GUIDANCE NOTE ON GST AUDIT
GST
Dated:- 28-12-2018
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Document 1THE OF COS
COUNTANTS OF
75
Years
1944-2018
GUIDANCE NOTE ON
GST
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CCOUNTANTS OF INDIA
THE INSTITUTE
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INDIA
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
(Statutory Body under an Act of Parliament)
www.icmai.in
Vision Statement
“The Institute of Cost
Accountants of India
would be the preferred
source of resources and
professionals for the
financial leadership of
enterprises globally.”
Mission Statement
“The Cost and Management
Accountant professionals would
ethically drive enterprises
globally by creating value to
stakeholders in the socio-
economic context through
competencies drawn from the
integration of strategy,
management and accounting”
Objectives of Taxation Committee:
1. Preparation of Suggestions and Analysis of various Tax
mat
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Edition: December, 2018
Published by
The President
The Institute of Cost Accountants of India
CMA Bhawan
12, Sudder Street, Kolkata – 700016
Delhi Office
CMA Bhawan
3, Institutional Area, Lodhi Road, New Delhi – 110003
The Institute of Cost Accountants of India
(Statutory body under an Act of Parliament)
© All rights reserved
Disclaimer:
This Publication does not constitute professional advice. The information
in this publication has been obtained or derived from sources believed by
the Institute of Cost Accountants of India (ICAI) to be reliable. Any opinions
or estimates contained in this publication represent the judgment of ICAI
at this time. Readers of his publication are advised to seek their own
professional advice before taking any course of action or decision, for which
they are entirely responsible, based on the contents of this publication. ICAI
neither accepts nor assumes any responsibility or liability to any reader for
this publication in respect of the information con
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orrectness of information declared, taxes paid and to assess the compliance
with GST. Every registered assessee whose turnover during a financial year exceeds 2 crore has to get
his accounts audited by a CMA or a CA. A Guidance Note on GST Audit surely will assist our members in
resolving any issues that might arise while conducting audit.
I congratulate CMA Niranjan Mishra, Chairman- Taxation Committee for bringing out this revised
“Guidance note on GST Audit”. Commendable job by the entire Tax Research Team. My best wishes to
Taxation Committee for its all future endeavours.
With Warm Regards,
Afte
CMA Amit A. Apte
21st December, 2018
HEAD OFFICE: 12, SUDDER STREET, KOLKATA-700 016, PHONES: +91-33-22521031/1034/1035, FAX: +91-33-22527993/1026
Message From Chairman
GST is an integrated scheme of taxation that does not discriminate between
goods and services and is a part of the tax reforms that centre on evolving
an efficient and harmonized consumption tax system in the country. GST
w
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ng with the latest developments, announcements and
amendments. This will serve as a very good knowledge and information
source, particularly when the stress is on the need of information on GST
Audit on a day-to-day basis.
–
I congratulate Team Tax Research, commendable job by the entire
Team. I am happy and would like to congratulate other members of the
Taxation Committee and knowledge contributors of the Institute for their
efforts to bring this out. CMA T K Jagannathan and CMA Amit Sarker
deserve a special mention here for their untiring efforts in bringing out this
publication. My best wishes to all for its all future endeavours. Keep up the
good job.
28
CMA Niranjan Mishra
21st December, 2018
Prefece
The GST laws provide for a mandatory audit to be undertaken by every
registered person whose aggregate turnover during a financial year exceeds
`2 crore. The audit is required to be carried out by a chartered accountant
or a cost accountant, who is required to certify “whether
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timelines for the GST audit, the taxpayers need to factor
in some key deadlines prescribed under the GST law. The last date for
filing the annual return is December 31, 2018, and the GST audit report
is required to be submitted along with the annual return. In addition,
corporates are also reeling under the pressure of carrying out the credit
matching which needs to be done before the filing of returns for the month
of September 2018.
There are many minute details in these aspects of GST Audit which are
needed to be handled carefully. Professionals dealing in this field would
surely find this handbook an easy source of information to fall back up
during their professional deliberations.
Here, we would also like to thank and acknowledge the immense
contributions of CMA T K Jagannathan and CMA Amit Sarker without
whose hard work, toil and guidance the handbook could have never acquired
its shape. The department is indebted to them for their contributions. CMA
Niranjan Mishra, Chairman â
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t Guidelines
3-9
3
Significant Concepts and Definitions under GST
10-18
4
Time of Supply, Place of Supply Classification and
19-37
Valuation of supplies
5
Accounts and records
38-47
6
Outward supplies
48-55
7
Input Tax credit
56-70
8
Reverse Charge Mechanism
71-79
9 Return Filing
80-84
10
Payment of Taxes
85-86
11
Export of Goods and Services
87-88
12
Import of Goods and Services
89
13
Job work
90-99
14
Input Service Distributor
100-107
15
Refund
108-112
16
Recommendatory Formats for GST Audit
113-119
17
Approved GST Return Formats notified by
120-151
Govt.
Tax Research Department, The Institute of Cost Accountants of India
COST
THE INSTITUTE OF CO
ACCOUNT
NTANTS OF INDIA
GST IN INDIA
The introduction of Goods and Services Tax on 1st July 2017 was a very
significant step in the field of indirect tax reforms in India. By amalgamating
a large number of Central and State taxes into a single tax, the aim was to
mitigate cascading or double taxation in a major way and pave the way for
a com
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applicable customs duties.
Import of services is treated as inter-State supplies and is subject to IGST.
CGST, SGST /UTGST & IGST is levied at rates which are mutually agreed
upon by the Centre and the States under the aegis of the GSTC.
GST applies to all goods and services except Alcohol for human consumption.
Taxpayers with an annual turnover of 20 lakh (Rs.10 lakh for special category
States (except J&K) as specified in article 279A of the Constitution) would
be exempt from GST.
A composition scheme (i.e. to pay tax at a flat rate without credits) is
available to small taxpayers (including to manufacturers other than
specified category of manufacturers and service providers) having an annual
turnover of up to Rs.1 crore (Rs.75 lakh for special category States (except J&K
and Uttarakhand) enumerated in article 279A of the Constitution). This
limit shall be raised to 1.5 crore after necessary amendments in the Act.
The threshold exemption and compounding scheme would be optional.
Gu
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on any supply of goods or services or both used or intended
to be used in the course or furtherance of business.
Audit of registered persons to be conducted in order to verify compliance
with the provisions of Act.
2
Guidance Note on GST Audit
Tax Research Department, The Institute of Cost Accountants of India
AUDIT
COST
THE INSTITUTE OF CO
ACCOUNT
NTANTS OF INDIA
According to Section 2(13) of the GST Act, 2017, ‘audit' implies –
Detailed examination of records, returns and other documents –
maintained/furnished by a taxable person,
(a)
(i)
under GST law/any other law or rules;
Verification of correctness of –
(ii)
(b)
(i)
(ii)
taxes paid;
turnover declared;
(iii) refund claimed;
(iv) input tax credit availed; and
(v)
assessment of compliances with provisions of GST law and
rules.
GST audit is not only reconciliation of tax liability & payment, it also
signifies compliance of the provisions of the GST act, law and provisions
etc.
Relevant Provisions:
Section 35(5): Every
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r sub-section (5) of section 35 and he shall furnish a copy of
audited annual accounts and a reconciliation statement, duly certified, in
FORM GSTR-9C, electronically through the common portal either directly
or through a Facilitation Centre notified by the Commissioner.
Audit by tax authorities:
Sec. 65 (1) The Commissioner or any officer authorized by him, by way of a
general or a specific order, may undertake audit of any registered person for
Guidance Note on GST Audit
3
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
such period, at such frequency and in such manner as may be prescribed.
Special audit:
Sec.66 (1) If at any stage of scrutiny, inquiry, investigation or any other
proceedings before him, any officer not below the rank of Assistant
Commissioner, having regard to the nature and complexity of the case and
the interest of revenue, is of the opinion that the value has not been correctly
declared or the credit availed is not within the norm
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it party deputed by the proper officer
or a cost accountant or chartered accountant nominated under
section 66-
i.
ii.
iii.
iv.
V.
vi.
such records as prepared or maintained by the registered
person and declared to the proper officer in such manner
as may be prescribed;
trial balance or its equivalent;
statements of annual financial accounts, duly audited,
wherever required;
cost audit report, if any, under section 148 of the Companies
Act, 2013;
the income-tax audit report, if any, under section 44AB of
the Income-taxAct, 1961; and
any other relevant record.
General Guidelines to conduct Audit:
Qualified Cost Accountant or Chartered Accountant is authorized to certify
GST Audit Report & for that purpose they should understand their powers,
roles and responsibilities regarding this.
4
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Duties of Auditors
The auditor is responsible for detection of non-compliance,
procedural irregu
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In the case of first audit, the auditor needs to maintain detailed
written record of his observations of the internal control system.
During these verifications, the following information should be
correctly obtained and recorded.
(ii)
Whether any input is exclusively consumed for fully
exempted supplies.
Whether any inputs consumed for fully exempted as well
as taxable supplies.
(iii) Whether any Capital goods on which input credit is availed
are exclusively used for fully exempted supplies.
Responsibilities of Auditors
Auditor's main responsibility in relation to fill up GSTR-9C is to
reconcile the audited financials with the annual return(GSTR
9, GSTR-9B)
The auditor has to determine whether any amount is to be
paid by taxpayer that has been arised due to non-reconciliation
between the audited financials with the annual return or not.
The Auditor has to disclose any leakage in revenue which may
result in non payment or lower payment of tax liability.
Guidance Note on GST Audit
5
OF
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audit
as per the standards of auditing.
Role of the Auditor
An auditor is required to verify the following matters before finalisation of
the books of accounts Analysis of GSTR -9C.
Registration
Whether registration has been obtained as per GST Law
Whether the amended certificate has been issued by giving effect
of correction/changes made in the particulars incorporated in
the application form.
Whether details of each place of business have been incorporated
in the registration certificate?
Transitional Credit
Whether transitional credit as
carried forward in Form
GSTTRAN-I is in accordance with the law?
Whether credit carried forward inappropriately has been
reversed along with applicable interest?
Valuation and Payment of tax liability and review of GST returns filed
Whether valuation has been done as per provisions of law
6
Whether applicable taxes both under forward charge and
reverse charge has been correctly discharged under the correct
head or not
Whether there is any short pay
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ecipient?
Whether the turnover declared in the GST returns are in
consonance with that declared in the books of accounts?
Whether the refund claimed, if any has been claimed in
pursuance of the provisions of GST law?
Whether the documentation aspect necessary for filing the
claim for refund has been undertaken in accordance with law?
Documents:
Whether the tax invoice, debit and credit notes, receipt voucher
etc. have been issued in accordance with the provisions of law?
Whether all the tax invoices and other documents issued for the
supply of goods or services or both have been accounted for in
the books of accounts and reported in the GST Returns?
Whether e-way bill, wherever applicable has been issued and
duly recorded in the books of accounts and also to verify
whether there is any variance in the data recorded in the e-way
bill and the corresponding tax invoice?
Whether HSN code has been correctly mentioned(specifically in
case of mandatory cases i.e.where the turnover exceeds Rs.
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re to be checked.
Some corrections may be needed either in the books of
accounts, returns or there may be requirement of amendment
in Shipping bills.
Stage wise action for audit
i.
Preparation/updating of Taxable Person master file containing
comprehensive Taxable Person profile.
ii. Collection of all relevant documents, data
iii.
iv.
V.
statement and reply to questionnaire.
reconciliation
Desk review on the basis of relevant documents and interview
of the Taxable Person.
Formulation and approval of audit plan based on desk review.
Conducting audit verification on the basis of the approved audit
plan.
Suggestions on correction/improvements to Taxable Person for
future guidance.
vi.
vii.
viii.
Issue of final audit report.
Preparation of draft audit report and its submission, along with
working papers for discussion.
ix. Follow up action, for monitoring the compliance of various points.
Applicability of Annual Return
All registered dealers are required to file annual return except the fo
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9C whether or not Turnover exceeds Rs. 2 CRores
with respect to individual turnover.
In case of switchover from composition to regular or vice-versa,
then GSTR-9A & GSTR-9 are required to be uploaded for the
relevant period simultaneously.
If there is no sale & purchase during F.Y 2017-18, THEN nil
Annual return is required to be uploaded.
All dealers whose registration are cancelled or pending as on
31.03.2018 and were registered for any day during F.Y 2017-
18, they have to file annual return.
Analysis of GSTR-9 (For Regular Taxpayers)
PART-I
PART-II
PART-III
PART-IV
PART- V
PART- V
Basic Details
Details of Outward & Inward Supplies declared during F.Y
Details of ITC as declared during F.Y as per return
Details of Tax paid as declared in return filed during F.Y
Particulars of the transactions for the previous F.Y declared in return of
April to September of Current F.Y or up to date of filing return of previous
year whichever is earlier
Other Information
Analysis of GSTR-9A (For Compo
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c)
Section 7(1)(d)
Schedule I
Schedule II
Schedule III
11 forms of supply of goods or services or both as sale, transfer,
barter, exchange, license, rental, lease or disposal made or
agreed to be made for a consideration by person in the course
or furtherance of business.
Import of services for a consideration whether or not in the
course or furtherance of business.
The activities specified in Schedule I, made or agreed to be
made without a consideration
The activities to be treated as supply of goods or supply of
services as referred to in Schedule II.
