GUIDANCE NOTE ON GST AUDIT
GST
Dated:- 28-12-2018
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\n=============
\nDocument 1THE OF COS
\nCOUNTANTS OF
\n75
\nYears
\n1944-2018
\nGUIDANCE NOTE ON
\nGST
\n0002
\nDOST
\n005
\nA
\n4222
\n10
\nED
\n20
\n\u00e0\u00ab\u00a9. \u00e0\u00aa\u00b6
\nB
\nOF
\nCCOUNTANTS OF INDIA
\nTHE INSTITUTE
\n\u00e0\u00a4\u00a4\u00e0\u00a4\u00ae\u00e0\u00a4\u00b8\u00e0\u00a5\u2039 \u00e0\u00a4\u00ae\u00e0\u00a4\u00be
\n\u00e0\u00a4\u0153\u00e0\u00a5\u008d\u00e0\u00a4\u00af\u00e0\u00a5\u2039\u00e0\u00a4\u00a4\u00e0\u00a4\u00bf\u00e0\u00a4\u00b0\u00e0\u00a5\u008d\u00e0\u00a4\u2014\u00e0\u00a4\u00ae\u00e0\u00a4\u00af
\nINDIA
\nTHE INSTITUTE OF COST ACCOUNTANTS OF INDIA
\n(Statutory Body under an Act of Parliament)
\nwww.icmai.in
\nVision Statement
\n“The Institute of Cost
\nAccountants of India
\nwould be the preferred
\nsource of resources and
\nprofessionals for the
\nfinancial leadership of
\nenterprises globally.”
\nMission Statement
\n“The Cost and Management
\nAccountant professionals would
\nethically drive enterprises
\nglobally by creating value to
\nstakeholders in the socio-
\neconomic context through
\ncompetencies drawn from the
\nintegration of strategy,
\nmanagement and accounting”
\nObjectives of Taxation Committee:
\n1. Preparation of Suggestions and Analysis of various Tax
\nmat<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Edition: December, 2018 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n orrectness of information declared, taxes paid and to assess the compliance = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ng with the latest developments, announcements and = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n timelines for the GST audit, the taxpayers need to factor = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n t Guidelines = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n applicable customs duties. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n on any supply of goods or services or both used or intended = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n r sub-section (5) of section 35 and he shall furnish a copy of = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n it party deputed by the proper officer = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n In the case of first audit, the auditor needs to maintain detailed = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n audit = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ecipient? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n re to be checked. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 9C whether or not Turnover exceeds Rs. 2 CRores = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n c) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n within 30days\/45 days- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n in the above situation. In a nutshell, = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ply by assembly \/ installation at site = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nd maintain, at his principal = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e (h) of sub-section (5) of section = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n eive or supply goods or services on behalf of = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nd delivery = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n per electronic back-up of records shall be maintained and = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n hall maintain records of goods transported, delivered = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n in case of advance receipt under Rule 50 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n able) of goods = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n whether registration in all states is taken or not, if = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 3 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the Customs Tariff Act. Any change in the item properties can = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nfirm they are issued = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n reported in the GST Returns correctly. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ection 9 (3) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Reporting for related parties and non-related parties in = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n iled. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n g the verification on which GST = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n earch Department, The Institute of Cost Accountants of India = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s or services or both to him which are used = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ll be added to his output tax liability, along with interest = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n tered person in = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n CGST Act, 2017 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n t for availing the Input Tax Credit: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n peline laid outside the factory) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ter = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n siness and partly for other purposes: Credit input tax = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the date of payment. