility and correct availing of Input Tax Credit.
• Ensure that ITC claimed matches with GSTR-2A/2B data.
• Review documents supporting ITC claims: tax invoices, debit notes, and reverse charge documents.
• Ensure that ITC reversals (if any) are properly accounted for and reported.

5. Reconciliations

• Reconcile sales turnover reported in GST returns with financial statements.
• Reconcile ITC claimed with ITC as per GSTR-2A/2B.
• Ensure that GST payable as per the books matches the amount paid and reported in returns.

6. E-way Bills

• Verify compliance with e-way bill requirements.
• Ensure that e-way bills are generated for all applicable transactions and details match with invoices.
• Check the validity and correctness of e-way bills and ensure timely closure of e-way bill transactions.

7. Reverse Charge Mechanism (RCM)

• Verify transactions liable for Reverse Charge Mechanism.
• Ensure correct accounting and payment of tax under RCM.
• Ensure proper documentation and compliance with RCM rules.

8. Accounts and Records Maintenance

• Ensure that all required records are maintained as per GST rules: invoices, credit/debit notes, e-way bills, purchase records, stock registers, and expense ledgers.
• Verify proper maintenance of electronic records and backups.

9. Tax Payments

• Check that tax payments are made on time and the correct amount is paid.
• Review challans and payment records.
• Ensure that interest and penalties (if any) are accounted for and paid.

10. Compliance with Notifications and Circulars

• Review adherence to relevant GST notifications and circulars issued by the GST Council.
• Ensure that any changes in GST law are promptly incorporated into business processes.

11. Annual Return and Reconciliation Statement

• Verify the accuracy of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) filings.
• Ensure that audited financial statements align with the GST annual return and reconciliation statement.

12. Audit Reports and Assessments

• Ensure compliance with audit requirements under GST law.
• Maintain proper records of any departmental audit reports, observations, and follow-up actions.
• Prepare responses to audit queries and ensure timely submission of required information.

13. Miscellaneous

• Verify compliance with GST provisions related to job work, imports, exports, and deemed exports.
• Ensure correct application of GST rates and exemptions.
• Review any advance rulings obtained and ensure compliance with the rulings.

1. What is a GST audit?
   • A GST audit is a thorough examination of a business’s records, returns, and other documents to verify compliance with GST laws.
2. Who is required to undergo a GST audit?
   • Businesses with an annual turnover exceeding ₹2 crores are required to undergo a GST audit.
3. What documents are required for a GST audit?
   • Key documents include GST registration certificate, tax invoices, returns, financial statements, e-way bills, and ITC records.
4. How often should a GST audit be conducted?
   • GST audits are typically conducted annually, but periodic internal reviews are recommended for ongoing compliance.
5. What is the role of the auditor in a GST audit?
   • The auditor reviews records, verifies compliance, reconciles data, identifies discrepancies, and prepares audit reports.
6. What are the consequences of non-compliance found in a GST audit?
   • Non-compliance can result in penalties, interest, and legal actions, and may necessitate corrective measures and additional tax payments.
7. How can businesses prepare for a GST audit?
   • Businesses should maintain accurate records, conduct internal reviews, stay updated with GST laws, and ensure timely and correct return filings.
8. What is the importance of reconciling GSTR-1 and GSTR-3B?
   • Reconciliation ensures that outward supplies reported in GSTR-1 match the summarized data in GSTR-3B, preventing discrepancies and potential notices from authorities.
9. What are e-way bills and their significance in a GST audit?
   • E-way bills are electronic documents for the movement of goods. They are crucial for compliance and must be accurately maintained and reconciled with invoices.
10. Can businesses claim ITC for all purchases?
    • No, ITC can only be claimed for eligible purchases as per GST laws. It’s important to verify eligibility and maintain supporting documents.

This comprehensive GST audit checklist ensures businesses remain compliant with GST laws, minimize risks, and identify areas for improvement in their tax processes.