Activities to be Treated as Supply Even if Made
Without Consideration
Activities to be Treated as Supply of Goods or
Supply of Services
Activities or Transactions Which Shall be Treated
Neither as A Supply of Goods Nor a Supply of
Services
10
Guidance Note on GST Audit
Tax Research Department, The Institute of Cost Accountants of India
F COST
Time of Supply, Place of Supply
Classification and Valuation of
Supplies
ACCOUNT
NTANTS OF INDI
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within 30days/45 days-
>Issue of Invoice
Or
>Receipt of Payment
Time of supply will be the earliest
of the follows in case of Invoice not
issued within time-
>Provision of Service
Or
>Receipt of Payment
Time of supply will be in case of
Invoice not issued – Date of receipt in
recipient's book
Guidance Note on GST Audit
11
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Time of Supply in case of services – Reverse Charge
–
Payment
made within
60 days
Date of
payment
entered in
the books
Date
when
debited in
bank
Earliest of the
followings
Payment not
made within
60 days
Payment not
made within
60 days
Associated
Entities(Cross
Border
Transaction)
Date of
Date of
Entry
Payment
Change in Rate of Tax in respect of supply of goods or services
Sec14. Where there is a change in rate of tax of supply of goods or services,
time of supply has to be determined in the following manner:
Supply is completed before the change in rate of tax
Invoice issued
befo
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in the above situation. In a nutshell,
suppliers of goods other than composition dealers will have to pay tax at
the time of issue of invoice only.
Date of receipt of Payment in case of change in rate of tax
Normally the date of receipt of payment is the date of credit in the bank
account of the recipient of payment or the date on which the payment is
entered into his books of account, whichever is earlier. Further, the date
of credit in the bank account is relevant if such credit is after four working
days from the date of change in rate of tax.
The way of calculation of time of supply is adequately covered by the
provisions of Sections 12, 13 and 14, one has to keep in mind these
provisions and calculate time of supply which is the pivot to determine
when the liability to discharge tax will arise.
Place of supply (IGST)
Places of supply provisions have been framed for goods and services,
keeping in mind the destination/consumption principle. In other words,
the place of supply is bas
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ply by assembly / installation at site
Supply on board a conveyance
(vessel, aircraft, train etc.)
Place of supply
Location of goods at time of termination
of movement for delivery to recipient
Principal Place of Business of third
person
Location of goods at the time of delivery
to the Recipient
Place of Installation / assembly
Location where goods are taken on
board
Guidance Note on GST Audit
13
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Section 11- Place of sup.ply of goods imported into, or exported from
India
Nature of supply
Goods imported into India
Goods exported from India
Place of supply
Location of Importer
Location outside India
Section 12-Place of supply of services where location of supplier and
recipient is in India.
Nature of supply
Supply to Registered Person
Place of supply
Location of Recipient
Supply to Un-registered Person(Location of Location of Recipient
Recipient available)
Supply to Un-registered Person(Location of Location
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nd maintain, at his principal
place of business, as mentioned in the certificate of registration,
a true and correct account ofۥ
Production or manufacture of goods
Inward and outward supply of goods or services or both
Stock of goods
(a)
(b)
(c)
(d)
Input tax credit availed
(e)
Output tax payable and paid and
(f)
Such other particulars as may be prescribed
(2)
(3)
(4)
(5)
Provided that where more than one place of business is
specified in the certificate of registration, the accounts
relating to each place of business shall be kept at such
places of business:
Provided further that the registered person may keep and
maintain such accounts and other particulars in electronic
form in such manner as may be prescribed.
Every owner or operator of warehouse or godown or any other
place used for storage of goods and every transporter, irrespective
of whether he is a registered person or not, shall maintain records
of the consigner, consignee and other relevant details of the goods
in su
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e (h) of sub-section (5) of section
17, where the registered person fails to account for the goods or
services or both in accordance with the provisions of sub-section
(1), the proper officer shall determine the amount of tax payable
on the goods or services or both that are not accounted for, as if
such goods or services or both had been supplied by such person
and the provisions of section 73 or section 74, as the case may
be, shall, mutatis mutandis, apply for determination of such tax.
Every registered person required to keep and maintain books of
account or other records in accordance with the provisions of
sub-section (1) of section 35 shall retain them until the expiry of
seventy-two months from the due date of furnishing of annual
return for the year pertaining to such accounts and records:
Provided that a registered person, who is a party to an appeal or
revision or any other proceedings before any Appellate Authority
or Revisional Authority or Appellate Tribunal or court, whe
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the
details of tax payable (including tax payable in accordance with
the provisions of sub-section (3) and sub-section (4) of section
9), tax collected and paid, input tax, input tax credit claimed,
together with a register of tax invoice, credit notes, debit notes,
delivery challan issued or received during any tax period.
(5) Every registered person shall keep the particulars of –
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
(6)
(7)
(8)
(9)
(a)
(b)
(c)
names and complete addresses of suppliers
names and complete addresses of the persons to whom he
has supplied goods or services
the complete address of the premises where goods are
stored by him, including goods stored during transit along
with the particulars of the stock stored therein.
If any taxable goods are found to be stored at any place without the
cover of any valid documents, the proper officer shall determine
the amount of tax payable on such goods as if such goo
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eive or supply goods or services on behalf of
such principal separately;
particulars including description, value and quantity
(wherever applicable) of goods or services received on behalf
of every principal;
particulars including description, value and quantity
(wherever applicable) of goods or services supplied on
behalf of every principal;
details of accounts furnished to every principal; and
tax paid on receipts or on supply of goods or services
effected on behalf of every principal.
(12) Every registered person manufacturing goods shall maintain
monthly production accounts showing quantitative details of raw
materials or services used in the manufacture and quantitative
details of the goods so manufactured including the waste and by
products thereof.
Guidance Note on GST Audit
17
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
(13) Every registered person supplying services shall maintain the
accounts showing quantitative details of goods used in
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nd delivery
challans relating to stocks, deliveries, inward supply and outward
supply shall be preserved for the period as provided in section 36
and shall, where such accounts and documents are maintained
manually, be kept at every related place of business mentioned
in the certificate of registration and shall be accessible at every
related place of business where such accounts and documents
are maintained digitally.
(17) Any person having custody over the goods in the capacity of a
carrier or a clearing and forwarding agent for delivery or dispatch
thereof to a recipient on behalf of any registered person shall
maintain true and correct records in respect of such goods
handled by him on behalf of such registered person and shall
produce the details thereof as and when required by the proper
officer.
(18) Every registered person shall, on demand, produce the books of
accounts which he is required to maintain under any law for the
time being in force.
Generation and maintenance of ele
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per electronic back-up of records shall be maintained and
preserved in such manner that, in the event of destruction of
such records due to accidents or natural causes, the information
can be restored within a reasonable period of time.
(2)
The registered person maintaining electronic records shall
produce, on demand, the relevant records or documents, duly
authenticated by him, in hard copy or in any electronically
readable format.
(3) Where the accounts and records are stored electronically by any
registered person, he shall, on demand, provide the details of
such files, passwords of such files and explanation for codes.
used, where necessary, for access and any other information
which is required for such access along with a sample copy in
print form of the information stored in such files.
Records to be maintained by owner or operator of godown or
warehouse and transporters.
1.
2.
3.
4.
Every person required to maintain records and accounts in
accordance with the provisions of sub-
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hall maintain records of goods transported, delivered
and goods stored in transit by him along with the Goods
and Services Tax Identification Number of the registered
consigner and consignee for each of his branches.
every owner or operator of a warehouse or godown shall
maintain books of accounts with respect to the period for
which particular goods remain in the warehouse, including
the particulars relating to dispatch, movement, receipt and
disposal of such goods.
The owner or the operator of the godown shall store the goods in
such manner that they can be identified item-wise and owner-
wise and shall facilitate any physical verification or inspection by
the proper officer on demand.
Tax Invoice and other such instruments in GST
Goods
The time for issuing invoice is depend on the supply of goods or service.
A registered person supplying taxable goods shall, before or at the time of
removal of goods (where supply involves movement of goods) or delivery or
making available thereof to
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in case of advance receipt under Rule 50
Refund voucher in case of refund under
Rule 51
Payment voucher in case of payment of invoice under Rule 52
Debit and Credit Note in case of rate difference or discount if any under
Rule 53
Input service distributor invoice for ISD Distribution under Rule 54
20
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Delivery Challan in case of Job work/ Sale on approval basis under Rule 55
Points to be noted.
All the records required to be maintained can be preserved in electronic
form.
If the records are not kept as per requirement then provisions of penalty.
and offences may become applicable.
This Section mandates the upkeep and maintenance of records, at the
place(s) of business, in electronic or other forms.
Furnishing of an audited statement of accounts and reconciliation
statement is also contemplated for persons having turnovers exceeding the
prescribed limit.
There is no relaxation
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able) of goods
or services received for the execution of works contract
Description, value and quantity (wherever applicable) of goods
Guidance Note on GST Audit
21
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
or services utilized in the execution of works contract
The details of payment received in respect of each works
contract and
The names and addresses of suppliers from whom he has
received goods or services
Accounts and records to be maintained by Agents:
Particulars of authorization received by him from each principal
to receive or supply goods or services on behalf of such principal
separately
Particulars including description, value and quantity (wherever
applicable) of goods or services received & Supplied on behalf of
every principal
Details of accounts furnished to every principal and
Tax paid on receipts or on supply of goods or services effected
on behalf of every principal.
Godown and warehouse owner or operators, and transporters
Tra
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whether registration in all states is taken or not, if
required
Check documents for principle place of business of each state
specific registration
22
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Check whether all documents of respective states are kept at
respective place or not
Multiple site in same or different states
Check whether state specific registration is mandatory or not
Check whether all documents of all sites in operation are kept
at principle place of business
Physical copies of the documents
Check whether all copies of invoices on which ITC is claimed is
available or not
Check whether all copies of sales invoices are available or not
Check whether Advance voucher, payment voucher, refund
voucher are prepared or not
Time period preserving the records
Records are required to be maintained for 72 months from the
due date of filing Annual Return
Check whether necessary mechanism is available to preserve
the rec
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= = = = = = = =
3
OF COST
INSTITUTE OF
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Check the documentary evidences for use of goods for provision
of taxable output services
Outward Supplies
Supply as defined in section 7, sub-section 1, “all forms of supply of goods
or services or both such as sale, transfer, barter, exchange, license, rental,
lease or disposal made or agreed to be made for a consideration by a person
in the course or furtherance of business;”
Check list for verification of the outward supplies documents in GST
All the elements of Rule 46 have to be verified for each and every document.
Number of HSN Codes digits have been mentioned on the tax invoices as
per Notification No 12/2017 – Central Tax Dated 28th June 2017.
Verify for any cancellation of tax invoices, as per the current provisions of
GST, there is no provision for cancellation of tax invoices except as per the
provisions of Section 67, Sub-section 12. If there are any cancellation of tax
invoic
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the Customs Tariff Act. Any change in the item properties can
be classified into a different item and which could result in short recovery
of the tax and which attracts penal provisions as per section 73 and section
74. The rate of interest and penalty are applicable as per the provisions of
Section 51 and Notification No 13 – Central Tax dated 28th June 2017.
Verify if there is any reverse charge applicable on the outward supplies? If
yes,
24
Verify if there are marked separately on the invoice?
Are they accounted in a separate ledger?
Is there a separate serial number for such tax invoices or who
they are being identified and tracked?
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Verify if there are any outward supplies on which taxes are levied over and
above MRP? If yes report them in the audit report and also in the audit
workings and findings.
Confirm that for each and every outward supply there is a corresponding
do
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nfirm they are issued
as per the provisions of Section 34 of the CGST Act as it is applicable only
in case outward supplies for which the tax invoice issued by the taxpayers
and not for the purchase returns.
In case of zero rated supplies, verify if the exports are happening on the
payment of duties or without payment of duties.
Verify if the bond is executed in case of without payment of duties and ITC
is not claimed as per the process.
Verify if there are any invoices which are issued before the execution of the
bond and exported without payment of duties, report the same in the audit
report and record it in the audit observations and findings documents.
Verify if any input tax credit is taken on the inward supplies related to
exports without payment of duties, if found report the same in the audit
report and record it in the audit observations and findings documents.
Verify if there any refund claims on the exports without payment of duties
for exports if any are pending, report the
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reported in the GST Returns correctly.
Verify if there are any Bill To and Ship To transactions, in these transactions,
the place of supply will the location of the principal supplier who has passed
on the lead and not of the party to whom the goods are being shipped.
Verify if there are any export of services, if yes, validate for each and every
category of transaction or each and every transaction satisfies all the
conditions specified in the provisions of Section 2, sub-section 6. If any of
the conditions is not met, the same should be qualified and reported in the
audit report.
Verify if any taxes are paid on a provisional basis as the taxpayer is not
able to assess the taxable value or correct classification or tax rate etc.,, If
any such transactions are there, the same should be reported in the Audit
report and also verify the procedures to be followed as per the provisions
are followed correctly and such observations if any should be part of the
audit report.
Verify if the tax
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ection 9 (3)
XXXX
XXXX
Reverse Charge – Section 9 (4)
XXXX
XXXX
Inter Branch Transfers
XXXX
XXXX
Job Work – goods not returned within stipulated time
–
· Section 143
XXXX
XXXX
GST on Samples
XXXX
XXXX
26
Guidance Note on GST Audit
Tax Research Department, The Institute of Cost Accountants of India
F COST
ACCOUNT
M
GST collected on the late fee, delayed payments
XXXX
XXXX
Sales Returns – Credit Notes Issued
XXXX
XXXX
Credit Notes issued for other reasons to customers
XXXX
XXXX
Sale of assets
XXXX
XXXX
Purchase Returns
XXXX
XXXX
Transfer to Agents – where sales are not confirmed by
–
agent Schedule 1
XXXX
XXXX
GST liability on the reversal of ITC if supplier not paid
within 180 days
XXXX
XXXX
GST paid on asset transferred to their GSTIN'S
XXXX
XXXX
GST collected on employee Benefits – Schedule 1
XXXX
XXXX
GST on assets on which input tax credit is claimed and
given as free – Schedule 1
XXXX
XXXX
GST collected on Reimbursements from employees
XXXX
XXXX
Total GST Liability to be reduced
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Reporting for related parties and non-related parties in
GST Audit
Valuation is an important aspect of the GST Audit. Valuation determines
what value the taxes are being paid. In case of if the buyer and seller are
not related, then the transaction value is to be considered for the valuation
purpose basis on provisions of Section 15 of the CGST Act.