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n input tax credit attributable to a tax = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n cept = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ing company or a financial institution shall have following = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n f Input Tax in respect of: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n se charge basis and eligibility of = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n stributor or = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n d in relation to advice, = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ort or Freight Charges and Goods Transport Agency = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n No. 10\/2017 – Integrated Tax (Rate) dt.28.06.2017 covers same = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 17\/2017 – Central Tax (Rate) dt. 28th June, 2017 provides that = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s to be = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n arriage of – = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ities, Inter-University = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n epartment, The Institute of Cost Accountants of India = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n furnish GSTR-1on = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n roval basis = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n etting off the Input Tax Credit (ITC) against the Outward Tax = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ss purposes. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n efines \u201cexport of services\u201d means the supply = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n against fulfillment of any export obligation e.g. Claim of = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n tment, The Institute of Cost Accountants of India = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of Section 143(1) of the CGST Act, 2017 prescribed that registered = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n f. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n puts and capital goods sent for = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n der = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ration under section 25. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n by the supplier in the name the principal as buyer = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s by the Auditor = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n business which receives invoices for = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n amount of tax credit available with the ISD as at the end = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n or = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n riod, to the aggregate turnover of all such recipient.) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n st Accountants of India = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the input tax credit contained in the original invoice was = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n he fundamentals of the GST = = = = = = = =<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nPublished by
\nThe President
\nThe Institute of Cost Accountants of India
\nCMA Bhawan
\n12, Sudder Street, Kolkata – 700016
\nDelhi Office
\nCMA Bhawan
\n3, Institutional Area, Lodhi Road, New Delhi – 110003
\nThe Institute of Cost Accountants of India
\n(Statutory body under an Act of Parliament)
\n\u00c2\u00a9 All rights reserved
\nDisclaimer:
\nThis Publication does not constitute professional advice. The information
\nin this publication has been obtained or derived from sources believed by
\nthe Institute of Cost Accountants of India (ICAI) to be reliable. Any opinions
\nor estimates contained in this publication represent the judgment of ICAI
\nat this time. Readers of his publication are advised to seek their own
\nprofessional advice before taking any course of action or decision, for which
\nthey are entirely responsible, based on the contents of this publication. ICAI
\nneither accepts nor assumes any responsibility or liability to any reader for
\nthis publication in respect of the information con<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nwith GST. Every registered assessee whose turnover during a financial year exceeds 2 crore has to get
\nhis accounts audited by a CMA or a CA. A Guidance Note on GST Audit surely will assist our members in
\nresolving any issues that might arise while conducting audit.
\nI congratulate CMA Niranjan Mishra, Chairman- Taxation Committee for bringing out this revised
\n“Guidance note on GST Audit”. Commendable job by the entire Tax Research Team. My best wishes to
\nTaxation Committee for its all future endeavours.
\nWith Warm Regards,
\nAfte
\nCMA Amit A. Apte
\n21st December, 2018
\nHEAD OFFICE: 12, SUDDER STREET, KOLKATA-700 016, PHONES: +91-33-22521031\/1034\/1035, FAX: +91-33-22527993\/1026
\nMessage From Chairman
\nGST is an integrated scheme of taxation that does not discriminate between
\ngoods and services and is a part of the tax reforms that centre on evolving
\nan efficient and harmonized consumption tax system in the country. GST
\nw<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\namendments. This will serve as a very good knowledge and information
\nsource, particularly when the stress is on the need of information on GST
\nAudit on a day-to-day basis.
\n–
\nI congratulate Team Tax Research, commendable job by the entire
\nTeam. I am happy and would like to congratulate other members of the
\nTaxation Committee and knowledge contributors of the Institute for their
\nefforts to bring this out. CMA T K Jagannathan and CMA Amit Sarker
\ndeserve a special mention here for their untiring efforts in bringing out this
\npublication. My best wishes to all for its all future endeavours. Keep up the
\ngood job.
\n28
\nCMA Niranjan Mishra
\n21st December, 2018
\nPrefece
\nThe GST laws provide for a mandatory audit to be undertaken by every
\nregistered person whose aggregate turnover during a financial year exceeds
\n`2 crore. The audit is required to be carried out by a chartered accountant
\nor a cost accountant, who is required to certify \u201cwhether <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nin some key deadlines prescribed under the GST law. The last date for
\nfiling the annual return is December 31, 2018, and the GST audit report
\nis required to be submitted along with the annual return. In addition,
\ncorporates are also reeling under the pressure of carrying out the credit
\nmatching which needs to be done before the filing of returns for the month
\nof September 2018.