Similarly, in case of related parties, then the valuation is to be the
determined basis of provisions of Rule 28, 30 & 31.
As per provisions of Rule 28, in case of related parties, the transaction has
to be valued on the basis of the open market value but the major difference
under GST is the definition of the related party itself. As per GST provisions,
one major difference is, a transaction is said to be related party transaction
if “any person directly or indirectly owns, controls or holds twenty-five per
cent. or more of the outstanding voting stock or shares of both of them;”
and as per the provisions of the Companies Act it is d
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iled.
There is a difference between the related party and distinct person in GST,
as a result there is a difference in the valuation process also, the verification
in such cases had to be done carefully and qualified accordingly.
All transactions related to related party transactions have to be verified
28
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
basis on the above said provisions and if they are not as per the provisions,
the same reported in the audit report and record it in the audit observations
and findings documents.
Transactions with consideration/without consideration
Under GST, there are some transactions where they are still treated
as supply even though there is no receipt of consideration on such
transactions. Transactions which are required to be qualified as supply are
given specifically in the Schedule I of the CGST Act.
All transactions where there is no consideration received should be identified
acco
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g the verification on which GST
is not levied and are falling under the provision of supply and without
consideration, the same should be reported in the Audit report.
Reconciliation Statements
Many reconciliation statements have to be provided and verified with the
financial statements as they help in identifying if all the transactions are
recorded by the taxpayer correctly and taxes are levied on them accordingly.
Difference in tax liability – consideration is received
Particulars
Total GST paid as per the financial
statement
GST liability as per GST Audit Report
Difference
Tax Base CGST SGST
IGST
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX XXXXX XXXXX XXXXX
In the above reconciliation statement there are differences, list all
transactions which have caused the differences. It has to be prepared for
each tax amount
If the taxpayer is dealing with multiple tax rates within the same tax, then
the statements have to be prepared at the tax rate level as it provides a
complete
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earch Department, The Institute of Cost Accountants of India
Input Tax Credit
COST
E INSTITUTE OF CO
ACCOUNT
NTANTS OF INDIA
A. Important Definitions-
“Input Tax Credit”
As per Sec. 2(63) of CGST Act, 2017, “input tax credit” means the credit of
“input tax”;
“Input Tax”
As per Sec. 2(62) of CGST Act, 2017, “input tax” in relation to a registered
person, means the central tax, State tax, integrated tax or Union territory
tax charged on any supply of goods or services or both made to him and
includesۥ
(a) the integrated goods and services tax charged on import of goods;
the tax payable under the provisions of sub-sections (3) and (4) of
section 9;
(b)
(c)
(d)
(e)
“Input”
the tax payable under the provisions of sub-sections (3) and (4) of
section 5 of the Integrated Goods and Services Tax Act;
the tax payable under the provisions of sub-sections (3) and (4) of
section 9 of the respective State Goods and Services Tax Act; or
the tax payable under the provisio
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s or services or both to him which are used
or intended to be used in the course or furtherance of his business and the
Guidance Note on GST Audit
31
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
said amount shall be credited to the electronic credit ledger of such person.
C. Conditions and Restrictions for taking ITC
As per Sec. 16(2), no registered person shall be entitled to the credit of
any input tax in respect of any supply of goods or services or both to him
unless,ۥ
a. he is in possession of a tax invoice or debit note issued by a
supplier registered under this Act, or such other taxpaying
documents as may be prescribed;
b.
Ù†
d.
he has received the goods or services or both.
Explanation. For the purposes of this clause, it shall be deemed
that the registered person has received the goods where the goods
are delivered by the supplier to a recipient or any other person
on the direction of such registered person, whether acting as an
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ll be added to his output tax liability, along with interest
thereon, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of
input taxon payment made by him of the amount towards the value of
supply of goods or services or both along with tax payable thereon.
As per Sec. 16(3) of CGST Act, 2017, Where the registered person has
claimed depreciation on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income-tax Act, 1961, the
input tax credit on the said tax component shall not be allowed.
Rule 36 of CGST Rules, 2017
Documentary requirements and conditions for claiming input tax credit.-
32
1.
The input tax credit shall be availed by a registered person,
including the Input Service Distributor, on the basis of any of the
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
2.
3.
following documents, namely,-
a. an invoice issu
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tered person in
respect of any tax that has been paid in pursuance of any order
where any demand has been confirmed on account of any fraud,
willful misstatement or suppression of facts.
Rule 37 of CGST Rules, 2017
Reversal of input tax credit in the case of non-payment of consideration.-
1. A registered person, who has availed of input tax credit on any
inward supply of goods or services or both, but fails to pay to
the supplier thereof, the value of such supply along with the tax
payable thereon, within the time limit specified in the second
proviso to subsection (2) of section 16, shall furnish the details
of such supply, the amount of value not paid and the amount
of input tax credit availed of proportionate to such amount not
paid to the supplier in FORM GSTR-2 for the month immediately
following the period of one hundred and eighty days from the
date of the issue of the invoice:
2.
Provided that the value of supplies made without consideration
as specified in Schedule I of the sa
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CGST Act, 2017
and CGST Rules, 2017, in order to take Input Tax Credit:-
34
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Possession of a tax invoice or debit note issued by a supplier
registered under CGST Act, 2017 read with Rule 46 of CGST
Rules, 2017.
Receipt of the goods or services or both
The tax charged in respect of such supply has been actually paid
to the Government subject to provisions of matching concepts.
The relevant information, as contained in the document is
furnished in the Form GSTR-2 by Input Tax Credit receiver.
The return is furnished under Sec. 39 of CGST Act, 2017.
In case the goods against an invoice are received in lots or
installments, credit can be taken upon receipt of the last lot or
installment.
Payment is made within 180 days from the date of issue of invoice,
except in case of tax is payable under RCM.
If payment is not made within 180 days from date of invoice then
the amount of value not paid and proportionate input tax credit
availed on such unpaid amount
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t for availing the Input Tax Credit:
As per Sec. 16(4) of CGST Act, 2017, A registered person shall not be
entitled to take input tax credit in respect of any invoice or debit note for
supply of goods or services or both after the due date of furnishing of the
return under section 39 for the month of September following the end of
financial year to which such invoice or invoice relating to such debit note
pertains or furnishing of them relevant annual return, whichever is earlier.
Thus, time limit for availing the ITC is due date of furnishing of the return
under Section 39 for the month of September following the end of Financial
Year or furnishing of the relevant annual Return, whichever is earlier.
E. Documentary evidences and conditions for availing the Input Tax
Credit
Input Tax Credit can be availed on the basis of following documents namely,
:-
Tax Invoice
Debit Note
Bill of Entry
ISD Invoice
ISD Credit note
Tax invoice raised under RCM and Proof of payment of tax
Input Tax Cred
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n
commissioning of plant and
machinery which includes
apparatus,
equipment,
machinery, fixed to earth
by foundation or structural
support that used for making
outward supply and includes
such foundation and structural
supports. (if not capitalized)
•
•
Inadmissible
Goods which are capitalized in books of
accounts
Goods used for effecting
supplies
exempt
Goods lost, stolen, destroyed, written
off, gifted, provided free of cost,
Goods used for construction of an
immovable property (land, building
or any other civil structure) on own
account
food and beverages
Motor Vehicles
Goods used for personal consumption
Goods used for construction of land,
building or any other civil structure,
telecommunication tower, pipeline laid
outside the factory.
Tax paid after demand made by
department alleging suppression facts,
fraud, willful misstatement etc.
Tax paid on detention, seizure on goods
and conveyance in transit.
Tax paid on goods or conveyance
confiscated.
36
Guidance Note on GST
= = = = = = = =
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peline laid outside the factory)
on his own account
Goods used for personal consumption
Tax paid after demand made by
department alleging suppression facts,
fraud, willful misstatement etc.
Tax paid on detention, seizure on goods
and conveyance in transit.
Tax paid on goods or conveyance
confiscated.
Guidance Note on GST Audit
37
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Admissible
Input Services-
Any service used or intended
to be used by a supplier in
the course or furtherance of
business
Housekeeping, security,
Marketing, sales Promotion
Professional consultancy
Technical Consultancy
Banking and Financial
Transportation both inward
and outward
Credit Rating
Works Contract services used
for supply of works contract
services
.
•
•
Inadmissible
In respect of Motor vehicles and other
conveyance except used for following
effecting taxable supplies-
further supply of such vehicles or
conveyances; or
transportation of passengers
imparting
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ter
demand made by department alleging
suppression facts, fraud, willful
misstatement etc. under Sec. 74.
Tax paid on detention, seizure on goods
and conveyance in transit under Sec.
129.
Tax paid on goods or conveyance
confiscated under Sec. 130.
38
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
G. Input Tax Credit on goods and services partly used for business
purpose and partly used for Other Purpose, or partly used for effecting
taxable supplies including zero rated supplies and partly for effecting
exempt supplies
As per Sec. 17(1) of CGST Act, 2017, where the goods or services or both
are used by the registered person partly for the purpose of any business
and partly for other purposes, the amount of credit shall be restricted to
so much of the input tax as is attributable to the purposes of his business.
As per Sec. 17(2) of CGST Act, 2017, where the goods or services or both are
used by the registered person partly
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siness and partly for other purposes: Credit input tax
attributable to the purposes of his business shall be allowed.
2.
3.
4.
5.
6.
If goods or services or both are used partly for effecting taxable
supplies including zero-rated supplies and partly for effecting
exempt supplies: Credit of the input tax attributable to taxable
supplies including zero-rated supplies shall be allowed.
No credit of inputs, input services used exclusively for purpose
other than business or effecting exempt supplies
No credit of in-eligible inputs and input services as listed in Sec.
17(5) of CGST Act, 2017.
Entire credit on inputs and input services used exclusively in or
in relation to taxable supplies including zero rated supplies is
admissible.
Out of common credit, credit attributable to exempt supplies
shall be reversed, calculated as per below:-
Guidance Note on GST Audit
39
OF COST
ACCOU
7.
8.
9.
10.
11.
12.
Tax Research Department, The Institute of Cost Accountants of India
Input Tax Credit to be r
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the date of payment.
However, after final calculation of amount of input tax credit
needs to be reversed is less than amount of input tax credit
reversed during the respective tax period then, the such amount
of input tax credit reversed in excess shall be claimed as credit
by registered person in his return for the month not later than
the month of September following the end of the financial year to
which such credit relates.
H. Manner of reversal of input tax credit on capital goods which are
used partly for effecting taxable supplies including zero rated supplies
or partly for business purpose and partly for other purpose is given in
Rule 43 of CGST Rules, 2017.
a.
b.
The Amount of input tax in respect of capital goods used
exclusively for non-business or used exclusively for effecting
exempt supplies shall not be allowed and shall not be credited to
his electronic credit ledger.
The entire amount of input tax in respect of capital goods used
exclusive for effecting taxable supplie
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n input tax credit attributable to a tax
period on common capital goods during their useful life shall be
calculated as Common Input Tax Credit/60.
The amount of input tax credit attributable to exempt supplies
shall be calculated as Total of input tax on common capital goods
attributable to tax period * Exempt Supply during the tax period/
Total Turnover during the tax period.
The amount of input tax credit attributable to exempt supplies
shall be added to output liability.
Formula of calculation of input tax credit to be reversed on common
capital goods:-
Useful life of capital goods shall be taken as five years.
Tc= Input Tax Credit attributable to common capital goods
Tm= Input Tax Credit attributable to tax period= Tc/60.
Tr= Sum total of Tm i.e. input tax credit attributable to tax period on all
common capital goods.
Te= Tr*E/F
E= Exempt supplies during the tax period
F= Total Turnover during the tax period.
Determination of Value of exempt supply and value of total turnover
for
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cept
in case of a banking company or a financial institution including
a non-banking
financial company, engaged in supplying services by way of
accepting deposits,
extending loans or advances;
the value of supply of services by way of transportation of goods
by a vessel from the customs station of clearance in India to a
place outside India.
Total Turnover:
“Turnover in State” or “turnover in Union territory” includes:-
The aggregate value of all taxable supplies made
The aggregate exempt supplies made
The aggregate value of exports of goods or services or both
“Turnover in State” or “turnover in Union territory” excludes:
The value of inward supplies on which tax is payable by a
person on reverse charge basis
Central tax, State tax, Union territory tax, integrated tax and
cess;
The amount of any duty or tax levied under entry 84 of List I
of the Seventh Schedule to the Constitution and entry 51 and
54 of List II of the said Schedule; (i.e. dut
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ing company or a financial institution shall have following
two options:-
i.
ii.
Reverse the input tax credit attributable to exempt supplies
as per Rule 42 of CGST Rules, 2017 or
Avail 50% of eligible input tax credit that month and rest
shall lapse.
No credit of tax paid on inputs and input services that are used
for non-business purpose
No credit of inadmissible inputs and input services
The option once exercised shall not be withdrawn during the
remaining part of the financial year.
Restriction of 50% shall not apply to the tax paid on supplies
made by one registered person to another registered person
having the same Permanent Account Number.
f. Option once exercised shall not be withdrawn during the
remaining part of financial year.
Summary of provisions of input tax credit in case of special
circumstances :-
Sr.
No.
1
2
3
Provision
Application for registration
within 30 days from the
date of becoming liable for
registration
Voluntary registration
A person who ceases to pay
tax u
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f Input Tax in respect of:
Inputs held in stock Inputs contained in Semi-Finished/
Finished goods held in stock Capital goods, which are
Exclusively used for such supply
From the date from which such supply become taxable.
case of sale/merger/ The input tax credit can be transferred to such
demerger/amalgamation/sold/merged/demerged/amalgamated/leased
transferred business in the manner prescribed.
lease or transfer of the business
with the specific provision for
transfer of liabilities
Registered taxable person
availing input tax credit
switches over as a taxable
person
or
He shall pay an amount, by way of debit in the
electronic credit or cash ledger, equivalent to the
credit of input tax in respect of :-
Inputs held in stock Inputs contained in Semi-
Finished/Finished goods held in stock Capital
goods (Credit can be reduced by prescribed percentage
points)
Check Points:
1.
2.
तं लं वं
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Eligibility of input tax credit on
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se charge basis and eligibility of
input tax credit paid on taxes paid on reverse charge basis.
Eligibility of input tax credit carried forward through Tran-1 form.
44
Guidance Note on GST Audit
COST
THE INSTITUTE OF CO
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Reverse Charge Mechanism
NTANTS OF INDIA
Reverse Charge under GST
In the normal course the tax is payable by the supplier of goods and /
or services. However, provisions have been made in the GST Act that in
certain cases, the tax liability is shifted on the recipient of goods and / or
services. The advantages of such provisions are that the Government gets
maximum revenue from comparatively lesser number of tax payers. The
relevant provisions are as under –
–
Thus, criteria for Reverse Charge is twofold
(a)
(b)
Specified categories of supplies of goods and services.
Purchase of goods and / or services from Unregistered suppliers.
(a) Reverse Charge on Goods and Services –
i) Reverse Char
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stributor or
selling agent.
Any
Registered
person.
45
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Definition of Agriculturist –
Section 2(7) of the CGST Act defines “agriculturist” means an individual or
a Hindu Undivided Family who undertakes cultivation of land-
(a) by own labour, or
(b)
by the labour of family, or
(c)
by servants on wages payable in cash or kind or by hired labour
under personal supervision or the personal supervision of any
member of the family;
Thus, any registered person purchasing these specified goods from the
specified suppliers is required to pay the tax on Reverse Charge.
Checkpoints :
1.
Verify purchases of goods.
2.
Verify accounting of goods.
3.
Verify payment to supplier of goods.
4.
a)
Date of receipt of goods.
b)
5.
6.
Verify payment of tax as per the provisions of Section 12(3) of the
CGST Act, at the earliest of the following dates –
c)
Date of payment as entered in the books of account of the
recipie
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d in relation to advice,
consultancy or assistance in any branch of law, in any manner
and includes representational Services before any court, tribunal
or authority.
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
(d) Services supplied by an arbitral tribunal to a business entity.
Sponsorship services provided to any-body corporate
partnership firm.
(e)
(f)
(g)
(h)
(i)
(i)
(k)
(1)
or
Services supplied by the Central Government, State Government,
Union Territory or local authority to business entity (except
Postal and courier service, aircraft service, transport of goods or
passengers)
Services supplied by the Central Government, State Government,
Union Territory or local authority by way of renting of immovable
property to a person registered under the CGST Act.
Services supplied by a director of a company or a body corporate
to the company or body corporate.
Services supplied by an insurance agent to any person carrying
on
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ort or Freight Charges and Goods Transport Agency
Services. Transport / Freight Charges are exempt from tax, but
Goods Transport Agency services are taxable.
Verify the process / system of determining liability under RCM.
Confirm that all vendors supplying these specified services are
captured in the working.
Check appropriate tax rate has been applied for payment of tax.
Check the payment is made by debiting the amount Cash Ledger.
Check the tax is paid as per the provisions of Section 13(3) of the
CGST act, as earlier of the following dates –
a.
Date of payment as entered in the books of account of the
Guidance Note on GST Audit
47
OF COST
INSTITUTE OF
ACCOUN
6.
7.
8.
b.
Tax Research Department, The Institute of Cost Accountants of India
recipient or the date on which the payment is debited in his
book of account, whichever is earlier, or
The date immediately following sixty days from the date of
issue of invoice or any other document, by whatever name
called, in lieu thereof by the
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n No. 10/2017 – Integrated Tax (Rate) dt.28.06.2017 covers same
services as per Notification under CGST referred above. In addition, there
is an entry as under –
S1.
No.
Category of supply of
services
1 Any service supplied Any
by any person who is
located in a non-taxable
territory to any person
other than non-taxable
person.
Supplier of
service
Recipient of service
Any person located in
taxable territory other
non-taxable
person
located in a non-
taxable territory.
than
online recipient.
In view of this provision, when services are imported by any registered
person, he is liable to pay the tax under Reverse Charge.
Section 7(4) of the IGST Act provides that – Supply of services imported
into the territory of India shall be treated to be a supply of services in the
course of inter-state trade or Commerce. In view of these provision, in case
of import of services, the recipient has to pay IGST tax.
Checkpoints :
48
1. Verify all foreign exchange remittances pertaining to import
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17/2017 – Central Tax (Rate) dt. 28th June, 2017 provides that
in the following categories of services, the tax on intra-State supplies shall
be paid by the electronic commerce operator –
(i)
(ii)
services by way of transportation of passengers by a radio -taxi,
motor cab, maxicab and motor cycle ;
services by way of providing accommodation in hotels, inns, guest
houses, clubs, campsites or other commercial places meant
for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is
liable for registration under sub-section (1) of section 22 of the
said Central Goods and Services Tax Act.
v) Services of supply by person in non-taxable territory –
Section 14 of IGST Act makes special provision for payment of tax by supplier
of online database access and retrieval services (OIDAR). It provides that
if the supplier of service is located in non-taxable territory and received
by non-taxable online recipient, the primary resp
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s to be
paid on RCM in respect of purchase of goods /services from unregistered
persons.
Notification No.8/2017 (Central Tax) Rate dt. 28.06.2017 exempted
purchase of goods and services from unregistered persons upto a value
of Rs.5000/- per day. Further, as per Notification No. 38/2017-Central tax
(Rate)dt. 13.10.2017 and Notification No. 32/2017 Integrated Tax (Rate)
dt. 13.10.2017, all categories of registered persons are exempted from
these provisions without any monetary limit. This Exemption is in force till
30th June, 2018.
In view of this status, it should be seen what would the status of these
provisions after 30th June, 2018.
Checkpoints –
1.
2.
3.
35
4.
5.
6.
Verify that the tax is paid upto 13.10.2017 in all eligible cases
where the purchase of goods and services exceed the value of
5000/- per day.
Ensure that there is a mechanism ready to address the situation
if these provisions are introduced after 30th June, 2018.
Verify that invoice is raised for payment of tax under r
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arriage of –
(a)
(b)
agricultural produce;
goods, where consideration charged for the transportation
of goods on a consignment transported in a single carriage
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
(c)
(d)
does not exceed one thousand five hundred rupees;
goods, where consideration charged for transportation
of all such goods for a single consignee does not exceed
rupees seven hundred and fifty;
milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f)
(g)
newspaper or magazines registered with the Registrar of
Newspapers;
relief materials meant for victims of natural or man-made
disasters, calamities, accidents or mishap; or
(h) defence or military equipments.
3. Services provided by-
4.
(a)
(b)
an arbitral tribunal to –
(i) any person other than a business entity; or
(ii) a business entity with aggregate turnover up
to twenty lakh rupees (ten lakh rupees in the
case of special ca
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ities, Inter-University
Sports Board, School Games Federation of India, All India
Sports Council for the Deaf, Paralympic Committee of India
Guidance Note on GST Audit
51
INSTITUTE OF
OF COST
ACCOUN
(c)
(d)
(e)
Tax Research Department, The Institute of Cost Accountants of India
or Special Olympics Bharat;
by the Central Civil Services Cultural and Sports Board;
as part of national games, by the Indian Olympic
Association; or
under the Panchayat Yuva Kreeda Aur Khel Abhiyan
Scheme.
Return Filing
Returns under GST
The basic features of the return mechanism in GST includes electronic
filing of returns, uploading of invoice level information, auto-population of
information relating to input tax credit from returns of supplier to that of
recipient, invoice level information matching and auto-reversal of input tax
credit in case of mismatch. The returns mechanism is designed to assist
the taxpayer to file returns and avail ITC.
What is GST Return?
A return is a document containing details of
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epartment, The Institute of Cost Accountants of India
As per the CGST Act (Note: subject to change by Notifications/orders)
Due Date
Return
Particulars
Interval
Form
GSTR-1
Details of outward supplies of
taxable goods and/or services
effected
Monthly*
10th of the next
month
GSTR-9
Annual Return
Annually
31st March of next
financial year
20th of the next
GSTR-3B
Provisional return for every month Monthly
month
1.2. A dealer opting for composition scheme:
A composition dealer will enjoy the benefits of lesser returns & compliance along
with payment of taxes at nominal rates. A composition dealer will file only 2 returns:
Return
Form
GSTR-4
Particulars
Interval
Due Date
Return for compounding Quarterly
taxable person
18th of the month
succeeding quarter**
GSTR-9A
Annual Return
1.3. Returns to be filed by certain specific registered dealers:
Monthly
31st March of next
financial year
Return
Particulars
Interval
Due Date
Form
Return for Non-Resident
GSTR-5
Monthly
foreign taxable person
20th
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furnish GSTR-1on
a quarterly basis.
Other Registered persons having aggregate turnover of more than Rs.1.5
Crore shall furnish these returns on a monthly basis.
Revision of Returns:
The mechanism of filing of revised returns for any correction of errors/
omissions has been done away with. The rectification of errors/omissions is
allowed in the return for subsequent month(s). However, no rectification is
allowed after furnishing of the return for the month of September following
the end of the financial year to which such details pertain, or furnishing of
the relevant annual return, whichever is earlier.
Interest on Late GST Payment
An interest of 18 percent is levied on the late payment of taxes under the
GST regime. The interest would be levied for the days for which tax was
not paid after the due date. An interest of 24 percent is levied on the wrong
availment of ITC Credit.
Penalty for non-filing of GST Returns
In case a taxpayer does not file his/her return within the due dates, h
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roval basis
Details of reimbursement excluded from the taxable value
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
â˜
ã…
ã…ã…
â˜
ã…ã…
where registered person acted as pure agent
Details of supply of capital goods or plant and machinery on
which input tax credit had been availed- Sale of capital goods/
vehicle/tools
Details of Export sales with payment/ without payment of IGST
Details of Debit / Credit notes issued under GST
Details of Non GST Purchases- Petrol/Diesel
Treatment of canteen recovery /telephone recovery / bus
recovery from employee
Whether balance of Cenvat Credit is transferred properly
through TRAN 1
Details of Education Cess/Secondary Higher Education Cess /
Krishi Kalyan Cess Carry forward in Trans-1
Whether interest has been paid correctly in case of delay in
payment of tax
Whether refunds are claimed properly Levy on Mixed supply or
Composite supply, Works Contract
Value of
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etting off the Input Tax Credit (ITC) against the Outward Tax
Liability. If there is any balance tax liability the same is required to be paid
to the government.
There are 3 ledgers prescribed by the government that is required to be
maintained by every tax payer –
1. Electronic Tax Liability Ledger
The electronic tax liability ledger shows the total tax liability of a registered
person at any point of time. This detail can be accessed on the GST portal
of a registered tax payer
ã…ã…
Amount of Tax Payable
Interest, Late Fee
Amount of Tax Payable along with interest on account mismatch
of credit based on provisions of Section 29 or Section 29A or
Section 43C
Any other amount payable by the taxpayer or directed by the
board on account of any proceedings carried out
Tax Deducted at Source
Tax Collection at Source
Tax Payable under Reverse Charge
Amount payable by the department against any interest, refund,
penalty, late fee or any other determined under the proceedings
of the A
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ss purposes.
ITC available to the branch for the amount of credit transferred
by ISD
ITC allowed on input held in stock and the semi-finished or
finished goods would be credited to electronic credit ledger if
the taxpayer applies for registration within 30 days of becoming
liable to pay tax.
ITC available on the input held in stock and semi-finished
or finished goods by a taxpayer in the composition scheme
converting to a normal taxpayer shall be transferred to electronic
credit ledger.
All the payments under GST have to be made by either using the input
tax credit available in the electronic credit ledger or through the electronic
cash ledger.
Utilizing ITC for the fulfillment of Tax liability:
IGST: After the IGST input tax credit is used for payment of IGST then the remaining
ITC can be used to pay tax liability under CGST and SGST.
CGST: The CGST input tax credit cannot be used to pay the SGST liability but can
be used to pay the liability under CGST.
SGST: The SGST input tax credi
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efines “export of services” means the supply
of any service when,-
(i)
the supplier of service is located in India;
(ii)
the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv)
the payment for such service has been received by the supplier of
service in convertible foreign exchange; and
(v)
the supplier of service and the recipient of service are not
merely establishments of a distinct person in accordance with
Explanation 1 in section 8;
Zero Rated Supply
As per the GST Act, export of goods and Services supplied to other countries
and supplies to a unit located in Special Economic Zone or to a developer of
SEZ are considered as Zero Rated. Concept of zero rated supplies of goods
and services has following objectives –
(a)
(b)
(c)
Taxes paid on supplies which are Zero Rated are refunded.
Input Tax credit on inputs, input services and capital goods used
in such supplies is allowed.
When the supplies are made without paym
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against fulfillment of any export obligation e.g. Claim of
Duty Drawback, Advance Authorization, EPCG obligation, MEIS
etc.
Shipping Bill details should be carefully entered in the GSTR-1
return. Otherwise, due to mis-matching, the refund will not be
processed.
In case of Services, instead of paying tax on services, the service
provider can claim Refund of Input Tax Credit as per the provisions
of Section 54 of CGST Act. Verify which option is exercised by the
assessee.
Guidance Note on GST Audit
59
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Import of Goods and Services
Import of Goods and Services –
Definition of Import of Goods – Section 2(10) of the IGST Act, defines import
of goods as bringing goods into India from a place outside India.
Import of Services already dealt with under Reverse Charge Mechanism.
For import of goods, instead of erstwhile CVD, IGST is charged and input
tax credit is allowed of such IGST paid.