\nThere are many minute details in these aspects of GST Audit which are
\nneeded to be handled carefully. Professionals dealing in this field would
\nsurely find this handbook an easy source of information to fall back up
\nduring their professional deliberations.
\nHere, we would also like to thank and acknowledge the immense
\ncontributions of CMA T K Jagannathan and CMA Amit Sarker without
\nwhose hard work, toil and guidance the handbook could have never acquired
\nits shape. The department is indebted to them for their contributions. CMA
\nNiranjan Mishra, Chairman \u00e2<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n3-9
\n3
\nSignificant Concepts and Definitions under GST
\n10-18
\n4
\nTime of Supply, Place of Supply Classification and
\n19-37
\nValuation of supplies
\n5
\nAccounts and records
\n38-47
\n6
\nOutward supplies
\n48-55
\n7
\nInput Tax credit
\n56-70
\n8
\nReverse Charge Mechanism
\n71-79
\n9 Return Filing
\n80-84
\n10
\nPayment of Taxes
\n85-86
\n11
\nExport of Goods and Services
\n87-88
\n12
\nImport of Goods and Services
\n89
\n13
\nJob work
\n90-99
\n14
\nInput Service Distributor
\n100-107
\n15
\nRefund
\n108-112
\n16
\nRecommendatory Formats for GST Audit
\n113-119
\n17
\nApproved GST Return Formats notified by
\n120-151
\nGovt.
\nTax Research Department, The Institute of Cost Accountants of India
\nCOST
\nTHE INSTITUTE OF CO
\nACCOUNT
\nNTANTS OF INDIA
\nGST IN INDIA
\nThe introduction of Goods and Services Tax on 1st July 2017 was a very
\nsignificant step in the field of indirect tax reforms in India. By amalgamating
\na large number of Central and State taxes into a single tax, the aim was to
\nmitigate cascading or double taxation in a major way and pave the way for
\na com<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nImport of services is treated as inter-State supplies and is subject to IGST.
\nCGST, SGST \/UTGST & IGST is levied at rates which are mutually agreed
\nupon by the Centre and the States under the aegis of the GSTC.
\nGST applies to all goods and services except Alcohol for human consumption.
\nTaxpayers with an annual turnover of 20 lakh (Rs.10 lakh for special category
\nStates (except J&K) as specified in article 279A of the Constitution) would
\nbe exempt from GST.
\nA composition scheme (i.e. to pay tax at a flat rate without credits) is
\navailable to small taxpayers (including to manufacturers other than
\nspecified category of manufacturers and service providers) having an annual
\nturnover of up to Rs.1 crore (Rs.75 lakh for special category States (except J&K
\nand Uttarakhand) enumerated in article 279A of the Constitution). This
\nlimit shall be raised to 1.5 crore after necessary amendments in the Act.
\nThe threshold exemption and compounding scheme would be optional.
\nGu<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nto be used in the course or furtherance of business.
\nAudit of registered persons to be conducted in order to verify compliance
\nwith the provisions of Act.
\n2
\nGuidance Note on GST Audit
\nTax Research Department, The Institute of Cost Accountants of India
\nAUDIT
\nCOST
\nTHE INSTITUTE OF CO
\nACCOUNT
\nNTANTS OF INDIA
\nAccording to Section 2(13) of the GST Act, 2017, \u2018audit' implies \u2013
\nDetailed examination of records, returns and other documents –
\nmaintained\/furnished by a taxable person,
\n(a)
\n(i)
\nunder GST law\/any other law or rules;
\nVerification of correctness of –
\n(ii)
\n(b)
\n(i)
\n(ii)
\ntaxes paid;
\nturnover declared;
\n(iii) refund claimed;
\n(iv) input tax credit availed; and
\n(v)
\nassessment of compliances with provisions of GST law and
\nrules.