Checkpoints –
1.
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tment, The Institute of Cost Accountants of India
Job Work
COST
E INSTITUTE OF CO
ACCOUNT
NTANTS OF INDIA
Job Work
Job work means outsourcing of manufacturing activities for completion of
a product beyond the premises of the principal manufacturer. The principal
manufacturer gets the manufacturing facilities through job worker to meet
requirement of customers. Job work is one of the most cost effective ways
to get the finished goods without any investment on plant and machinery
for manufacturing process.
Meaning of Job work in Pre-GST era
In pre-GST era Job Work was carried as per Notification No.214/86-CE and
defined “Job Work” means processing or working upon of raw materials or
semi-finished goods supplied to the job worker, so as to complete a part or
of the process resulting in the manufacture or finishing of an article or any
operation which is essential for the aforesaid process.
Meaning of Job work under GST law
Section 2 (68) of CGST Act, 2017, “Job work€
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of Section 143(1) of the CGST Act, 2017 prescribed that registered
person can send any inputs or capital goods, without payment of tax, to a
Job worker for job work and there subsequently send to another job worker
and likewise.
Facility of Job Working
As per Section 143(1) of CGST Act, 2017, the inputs and capital goods can
be sent for job work. As per Section 19 (7) of CGST Act, 2017, Mould and
dies, jigs and fixtures, or tools sent out to a job worker for job work.
Guidance Note on GST Audit
61
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
Explanation: For purposes of job work, input includes intermediate goods
arising from any treatment or process carried out on the inputs by the
principal or the job worker.
Concessional Rate of 5% for Certain Job work
As per Notification No. 11/2017-CT (Rate) and No. 8/2017-IT (Rate) both
dated 28-06-2017, effective from 01-07-2017 as amended from time to
time.
Services by way of job work in relation to
1.
2.
3
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f.
13-10-2017].
Manufacture of clay bricks falling under Tariff item 6901 00 10
[inserted w.e.f. 13-10-2017]
Manufacturing of clay bricks falling under tariff item 6901 00 10
[inserted w.e.f. 13-10-2017]
Manufacture of Handicraft goods as defined in Notification No.
32/2017-CT dated 15-09-2017 [inserted w.e.f. 15-11-2017]
Job work of Manufacture of Umbrella
GST rate in respect of job work of manufacture of umbrella is 12% [(6%
CGST and 6% SGST)]w.e.f. 13.10.2017 Notification No. 11/2017 CT (Rate)
and 8/2017 IT (Rate)both dated 28.06.2017 amended we.f.13.10.2017
Documents for movement of inputs and Capital goods to Job worker
Rule 55 (1) (c) of CGST Rules, 2017 provides that for the purpose of
transportation of goods for job work, the principal manufacturer may issue
a delivery challan, serially numbered not exceeding sixteen characters, in
one or multiple series, in lieu of invoice at the time of removal of goods for
62
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, T
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puts and capital goods sent for
job work:
In terms of Section 19 (1) and 19(4) of CGST Act, the principal shall, subject
to such conditions and restrictions as may be prescribed, be allowed to
take credit of input tax on inputs and capital goods sent to a job worker for
job work.
Further, as per Section 19(2) and 19(5) of the CGST Act, the principal shall
be entitled to take credit of input tax on inputs and capital goods, even
both are directly sent to a job worker for job work without their being first
brought to his place of business.
Section 19 (3) of CGST Act, where the inputs sent for job work are not
received back by the principal after completion of job work or otherwise or
are not supplied from the place of business of the job worker in accordance
with clause (a) or clause (b) of sub-section (1) of section 143 within one year
of being sent out, it shall be deemed that such inputs had been supplied
by the principal to the job worker on the day when the said inputs were
sent out
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der
(1)
(2)
(3)
–
The inputs, semi – finished goods or capital goods shall be sent
to the job worker under the cover of a challan issued by the
principal, including where such goods are sent directly to a job-
worker.
The challan issued by the principal to the job worker shall contain
the details specified in rule 55.
The details of challans in respect of goods dispatched to a job
worker or received from a job worker or sent from one job worker
to another during a quarter shall be included in FORM GST ITC-
04 furnished for that period on or before the twenty- fifth day of
the month succeeding the said quarter.
(4) Where the inputs or capital goods are not returned to the principal
within the time stipulated in section 143, it shall be deemed that
such inputs or capital goods had been supplied by the principal
to the job worker on the day when the said inputs or capital
goods were sent out and the said supply shall be declared in
FORM GSTR-1and the principal shall be liable to pa
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ration under section 25.
64
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Further, the value of goods or services used by the job worker for carrying
out the job work will be included in the value of services supplied by the
job worker. After completion of job work, if the goods directly supplied
to the customers from the premises of the job worker, the value of such
supply will be included in the aggregate turnover of the principal.
It is to be noted that in the erstwhile Central Excise and Service Tax
provisions where job work charges or supply of services are subject to
service tax only, if the process carried by job worker does not amount to
manufacture.
Documents required for movement of goods for Job working :
(i) By the Principal to job worker –
(ii)
(iii)
(iv)
The principal shall move goods to job worker under cover of
challan in terms of rules 45 and 55 of the CGST Rules. The
challan meant for job work shal
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by the supplier in the name the principal as buyer
and job worker 's name and address should be mentioned as
the consignee, in terms of rule 46(o) of the CGST Rules. The
principal shall issue the challan under rule 45 of the CGST Rules
and send the same to the job worker directly. In case of import
of goods by the principal, after customs clearances of imported
goods move directly from Customs station of import to premises
of job worker with a copy of Bill of Entry and the principal shall
issue challan under rule 45 of the CGST Rules and the challan
is to be sent directly to the job worker.
Guidance Note on GST Audit
65
INSTITUTE OF
OF COST
ACCOU
(v)
(vi)
Tax Research Department, The Institute of Cost Accountants of India
In piecemeal return by the job worker:
After completion of job work, if the piecemeal quantities are
returned by the job worker to another job worker or to the
principal, the challan issued originally by the principal cannot
be endorsed and a fresh challan is require
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s by the Auditor
66
ã…ã…
Whether unregistered job workers place is added in registration
as additional place of business.
Is GST on RCM paid for all job work charges for the job work
charges paid to unregistered job worker upto 13.10.2017
Whether job work goods are received back within 180 days
which are disclosed in the Trans-1 against the stock lying at
job workers end.
If the job work material is not received within specified time
limit, whether GST is paid on the same by treating the same as
supply.
Valuation in case of job work for the related party
Clearance of material directly from job workers premises
Closure of the delivery challans in time limit 1 year for RM and
3 years for capital goods.
Proper filing of ITC-04 on due date
Whether Scrap generated at job workers premises is brought
back or cleared from the job worker premises on payment of
GST.
E way bill for the job work material sent through delivery
challan
Job work register showing the outward, inward and bala
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business which receives invoices for
services used by its branches. It distributes the tax paid, to such branches on
a proportional basis by issuing an ISD invoice.
The branches can have different GSTINs but must have the same PAN as
that of ISD.
Insight on ISD under GST regime
Point of Difference
GST Regime
1. Who can be Input An office of the supplier of goods and/or services
service distributor?
2.
Document based Receives tax invoices issued by supplier towards
on which credit can be receipt of input services
distributed
3. How to distribute By issuing an ISD invoice for the purposes of
credit?
distributing to a supplier of taxable goods and/or
services having the same PAN as that of the office
referred to above
4. Type of tax credit that The credit of CGST (SGST in State Acts) and/or IGST
can be distributed
paid on the said services
5. To whom can it be To supplier having the same PAN. i.e., credit cannot
distributed?
be distributed to outsourced manufacturers or service
providers
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amount of tax credit available with the ISD as at the end
of a relevant month to be filed in GSTR-6 by 13th* of the
succeeding month by ISD.
The recipient of the tax credit can view the tax credit so distributed
by ISD in GSTR-2A that is auto-populated and in turn, can claim
the same by filing GSTR-2.
An ISD need not file annual returns as ISD.
Distribution of Input Tax credit: The credit of tax paid under
reverse charge mechanism is not available for distribution to the
recipients. So, the ISD has to utilize such credit only as a normal
taxpayer.
1) The tax credit available against any specific input services
used entirely by one of the recipients can be allocated only
to that recipient for utilization of such credit and not
to other recipients.
2)
The tax credit available against the input services
used commonly by more than one recipients of the ISD shall
be allocated to those recipients on a proportionate basis
in the ratio of the turnover of all such recipients that are
operation
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or
As per Section 20 of CGST Act, 2017 The Input Service Distributor shall
distribute the credit of central tax as central tax or integrated tax and
integrated tax as integrated tax or central tax, by way of issue of a document
containing the amount of input tax credit being distributed in such manner
as may be prescribed.
(1) ISD may distribute the credit in following manner
(2)
Credit of
Credit as
CGST
CGST (If Recipient is in Same
State)
IGST (If Recipient is in other
State)
IGST
IGST (If Recipient is in other
State)
CGST (If Recipient is in same
State)
The Input Service Distributor may distribute the credit subject to
the following conditions, namely: —
–
(a) the credit can be distributed to the recipients of credit
against a document containing such details as may be
prescribed;
(b)
(c)
the amount of the credit distributed shall not exceed the
amount of credit available for distribution;
the credit of tax paid on input services attributable to a
recipient of credit shall be
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riod, to the aggregate turnover of all such recipient.)
the credit of tax paid on input services attributable to all
recipients of credit shall be distributed amongst such
recipients and such distribution shall be pro rata on the
basis of the turnover in a State or turnover in a Union
territory of such recipient, during the relevant period, to
the aggregate of the turnover of all recipients and which are
operational in the current year, during the said relevant
period. (In simple term If credit is attributable to more
than one recipient, then credit shall be distributed on PRO
RATA basis of the turnover in a state of such recipient,
during the relevant period, to the aggregate turnover of all
such recipient.)
Procedure for distribution of ITC by ISD [Rule 39]
Rule 39 of CGST Rule. Procedure for distribution of input tax credit
by Input Service Distributor.- (1) An Input Service Distributor shall
distribute input tax credit in the manner and subject to the following
conditions, namely,-
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st Accountants of India
(e)
(f)
in making exempt supply, or are otherwise not registered for any
reason, shall be the amount, “C1”, to be calculated by applying
the following formula
C1 = (t1÷T) × C
where,
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1
during the relevant period, and
“T” is the aggregate of the turnover, during the relevant period,
of all recipients to whom the input service is attributable in
accordance with the provisions of section 20;
the input tax credit on account of integrated tax shall be
distributed as input tax credit of integrated tax to every recipient;
the input tax credit on account of central tax and State tax or
Union territory tax shall-
(i)
If recipient is in same state
UTGST respectively.
–
then as CGST, SGST and
(g)
(h)
(i)
(j)
–
(ii) If recipient is in other state – then as IGST.
Input Service Distributor shall issue an Input Service Distributor
invoice, as p
= = = = = = = =
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= = = = = = = =
the input tax credit contained in the original invoice was
71
Guidance Note on GST Audit
OF COST
ACCOU
(2)
(3)
Tax Research Department, The Institute of Cost Accountants of India
distributed in terms of clause (d), and the amount so apportioned
shall be-
(i)
(ii)
reduced from the amount to be distributed in the month
in which the credit note is included in the return in FORM
GSTR-6; or
added to the output tax liability of the recipient where the
amount so apportioned is in the negative by virtue of the
amount of credit under distribution being less than the
amount to be adjusted.
If the amount of input tax credit distributed by an Input Service
Distributor is reduced later on for any other reason for any of the
recipients, including that it was distributed to a wrong recipient
by the Input Service Distributor, the process specified in clause
(j) of sub-rule (1) shall apply, mutatis mutandis, for reduction of
credit.
Subject to sub-rule (2), the Input Service Distributor shall, on
the
= = = = = = = =
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= = = = = = = =
he fundamentals of the GST
law wherein the credit of CGST cannot be utilized against SGST
and vice versa.
Input Service Distributor is not liable to furnish the details
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
M
of inward and outward supplies. Input Service Distributor is
liable to file return in GSTR-6 on or before 13th of the month
succeeding the tax period. The details relating to input tax
credit distributed is communicated to the recipient in Part B
of GSTR-6A.
ISD is not required to file Annual Return.
ISD registration is for one office of the taxpayer which will be
different from the normal registration.
The revenue generating units have GST liability, so rightly
the ITC on those services used by them must be allocated to
them to use the tax credit to set off against their tax liability.
Different offices of a taxpayer can apply for ISD registration.
Different offices like marketing division, security division
= = = = = = = =
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= = = = = = = =
ransferred
Guidance Note on GST Audit
73
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
ITC cannot be transferred more than ITC Availed
Annual return.
1.
2.
Every registered person, other than an Input Service Distributor,
a person paying tax under section 51 or section 52, a casual
taxable person and a non-resident taxable person, shall furnish
an annual return for every financial year electronically in such
form and manner as may be prescribed on or before the thirty-
first day of December following the end of such financial year.
Every registered person who is required to get his accounts
audited in accordance with the provisions of sub-section (5) of
section 35 shall furnish, electronically, the annual return under
sub-section (1) along with a copy of the audited annual accounts
and a reconciliation statement, reconciling the value of supplies
declared in the return furnished for the financial year with the
audited annual financial statement, and
= = = = = = = =
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= = = = = = = =
ibed to establish
that a refund is due to the applicant, and
Evidence that incidence of duty has not been passed on by him to
any other person. However, where the amount claimed as refund
is less than two lakh rupees, self-declaration based on documents
available with him is sufficient. – section 54(4) of CGST Act.
Application for refund of tax, interest, penalty, fees or any other
amount
Any person, except the persons covered by notification issued under section
55 (UN Agencies, Embassies), claiming refund of tax, interest, penalty, fees
or any other amount paid by him, may file as application in form GST RFD-
01 electronically – Rule 89(1) of SGST Rule, 2017.