\nGST audit is not only reconciliation of tax liability & payment, it also
\nsignifies compliance of the provisions of the GST act, law and provisions
\netc.
\nRelevant Provisions:
\nSection 35(5): Every <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\naudited annual accounts and a reconciliation statement, duly certified, in
\nFORM GSTR-9C, electronically through the common portal either directly
\nor through a Facilitation Centre notified by the Commissioner.
\nAudit by tax authorities:
\nSec. 65 (1) The Commissioner or any officer authorized by him, by way of a
\ngeneral or a specific order, may undertake audit of any registered person for
\nGuidance Note on GST Audit
\n3
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nsuch period, at such frequency and in such manner as may be prescribed.
\nSpecial audit:
\nSec.66 (1) If at any stage of scrutiny, inquiry, investigation or any other
\nproceedings before him, any officer not below the rank of Assistant
\nCommissioner, having regard to the nature and complexity of the case and
\nthe interest of revenue, is of the opinion that the value has not been correctly
\ndeclared or the credit availed is not within the norm<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nor a cost accountant or chartered accountant nominated under
\nsection 66-
\ni.
\nii.
\niii.
\niv.
\nV.
\nvi.
\nsuch records as prepared or maintained by the registered
\nperson and declared to the proper officer in such manner
\nas may be prescribed;
\ntrial balance or its equivalent;
\nstatements of annual financial accounts, duly audited,
\nwherever required;
\ncost audit report, if any, under section 148 of the Companies
\nAct, 2013;
\nthe income-tax audit report, if any, under section 44AB of
\nthe Income-taxAct, 1961; and
\nany other relevant record.
\nGeneral Guidelines to conduct Audit:
\nQualified Cost Accountant or Chartered Accountant is authorized to certify
\nGST Audit Report & for that purpose they should understand their powers,
\nroles and responsibilities regarding this.
\n4
\nGuidance Note on GST Audit
\nCOST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nDuties of Auditors
\nThe auditor is responsible for detection of non-compliance,
\nprocedural irregu<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nwritten record of his observations of the internal control system.
\nDuring these verifications, the following information should be
\ncorrectly obtained and recorded.
\n(ii)
\nWhether any input is exclusively consumed for fully
\nexempted supplies.
\nWhether any inputs consumed for fully exempted as well
\nas taxable supplies.
\n(iii) Whether any Capital goods on which input credit is availed
\nare exclusively used for fully exempted supplies.
\nResponsibilities of Auditors
\nAuditor's main responsibility in relation to fill up GSTR-9C is to
\nreconcile the audited financials with the annual return(GSTR
\n9, GSTR-9B)
\nThe auditor has to determine whether any amount is to be
\npaid by taxpayer that has been arised due to non-reconciliation
\nbetween the audited financials with the annual return or not.
\nThe Auditor has to disclose any leakage in revenue which may
\nresult in non payment or lower payment of tax liability.
\nGuidance Note on GST Audit
\n5
\nOF<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nas per the standards of auditing.
\nRole of the Auditor
\nAn auditor is required to verify the following matters before finalisation of
\nthe books of accounts Analysis of GSTR -9C.
\nRegistration
\nWhether registration has been obtained as per GST Law
\nWhether the amended certificate has been issued by giving effect
\nof correction\/changes made in the particulars incorporated in
\nthe application form.
\nWhether details of each place of business have been incorporated
\nin the registration certificate?
\nTransitional Credit
\nWhether transitional credit as
\ncarried forward in Form
\nGSTTRAN-I is in accordance with the law?
\nWhether credit carried forward inappropriately has been
\nreversed along with applicable interest?
\nValuation and Payment of tax liability and review of GST returns filed
\nWhether valuation has been done as per provisions of law
\n6
\nWhether applicable taxes both under forward charge and
\nreverse charge has been correctly discharged under the correct
\nhead or not
\nWhether there is any short pay<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nWhether the turnover declared in the GST returns are in
\nconsonance with that declared in the books of accounts?