Refund of balance in Electronic cash Ledger – Any claim
for refund relating to balance in the electronic cash ledger in
accordance with the provisions of section 49(6) may also be
made through the return furnished for the relevant tax period
in form GSTR-3, form GSTR-4 or form GSTR-7, as the case
may be: first proviso to Rule 89
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
–
Refund claim is case of deemed export either by recipient
or supplier – In respect of supplies regarded as deemed
exports, the application may be filed by (a) the recipient of
deemed export supplies; or (b) the supplier of deemed export
supplies in case where the recipient does not avail input tax
credit on such supplies and furnishes an undertaking to effect
the supplier may claim the refund – third proviso to Rule 89(1)
of CGST and SGST Rules, 2017 as amended w.e.f. 18-10-2017.
Refund of advance tax by casual or non-resident taxable
person – Refund of any amount, after adjusting the tax payable
by the applicant out of the advance tax deposited by him under
section 27 (casual taxable person or non-resident taxable
person) at the time of registration, shall be claimed either in the
last return required to furnish by him or only after furnishing
of the said last return · fourth proviso to rule 89(1) of CGST
and SGST Rules, 2017.
–
Documents to be filed with refund cla
= = = = = = = =
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= = = = = = = =
be allowed in case where the
goods exported out of India are subjected to export duty – second proviso
to section 54(3) of CGST Act.
No refund of input tax credit shall be allowed if the supplier of goods or
services avails duty drawback of CGST/SGST/UTGST or claims refund of
IGST paid on such supplies – third proviso to section 54(3) of CGST Act.
However, drawback of customs duty portion can be availed.
Drawback – “Drawback” in relation to any goods manufactured in India
and exported, means the rebate of duty, tax or cess chargeable on imported
inputs or any domestic inputs or input services used in the manufacture of
such goods – section 2(42) of CGST Act.
Refund only in case of (a) exports and supplies to SEZ (b) inverted
rate structure – Refund will be admissible only in case of physical exports
and supplied to SEZ. Provision of ‘deemed export' has been made in CGST
Act. However, there is no specific provision of refund in case of deemed
exports or supplies to EO
= = = = = = = =
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= = = = = = = =
OUN
(i)
Tax Research Department, The Institute of Cost Accountants of India
and 5/2017-IT (Rate) both dated 28-6-2017 has been issued.
As
per this notification, the refund is not admissible even if ITC
is more that tax paid, in the following cases
Woven textile fabrics falling under specified headings in
chapters 50 to 55
(ii) Knotted netting of twine, cordage of rope, made up of
fishing nets or other made up nets, of textile fabrics, falling
under heading = 5608 [inserted w.e.f. 14-11-2017]
(iii) Corduroy fabrics falling under head 5801 [inserted w.e.f.
22-9-2017]
(iv) Narrow woven fabrics (all goods) falling under chapter 60
(v) Railway locomotives and their parts falling under heading.
8601 to 8608
Restriction not applicable in case of export of aforesaid goods – This
restriction is only in respect of refunds under section 54(3)(ii) of CGST Act.
Thus, the restriction is not applicable to refund under section 54(3)(i) of
CGST Act i.e. zero rated supplies. Hence, in case of exp
= = = = = = = =
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= = = = = = = =
re for exports and claiming of refund has been discussed in the
chapter on 'Exports'.
Additional Checks:
78
Identify source documents- Tax Invoice, Debit Note and Credit
Note, check entries in records to source document on sample
basis.
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Interest on delayed payment of tax should be calculated as per
rate prescribed, based on daily basis from the due date to the
date of actual payment.
Use “Mark-Up' technique based on inward supplies combined
with an inventory check to ascertain if there are any suppressed
supplies on which tax invoices not issued.
Verify the Asset Schedule in Financials to know the disposal
of used capital goods, whether output tax has been levied and
discharged.
Verify bank statements on test check basis for evidence of
payments against invoices on which input tax credit has been
availed.
Reconcile the inward supplies as per financials with inward
supply
= = = = = = = =
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= = = = = = = =
s of supplies and corresponding taxes
Total outward supplies
Total inward supplies
Total tax liability on output supply and supplies liable to reverse charge
Input tax credit availed during the year
B) Payment of tax liability on output supply and supplies liable to reverse charge
By utilising cash in cash ledger
By utilising input tax credit ledger
By utilising TDS in cash ledger
C) Other details
NONO 002=22±
Guidance Note on GST Audit
Deposit by challans
Transfer of TDS from deductors
Refunds
Amounts paid under protest/ as pre-deposit against demand
Balances as on date of financial statements (GST payable)
Balances as on date of financial statements (ITC)
TDS deducted
Tax Research Department, The Institute of Cost Accountants of India
Tax Research Department, The Institute of Cost Accountants of India
As per Annual return
Particulars
Reconciliation of ‘Total tax liability on output supply and supplies liable to reverse charge'
Remarks
As per Auditor
CGST SGST
IGST
Differenc
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
s
Reson for difference
Details of Income
THE INSTITUTE OF COST
Tax Research Department, The Institute of Cost Accountants of India
Goods
(A) Total value of supplies on which GST paid (inter-State Supplies)
As per Annual Return
S1.
No.
Description
HSN
Code
Quantity Rate value
Tax Taxable
Quantity
Тах
IGST
Rate
As per audit
Taxable
value
Reason for
IGST
differences
1
2
3
Guidance Note on GST Audit
Guidance Note on GST Audit
83
As per Annual Return
Tax
Rate
Taxable
value
Quantity
IGST
Services
Sl.
No.
Description
Service
code
Quantity
1
2
3
Tax
Rate
As per audit
Taxable
value
IGST
As per audit
Reason for
Quantity
differences
(B)Total value of supplies on which GST paid (intra-State Supplies)
As per Annual Return
Tax-
Goods
S1.
Description
No.
HSN
Code
able CGST SGST
Quantity
value Rate Rate
CGST
1
2
3
Goods
As per Annual Return
Sl.
Description
No.
HSN
Code
Quantity
Taxable
value
CGST SGST
Rate Rate
1
2
3
CGST
SGST
SGST
(C) Total value of supplies on which GST Paid (Exports)
Quan
= = = = = = = =
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= = = = = = = =
ich no GST paid
Sl. No.
Goods/
service
As per Annual return
As per Audit
Value
Value
1.
2.
3.
Guidance Note on GST Audit
Reason for
differences
Tax Research Department, The Institute of Cost Accountants of India
Goods
As per Annual Return
As per audit
Tax-
Reason for
Sl.
No.
Description
HSN
Code
Quantity
Tax
Value
CGST SGST
IGST
Quantiy able CGST SGST
value
IGST
differences
1
2
(F) Sales Returns
Amount
(G) Other Income (Income other than from supplies)
As per Annual return As per Audit
3
Sl. No.
Specify
Head
1.
2.
85
3.
Amount
Reason for
differences
THE INSTITUTE OF COST
M
VION
2
–
CGST SGST Cess
Difference
Total
–
–
Total
IGST
CGST
SGST
As per Books
GST Payable (Liability – Outward Supply)
As per Returns-GSTR 3B
CGST
86
1 Ta] 77883842
Mar
Guidance Note on GST Audit
Total IGST
THE INSTITUTE OF COST
I
I
I
Tax Research Department, The Institute of Cost Accountants of India
Cess
–
GST Payable (Liability – RCM)
As per Returns-GSTR 3B
As per Books
CGST
Total
IGST
………
3……….ye
Mon
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
an and add a
INSTITUTE OF
OF COST
ACCOU
Tax Research Department, The Institute of Cost Accountants of India
E INSTITUTE O
COST
Approved GST Return Formats notified by Govt.
GSTR-9
“FORM GSTR-9
(See rule 80)
Annual Return
Basic Details
Pt. I
1
Financial Year
2
GSTIN
3A
Legal Name
3B
Trade Name (if any)
Pt. II
Details of Outward and inward supplies declared during the financial year
Nature of Supplies
Taxable Value
(Amount in in all tables)
Central State Integrated
Cess
Tax
Tax/
Tax
UT
Tax
2
3
4
5
6
4
Details of advances, inward and outward supplies on which tax is payable as declared in returns
filed during the financial year
Supplies made to un-registered
A
persons (B2C)
Supplies made to registered persons
B
(B2B)
Zero rated supply (Export) on
C
payment of tax (except supplies to
SEZS)
D
Supply to SEZs on payment of tax
E
Deemed Exports
ACCOUNT
NTS OF INDIA
Guidance Note on GST Audit
89
OF COST
ACCOU
F
G
H
Tax Research Department, The Institute of Cost Accountants of India
Advances on
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
of
transactions specified
in A to F above (+)
Supplies declared through
J
Amendments (+)
Supplies reduced through
K
Amendments (-)
L
Sub-Total (H to K above)
Turnover on which tax is not to be
M
paid (GL above)
Total Turnover (including advances)
N
(4N+5M-4G above)
Pt. III
Details of ITC as declared in returns filed during the financial year
Description
Туре
Central
State
Integrated
Cess
Tax
Tax /
Tax
96
90
Guidance Note on GST Audit
Tax Research Department, The Institute of Cost Accountants of India
1
2
UT
Tax
4
5
Details of ITC availed as declared in returns filed during the financial year
Total amount of input tax credit availed through FORM
GSTR-3B (sum total of Table 4A of FORM GSTR-3B)
6
A
Inward supplies (other than imports
B
and inward supplies liable to reverse
charge but includes services received
from SEZs)
Inward supplies received from
unregistered persons liable to reverse
charge (other than B above) on
which tax is paid & ITC availed
Inward supplies received
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
credit
H
Other reversals (pl. specify)
I
Total ITC Reversed (A to H above)
J
Net ITC Available for Utilization (60 – 71)
8
Other ITC related information
A
ITC as per GSTR-2A (Table 3 & 5 thereof)
B
ITC as per sum total of 6(B) and 6(H) above
Guidance Note on GST Audit
NTS OF INDIA
91
OF COST
ACCOUN
Tax Research Department, The Institute of Cost Accountants of India
ITC on inward supplies (other than imports and inward
supplies liable to reverse charge but includes services
received from SEZs) received during 2017-18 but availed
during April to September, 2018
Difference [A-(B+C)]
D
E
ITC available but not availed (out of D)
F
ITC available but ineligible (out of D)
IGST paid on import of goods (including supplies from
SEZ)
G
IGST credit availed on import of goods (as per 6(E)
H
above)
I
Difference (G-H)
ITC available but not availed on import of goods (Equal
J
to I)
K
Total ITC to be lapsed in current financial year
(E+F+J)
Pt. IV
Details of tax paid as declared in returns filed du
= = = = = = = =
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= = = = = = = =
terest
Other Information
Particulars of Demands and Refunds
15
Details
Central
State Tax/
Tax
UT Tax
1
2
3
Total
A
Refund
claimed
Total
B
Refund
sanctioned
Total
C
Refund
Rejected
Total
D
Refund
E
ã€ã‚¨
F
Pending
Total
demand of
taxes
Total
taxes paid
in respect
of E
above
Total
demands
G
pending
Integrated Tax
4
Cess
5
THE INSTITUTE O
COST
ACCOUNT
M
NTS OF INDIA
Interest
Penalty
Late Fee
/ Others
out of E
above
16
Information on supplies received from composition taxpayers, deemed supply under section 143 and
goods sent on approval basis
Details
Taxable Value
Central
Tax
State
Tax/
UT
Integrated Cess
Tax
Tax
1
2
3
4
5
9
Supplies received from Composition
A
taxpayers
B
Deemed supply under Section 143
Goods sent on approval basis but not
returned
C
17
HSN Wise Summary of outward supplies
HSN
Code
UQC
Total
Quantity
Taxable
Value
Central
Tax
State
Tax /
UT
Integrated
Tax
Cess
Tax
1
2
3
4
5
6
7
8
9
Rate of Tax
Guidance Note on GST Audit
93
OF COST
ACCOU
Tax Research Department, T
= = = = = = = =
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= = = = = = = =
details for the period between July 2017 to March 2018 are to be
provided in this return.
3. Part II consists of the details of all outward supplies & advances
received during the financial year for which the annual return is filed.
The details filled in Part II is a consolidation of all the supplies declared
by the taxpayer in the returns filed during the
financial year. The instructions to fill Part II are as follows:
Table
No.
4A
4B
4C
4D
4E
4F
4G
4I
Instructions
Aggregate value of supplies made to consumers and unregistered persons on which
tax has been paid shall be declared here. These will include details of supplies made
through E-Commerce operators and are to be declared as net of credit notes or debit
notes issued in this regard. Table 5, Table 7 along with respective amendments in
Table 9 and Table 10 of FORM GSTR-1 may be used for filling up these details.
Aggregate value of supplies made to registered persons (including supplies made to
UINS) on which tax has been paid sha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
FORM GSTR-1 may be used for filling up these details.
Aggregate value of all inward supplies (including advances and net of credit and
debit notes) on which tax is to be paid by the recipient (i.e.by the person filing the
annual return) on reverse charge basis. This shall include supplies received from
registered persons, unregistered persons on which tax is levied on reverse charge
basis. This shall also include aggregate value of all import of services. Table 3.1(d)
of FORM GSTR-3B may be used for filling up these details.
Aggregate value of credit notes issued in respect of B to B supplies (4B), exports
(4C), supplies to SEZs (4D) and deemed exports (4E) shall be declared here.
Table 9B of FORM GSTR-1 may be used for filling up these details.
Guidance Note on GST Audit
95
OF COST
ACCOU
4J
4K
4L
5A
5B
5C
Tax Research Department, The Institute of Cost Accountants of India
Aggregate value of debit notes issued in respect of B to B supplies (4B), exports (4C),
supplies to SEZs (4D) and
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
il Rated and Non-GST supplies shall be
AND declared here. Table 8 of FORM GSTR-1 may be used for filling up these details. The
value of “no supply” shall also be declared here.
5F
5H
51
5J
5K
5N
4.
Aggregate value of credit notes issued in respect of supplies declared in
5A, 5B, 5C, 5D, 5E and 5F shall be declared here. Table 9B of FORM GSTR-1 may be
used for filling up these details.
Aggregate value of debit notes issued in respect of supplies declared in
5A, 5B,5C, 5D, 5E and 5F shall be declared here. Table 9B of FORM GSTR-1 may be
used for filling up these details.
& Details of amendments made to exports (except supplies to SEZs) and supplies to
SEZs on which tax has not been paid shall be declared here. Table 9A and Table 9C
of FORM GSTR-1 may be used for filling up these details.
Total turnover including the sum of all the supplies (with additional supplies and
amendments) on which tax is payable and tax is not payable shall be declared here.
This shall also include amount of adv
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
C which was availed, reversed and then reclaimed in the ITC
ledger. This is to be declared separately under 6(H) below.
96
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
6C
6D
6E
6F
6G
6H
6J
6K
6L
6M
7A, 7B,
7C, 7D,
7E, 7F,
7G and
7H
8A
8B
Aggregate value of input tax credit availed on all inward supplies received from
unregistered persons (other than import of services) on which tax is payable on
reverse charge basis shall be declared here. It may be noted that the total ITC
availed is to be classified as ITC on inputs, capital goods and input services.
Table 4(A)(3) of FORM GSTR-3B may be used for filling up these details.
Aggregate value of input tax credit availed on all inward supplies received
from registered persons on which tax is payable on reverse charge basis shall
be declared here. It may be noted that the total ITC availed is to be classified as
ITC on inputs, capital goods and input services. Table 4(A)(3) of FO
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
y, this amount should be zero.
Details of transition credit received in the electronic credit ledger on filing
of FORM GST TRAN-I including revision of TRAN-I (whether upwards or
downwards), if any shall be declared here.
Details of transition credit received in the electronic credit ledger after filing of
FORM GST TRAN-II shall be declared here.
Details of ITC availed but not covered in any of heads specified under 6B to 6L
above shall be declared here. Details of ITC availed through FORM ITC- 01 and
FORM ITC-02 in the financial year shall be declared here.
Details of input tax credit reversed due to ineligibility or reversals required
under rule 37, 39,42 and 43 of the CGST Rules, 2017 shall be declared here.
This column should also contain details of any input tax credit reversed under
section 17(5) of the CGST Act, 2017 and details of ineligible transition credit
claimed under FORM GST TRAN-I or FORM GST TRAN-II and then subsequently
reversed. Table 4(B) of FORM GSTR-3B may be used
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ril to September 2018 shall be declared here.
Table 4(A)(5) of FORM GSTR-3B may be used for filling up these details.
Aggregate value of the input tax credit which was available in FORM GSTR-2A
(table 3 & 5 only) but not availed in any of the FORM GSTR-3B returns shall be
declared here. The credit shall be classified as credit which was available and
not availed or the credit was not availed as the same was ineligible. The sum
total of both the rows should be equal to difference in 8D.
Aggregate value of IGST paid at the time of imports (including imports from
SEZs) during the financial year shall be declared here.
The input tax credit as declared in Table 6E shall be auto-populated here.
The total input tax credit which shall lapse for the current financial year shall
be computed in this row.
Part IV is the actual tax paid during the financial year. Payment
of tax under Table 6.1 of FORM GSTR-3B may be used for filling
up these details.
Part V consists of particulars of transactions f
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
ar, whichever is earlier shall be declared here. Table 4(B) of FORM
GSTR-3B may be used for filling up these details.
Details of ITC for goods or services received in the previous financial year but ITC
for the same was availed in returns filed for the months of April to September
of the current financial year or date of filing of Annual Return for the previous
financial year whichever is earlier shall be declared here. Table 4(A) of FORM
GSTR-3B may be used for filling up these details.
98
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
M
7. Part VI consists of details of other information. The instructions to fill
Part VI are as follows:
Table No.
Instructions
15A,
15B,
15C and
15D
15E, 15F
and 15G
16A
16B
16C
17 & 18
19
199
Aggregate value of refunds claimed, sanctioned, rejected and pending for
| processing shall be declared here. Refund claimed will be the aggregate value
of all the refund claims filed in the financial
= = = = = = = =
Plain text (Extract) only
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= = = = = = = =
3) and sub-section (4) of Section 143 of the CGST
Act shall be declared here.
Aggregate value of all deemed supplies for goods which were sent on
approval basis but were not returned to the principal supplier within
one eighty days of such supply shall be declared here.
Summary of supplies effected and received against a particular HSN code
to be reported only in this table. It will be optional for taxpayers having
annual turnover upto Rs. 1.50 Cr. It will be mandatory to report HSN code at
two digits level for taxpayers having annual turnover in the preceding year
above 1.50
Cr but upto 5.00 Cr and at four digits' level for taxpayers having annual
turnover above Rs.5.00 Cr. UQC details to be furnished only for supply of
goods. Quantity is to be reported net of returns. Table 12 of FORM GSTR -1
may be used for filling up details in Table 17.
Late fee will be payable if annual return is filed after the due date.
Guidance Note on GST Audit
99
100
OF COST
INSTITUTE OF
ACCOUN
Tax Research
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ward supplies liable
to reverse charge
received from
registered persons
Inward supplies liable
to reverse charge
Central Tax
3
State Tax/
UT Tax
4
Integrated
Cess
Tax
5
6
B
received from
unregistered persons
C
Import of services
Net Tax Payable on
D
(A), (B) and (C) above
8
Details of other inward supplies as declared in returns filed during the financial year
Inward supplies from
A
registered persons
(other than 7A above)
B
Import of Goods
Pt. III
Details of tax paid as declared in returns filed during the financial year
9
Description
1
Total tax payable
Paid
2
3
Integrated Tax
Central Tax
State/UT Tax
Guidance Note on GST Audit
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Pt. IV
10
11
Tax Research Department, The Institute of Cost Accountants of India
Interest
Late fee
Penalty
Particulars of the transactions for the previous FY declared in returns of April to September of current
FY or upto date of filing of annual return of previous FY whichever is earlier
Description
1
Turnover
Cess
Central State Tax/
Tax
UT
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HE INSTITUTE OF CO
ACCOUNT
Details of credit reversed or availed
Description
Central
Tax
State Tax/
UT Tax
Integrated
Tax
Cess
1
2
3
4
5
A
Credit reversed on opting in the composition
scheme (-)
Credit availed on opting out of the composition
B
scheme (+)
17
Late fee payable and paid
Description
Payable
Paid
2
3
A
Central Tax
State Tax
B
NTANTS OF INDIA
Verification:
I hereby solemnly affirm and declare that the information given herein
above is true and correct to the best of my knowledge and belief and nothing
has been concealed there from and in case of any reduction in output tax
liability the benefit thereof has been/will be passed on to the recipient of
supply.
Place
Signatory
Date
Signature
Name of Authorised
Designation Status
Guidance Note on GST Audit
103
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Instructions: –
1.
2.
Table No.
5
6A
6B
7A
7B
7C
8A
8B
3.
Tax Research Department, The Institute of Cost Accountants of India
The details for the period between July 2017 to March 2018
shall be provided in this
= = = = = = = =
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lies shall
be declared here.
Aggregate value of all inward supplies received from registered persons on
which tax is payable on reverse charge basis shall be declared here. Table 4B,
Table 5 and Table 8A of FORM GSTR-4 may be used for filling up these details.
Aggregate value of all inward supplies received from unregistered persons
(other than import of services) on which tax is payable on reverse charge
basis shall be declared here. Table 4C, Table 5 and Table 8A of FORM
GSTR-4 may be used for filling up these details.
Aggregate value of all services imported during the financial year shall be
declared here. Table 4D and Table 5 of FORM GSTR-4 may be used for
filling up these details.
Aggregate value of all inward supplies received from registered persons on
which tax is payable by the supplier shall be declared here. Table 4A and
Table 5 of FORM GSTR-4 may be used for filling up these details.
Aggregate value of all goods imported during the financial year shall
be declared here.
Pa
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sts of details of other information. The instruction to fill
Part V are as follows:
Table No.
15A,
15B, 15C
and 15D
15E, 15F
and 15G
16A
16B
17
Instructions
Aggregate value of refunds claimed, sanctioned, rejected and pending for
processing shall be declared here. Refund claimed will be the aggregate value
of all the refund claims filed in the financial year and will include refunds
which have been sanctioned, rejected or are pending for processing. Refund
sanctioned means the aggregate value of all refund sanction orders. Refund
pending will be the aggregate amount in all refund application for which
acknowledgement has been received and will exclude provisional refunds
received. These will not include details of non-GST refund claims.
Aggregate value of demands of taxes for which an order confirming the
demand has been issued by the adjudicating authority has been issued shall
be declared here. Aggregate value of taxes paid out of the total value
of confirmed demand in 15E above shal
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TB/books of
accounts not available, a summary
reconciliation at the company level
is recommended to ensure that the
sum of state wise turnover matches
with the entity turnover.
– Unbilled revenue on which invoices
have been issued without GST (i.e.
for pre GST period) to be excluded
– Invoices issued in GST period for
revenue recognised in the previous
financial year to be considered for
this
–
Advances for future supplies
on which GST has been paid,
however, not recognised as
revenue needs to be considered
Advances for supply of goods
received upto Nov 15, 2017 and
if unadjusted till the end of the
FY would be leviable to GST
The above is applicable for
assessees with turnover upto
INR 1.5 crores for advances
received upto Oct 13, 2017
Advance for supply of
services applicable to GST
Exclude advances for exempt
|supplies, refundable deposits.
106
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
D
E
F
G
Deemed Supply under Sch
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o GST and auditor to make
appropriate recommendations
Monthly or quarterly trial
balance for the period could
be relied upon which is also
verified with the audited
financials and duly reconciled
Appropriate accounting
standards to be reviewed for
verifying unbilled revenue as
recorded in the financials at
the close of the financial year
– Time of supply provisions read
with relevant contracts also
could be reviewed in order to
determined whether any portion
of unbilled revenue would have
attracted GST as per the time of
|supply provisions
Advances of previous year
recognised as revenue in the
audited books of accounts
need
be considered
to
– It could also be checked whether
appropriate taxes as applicable
during the pre GST period were
paid for these advances
107
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108
Tax Research Department, The Institute of Cost Accountants of India
Credit notes accounted for in
not
the audited Annual Financial
Statement but are
permissible under GST
Adjustments on account
of
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the audited financials
with the reasons for difference
as envisaged under Section 15
need to be recorded separately
while populating the figures for
this field.
– The basis of foreign exchange
conversion rate for financials
and the turnover reported in
GST returns would need to be
identified and difference on
account of different exchange
rates would need to be recorded
and populated. Further, the
provisions in CGST Act for
reporting value of export and
import transactions would
need to be evaluated with
the treatment adopted by the
auditee.
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Adjustments in turnover due to
reasons not listed above
turnover
adjustments as above
after
Turnover as declared in Annual
Return (GSTR9)
Un-Reconciled turnover (Q – P)
P
Annual
Q
R
6
Reasons for Un – Reconciled
difference in Annual Gross
Turnover
A
Reason 1
B
Reason 2
C
Reason 3
These adjustments could be on
account of transactions which w
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ro rated supplies
on which GST has not been paid
need to be considered here
Process for identification
of reverse charge liability for
domestic and cross border
transactions should be reviewed
to determine whether the
processes are comprehensive.
Procurements
from
unregistered vendors till Oct
13, 2017 need to be considered
for reverse charge liability
Accounting of reverse charge
transactions to determine the
taxable value is required to be
reviewed
Guidance Note on GST Audit
109
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E
F
Tax Research Department, The Institute of Cost Accountants of India
Taxable turnover as per
adjustments above (A-B-C-D)
Taxable turnover as per liability
declared in
(GSTR9)
G
8
Annual Return
Unreconciled taxable turnover
(F-E)
Reasons for Un Reconciled
–
difference in taxable turnover
A
Reason 1
B
Reason 2
C
Reason 3
Auto populated
– Taxable turnover as per Table
4N of GSTR 9
> Identify the reasons for
unreconciled taxable turnover
>
and in case of taxable turnover
> which has got missed in
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T
> Reasons for
unreconciled
>
payment need to be identified
and recorded.
>
Taxable
Value
2
Additional amount of tax
payable on
account of
unreconciled taxable turnover
with bifurcation into different
tax rates, interest, etc.
Interest
Late Fees
Penalty
Others (Please specify)
Reconciliation of Input Tax
Credit (ITC)
Reconciliation of Net Input Tax
Credit (ITC)
ITC availed as per
audited
Annual Financial Statement for
the State/ UT (For multi-GSTIN
units under same PAN this
should be derived from books of
accounts)
ITC booked in earlier Financial
Years claimed in
Financial Year
current
ITC availed after reversal effect
as per the audited Annual
Financial Statement is to be
mentioned .In case of multiple
GSTIN, ITC of each GSTIN needs
to be mentioned separately
ITC booked in the earlier year
in audited accounts and the
same claimed in GST return
in the current year is to be
mentioned.
Guidance Note on GST Audit
111
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C
áŽ
E
Tax Research Department, The Institute of Cost
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be identified and
recorded. In case of ineligible
ITC availed in the GST returns,
the auditor would need to
recommend
appropriate
reversals along with interest, if
any.
14
Reconciliation of ITC declared
in Annual Return (GSTR9) with
ITC availed on expenses as
per audited Annual Financial
Statement or books of account
112
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Description
1
A
Purchases
B
Freight
Carriage
C
Power and Fuel
D
Imported goods
(Including
received from SEZs)
E
Rent and Insurance
F
Goods lost, stolen, destroyed,
written off or disposed of by way
of gift or free samples
Value
2
The identifiable expenses for
each GSTIN would need to be
depicted for each of the heads of
expenses to the extent they are
recorded and accounted for the
GSTIN. The heads of expenses
are generic in nature and could
vary according to the nature of
business and the accounting
treatment of the registered
person. The objective is to
identi
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n for
the said difference needs to be
mentioned here.
16
Tax payable on un-reconciled
difference in ITC (due to reasons
specified in 13 and 15 above)
Description
1
Central Tax
State UT Tax
Intergrated Tax
Cess
Interest
Penalty
Amount
Payable
2
Tax payable on account
of unreconciled ITC and
for reasons identified above
should be mentioned here.
Tax so payable needs to be
appropriately bifurcated into
central tax, state / UT tax,
integrated tax, cess, interest
and penalty.
Pt V Auditor's
recommendation
on additional Liability due to
non-reconciliation
Description
114
1
5%
12%
18%
28%
3%
0.25%
0.10%
Input Tax Credit
Interest
Late Fees
Penalty
Any other amount paid for
supplies not included in Annual
Return (GSTR-9)
Erroneous refund to be paid
back
Value
2
Guidance Note on GST Audit
Tax Research Department, The Institute of Cost Accountants of India
Outstanding demands to be
settled
Other (Pl. specify)
THE INSTITUTE OF
COST
ACCOUNT
NTANTS OF INDIA
Verification:
I hereby solemnly affirm and
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d in FORM GSTR-9 for
this GSTIN. The instructions to fill this part are as follows
Instructions
The turnover as per the audited Annual Financial Statement
shall be declared here. There may be cases where multiple
GSTINS (State-wise) registrations exist on the same PAN. This
is common for persons / entities with presence over multiple
States. Such persons / entities, will have to internally derive
their GSTIN wise turnover and declare the same here. This shall
include export turnover (if any). It may be noted that reference
to audited Annual Financial Statement includes reference to
books of accounts in case of persons/entities having presence
over multiple States.
Unbilled revenue which was recorded in the books of accounts
on the basis of accrual system of accounting in the last financial
year and was carried forward to the current financial year shall
be declared here. In other words, when GST is payable during the
financial year on such revenue (which was recognized earlier),
the va
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es were reflected in the annual return (GSTR-
9)shall be declared here.
Trade discounts which are accounted for in the audited Annual
Financial Statement but on which GST was leviable(being not
permissible) shall be declared here.
Turnover included in the audited Annual Financial Statement
for April 2017 to June 2017 shall be declared here.
Unbilled revenue which was recorded in the books of accounts
on the basis of accrual system of accounting during the current
financial year but GST was not payable on such revenue in the
same financial year shall be declared here.
Value of all advances for which GST has not been paid but the
same has been recognized as revenue in the audited Annual
Financial Statement shall be declared here.
Aggregate value of credit notes which have been accounted for in
the audited Annual Financial Statement but were not admissible
under Section 34 of the CGST Act shall be declared here.
Aggregate value of all goods supplied by SEZs to DTA units for
which the DTA
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over reported in the Annual
Return (GSTR9) and turnover reported in the audited Annual
Financial Statement due to foreign exchange fluctuations shall
be declared here.
Any difference between the turnover reported in the Annual
Return (GSTR9) and turnover reported in the audited Annual
Financial Statement due to reasons not listed above shall be
declared here.
Annual turnover as declared in the Annual Return (GSTR 9)
shall be declared
here. This turnover may be derived from Sr. No. 5N, 10 and 11
of Annual Return (GSTR 9).
Reasons for non-reconciliation between the annual turnover
declared in the audited Annual Financial Statement and
turnover as declared in the Annual Return (GSTR 9) shall be
specified here.
The table provides for reconciliation of taxable turnover from
the audited annual turnover after adjustments with the taxable
turnover declared in annual return (GSTR-9).
Annual turnover as derived in Table 5P above would be auto-
populated here.
Value of exempted, nil rated, non-GS
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dance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
Table
No.
Instructions
Part III consists of reconciliation of the tax payable as per declaration
in the reconciliation statement and the actual tax paid as declared in
Annual Return (GSTR9). The instructions to fill this part are as follows :-
The table provides for reconciliation of tax paid as per
reconciliation statement and amount of tax paid as declared in
Annual Return (GSTR 9). Under the head labelled ۥRC, supplies
where tax was paid on reverse charge basis by the recipient (i.e.
the person for whom reconciliation statement has been prepared)
shall be declared.
9
9P
9Q
10
11
12A
12B
12C
The total amount to be paid as per liability declared in Table 9A
to 90 is auto populated here.
The amount payable as declared in Table 9 of the Annual
Return (GSTR9) shall be declared here. It should also contain
any differential tax paid on Table 10 or 11 of the Annual Return
(GSTR9).
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is being filed for shall be declared here. This shall include
transitional credit which was booked in earlier years but availed
duringFinancial Year 2017-18.
Any ITC which has been booked in the audited Annual Financial
Statement of the current financial year but the same has not
been credited to the ITC ledger for the said financial year shall
be declared here.
Guidance Note on GST Audit
119
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Tax Research Department, The Institute of Cost Accountants of India
Table
No.
12D
12E
13
Instructions
ITC availed as per audited Annual Financial Statement or books
of accounts as derived from values declared in Table 12A, 12B
and 12C above will be auto-populated here.
Net ITC available for utilization as declared in Table 7J of Annual
Return (GSTR9) shall be declared here.
Reasons for non-reconciliation of ITC as per audited Annual
Financial Statement or books of account (Table 12D) and
the net ITC (Table12E) availed in the Annual Return (GSTR9)
shall be specified here.
Part IV con
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red in Table 14R and ITC declared in
Table 14S shall be specified here.
Any amount which is payable due to reasons specified in Table
13 and 15 above shall be declared here.
Part V consists of the auditor's recommendation on the additional liability
to be discharged by the taxpayer due to non-reconciliation of turnover or
non-reconciliation of input tax credit. The auditor shall also recommend
if there is any other amount to be paid for supplies not included in the
Annual Return. Any refund which has been erroneously taken and shall
be paid back to the Government shall also be declared in this table. Lastly,
any other outstanding demands which is recommended to be settled by the
auditor shall be declared in this Table.
Towards, the end of the reconciliation statement taxpayers shall be given
an option to pay their taxes as recommended by the auditor.
120
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
PART B- CERTIFICATION
–
I
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mation and explanations which, to the
best of *my/our knowledge and belief, were necessary for the purpose of
the audit information and explanations which, to the best of *my/our
knowledge and belief, were necessary for the purpose of the audit were not
provided/partially provided to us.
In *my/our opinion, proper books of account *have/have not been kept by
the registered person so far as appears from*my/ our examination of the
books.
I/we certify that the balance sheet, the *profit and loss/income and
expenditure account and the cash flow Statement are *in agreement/not
in agreement with the books of account maintained at the Principal place
of business at
…and **
..additional place of business within the State.
The documents required to be furnished under section 35 (5) of the CGST
Act and Reconciliation Statement required to be furnished under section
44(2) of the CGST Act is annexed herewith in Form No. GSTR-9C.
Guidance Note on GST Audit
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Tax Research Departmen
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balance sheet as on
and expenditure account for the period beginning from
on, the cash flow statement for the period beginning from
on, and documents declared by the said Act to be part of, or annexed to,
the *profit and loss account/income and expenditure account and balance
sheet.
I/we report that the said registered personۥ
*has maintained the books of accounts, records and documents as required
by the IGST/CGST/>GST Act, 2017 and the rules/notifications made/
issued thereunder
*has not maintained the following accounts/records/documents as required
by the IGST/CGST/>GST Act, 2017 and the rules/notifications made/
issued thereunder:
1.
2.
3.
3. The documents required to be furnished under section 35 (5) of the
122
Guidance Note on GST Audit
COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
CGST Act and Reconciliation Statement required to be furnished under
section 44(2) of the CGST Act is annexed herewith in Form No.GSTR-9C.
4. In *my/our opini
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eds two crore rupees”. It
must be noted that the word turnover has not been defined whereas the
expressions aggregate turnover has been defined. For every registered
person if turnover exceeds two core shall get his accounts audited by a
chartered accountant / cost accountant. One may note that the expression
turnover in State or turnover in Union territory is defined. In this backdrop
the following understanding is relevant:
a)
b)
c)
Aggregate turnover is PAN based while turnover in a State / UT
is similarly worded except to the extent that turnover in a State /
UT is limited to a State;
It is therefore, reasonable to interpret that the word turnover used
in section 35(5) ought to be understood as aggregate turnover
(PAN level).
For the financial year 2017-18, the GST period comprises of 9
months whereas the relevant section 35(5) uses the expression
financial year; Therefore, in the absence of clarification from
Government and to avoid any cases of default, it is reasonable to
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. On a combined reading of the charging sections
with the definitions of non-taxable supply and exempt supply, it becomes
clear that petroleum products and alcoholic liquor for human consumption
124
Guidance Note on GST Audit
F COST
ACCOUNT
Tax Research Department, The Institute of Cost Accountants of India
would form part of exempt turnover. Since aggregate turnover includes
exempt turnover, value of alcoholic liquor for human consumption is to be
included while computing threshold limit of Rs. 2 crores.
Q3. Would the term ‘aggregate turnover,' includes stock transfers/
cross charges effected between branches located in two different
states or within same states.
Response –
Section 2(6) of CGST/ SGST Act defines aggregate turnover to include
‘inter-state supplies of person having same PAN'. Thus, stock transfers/
cross charges of services provided from a branch located in one state to a
branch located in another state will be included in the aggregate turnover
of the branc
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ving
registration in more than one state is required to file GSTR 9C for each
registration obtained under the GST Act.
Q5. What are the documents to be enclosed along with GSTR 9C.
Response –
As per section 35(5), a copy of audited accounts and such other documents
in such form and manner ‘as may be prescribed' ought to be submitted
along with reconciliation statement (i.e. GSTR 9C). Prescription ought to be
provided in the Rules as the Act employs the term 'as may be prescribed'.
No documents other than audited annual accounts have been prescribed
in Rule 80(3).
Part B of GSTR 9C requires that the GST Auditor to enclose a copy of audit
report of the entity, where the audit of the entity has been carried out
by another person under a statute other than GST Act. In the said case,
documents declared by the said statute which forms a part of the audited
financial statements must also be annexed to the audit report.
Guidance Note on GST Audit
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Tax Research Departmen
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es of the failure in submitting the annual return
and not getting the accounts audited?
Response –
The consequences of the failure in submitting the annual return and not
getting the accounts audited are shown below:
a) Section 44(2) of the CGST Act and State /Union Territory GST Act
provides that every Registered Person shall file electronically an annual
return in Form GSTR 9 along with a reconciliation statement in Form GSTR
9-C, reconciling the value of supplies declared in the return furnished for
the financial year with the audited annual financial statement.
b) Section 47(2) of the CGST Act provides for levy of a late fee of Rs. 100/-
per day (each under CGST Act and under SGST Act) for delay in furnishing
annual return in GSTR 9, subject to a maximum amount of quarter percent
(0.25%) of the turnover in the State or Union Territory. Similar provisions
for levy of late fee exist under the State / Union Territory GST Act.
c) On a combined reading of Section 47(2) and Section 44 (2
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ccountants of India
Q8. Can the late fee be waived off in certain cases which are genuine.
Response –
The Government may, by notification, waive in part or full, any late fee
referred to in section 47 for such class of taxpayers and under such mitigating
circumstances as may be specified therein on the recommendations of the
Council. But no notification has been issued by the Central Government/
State Government as on date for the same.
Q9. Provision of filing the Revised Form GSTR 9C if at all applicable
Response –
There is no basis of saying that revised GSTR 9C can be filed in the absence
of a legal provision.
Accordingly, unless the GST Act is amended to enable filing of revised
GSTR 9C for a financial year, revision of GSTR 9C would not be possible.
Q.10 Which records to be reconciled in Form GSTR-9C
Response –
–
A. Annual Return of Registered Person in Form GSTR 9
B. Books of accounts of registered person if the registered person has
multiple registrations, information needs to b
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consider for the purpose of planning of the audit
and determining the nature, timing and extent of the audit procedures, the
internal control of the enterprise as well.
Guidance Note on GST Audit
127
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Tax Research Department, The Institute of Cost Accountants of India
Q.14 Importance of Management Representation Letter (MRL)
Response –
Management representation letter (MRL) is a letter issued by a client to
the auditor in writing as part of audit evidences. The date of the document
must not be later than the date of audit work completion. It is used to let the
client's management declare in writing that the financial statements and
other presentations to the auditor are sufficient and appropriate and
without omission of material facts to the financial statements, to the best
of the management's knowledge.
For audit evidence, it is reliable if the auditor has no other means of
obtaining evidence. Examples may include situations involving contingent
liabilities or off-balanc
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sues/aspects associated
with GST.
6. Tendering representation to the Government on practical difficulties
faced by the stakeholders in Taxation related matters.
7. Updating Government about the steps taken by the Institute in
removing the practical difficulties in implementing various Tax Laws
including GST.
8. Facilitating general public other than members through GST Help-Desk
opened at Head quarter of the Institute and other places of country.
9. Introducing advance level courses for the professionals on GST and
Income Tax.
10. Extending Crash Courses on Taxation to Corporates, Universities, Trade
Associations etc.
Behind Every Successful Business Decision, there is always a CMA
INSTITUTE OF
THE
COST
ACCOUNTANT
mears
1944 – 2018
OF
INDIA
HEADQUARTERS
CMA Bhawan
12, Sudder Street, Kolkata – 700 016
Ph: +91-33-2252-1031/34/35/1602/1492/1619/7373/7143
Fax: +91-33-2252-7993/1026/1723
DELHI OFFICE
CMA Bhawan
3, Institutional Area, Lodhi Road, New Delhi – 110003
Ph: +91-11-24666100/246661
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