\nWhether the refund claimed, if any has been claimed in
\npursuance of the provisions of GST law?
\nWhether the documentation aspect necessary for filing the
\nclaim for refund has been undertaken in accordance with law?
\nDocuments:
\nWhether the tax invoice, debit and credit notes, receipt voucher
\netc. have been issued in accordance with the provisions of law?
\nWhether all the tax invoices and other documents issued for the
\nsupply of goods or services or both have been accounted for in
\nthe books of accounts and reported in the GST Returns?
\nWhether e-way bill, wherever applicable has been issued and
\nduly recorded in the books of accounts and also to verify
\nwhether there is any variance in the data recorded in the e-way
\nbill and the corresponding tax invoice?
\nWhether HSN code has been correctly mentioned(specifically in
\ncase of mandatory cases i.e.where the turnover exceeds Rs.<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nSome corrections may be needed either in the books of
\naccounts, returns or there may be requirement of amendment
\nin Shipping bills.
\nStage wise action for audit
\ni.
\nPreparation\/updating of Taxable Person master file containing
\ncomprehensive Taxable Person profile.
\nii. Collection of all relevant documents, data
\niii.
\niv.
\nV.
\nstatement and reply to questionnaire.
\nreconciliation
\nDesk review on the basis of relevant documents and interview
\nof the Taxable Person.
\nFormulation and approval of audit plan based on desk review.
\nConducting audit verification on the basis of the approved audit
\nplan.
\nSuggestions on correction\/improvements to Taxable Person for
\nfuture guidance.
\nvi.
\nvii.
\nviii.
\nIssue of final audit report.
\nPreparation of draft audit report and its submission, along with
\nworking papers for discussion.
\nix. Follow up action, for monitoring the compliance of various points.
\nApplicability of Annual Return
\nAll registered dealers are required to file annual return except the fo<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nwith respect to individual turnover.
\nIn case of switchover from composition to regular or vice-versa,
\nthen GSTR-9A & GSTR-9 are required to be uploaded for the
\nrelevant period simultaneously.
\nIf there is no sale & purchase during F.Y 2017-18, THEN nil
\nAnnual return is required to be uploaded.
\nAll dealers whose registration are cancelled or pending as on
\n31.03.2018 and were registered for any day during F.Y 2017-
\n18, they have to file annual return.
\nAnalysis of GSTR-9 (For Regular Taxpayers)
\nPART-I
\nPART-II
\nPART-III
\nPART-IV
\nPART- V
\nPART- V
\nBasic Details
\nDetails of Outward & Inward Supplies declared during F.Y
\nDetails of ITC as declared during F.Y as per return
\nDetails of Tax paid as declared in return filed during F.Y
\nParticulars of the transactions for the previous F.Y declared in return of
\nApril to September of Current F.Y or up to date of filing return of previous
\nyear whichever is earlier
\nOther Information
\nAnalysis of GSTR-9A (For Compo<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nSection 7(1)(d)
\nSchedule I
\nSchedule II
\nSchedule III
\n11 forms of supply of goods or services or both as sale, transfer,
\nbarter, exchange, license, rental, lease or disposal made or
\nagreed to be made for a consideration by person in the course
\nor furtherance of business.
\nImport of services for a consideration whether or not in the
\ncourse or furtherance of business.
\nThe activities specified in Schedule I, made or agreed to be
\nmade without a consideration
\nThe activities to be treated as supply of goods or supply of
\nservices as referred to in Schedule II.
\nActivities to be Treated as Supply Even if Made
\nWithout Consideration
\nActivities to be Treated as Supply of Goods or
\nSupply of Services
\nActivities or Transactions Which Shall be Treated
\nNeither as A Supply of Goods Nor a Supply of
\nServices
\n10
\nGuidance Note on GST Audit
\nTax Research Department, The Institute of Cost Accountants of India
\nF COST
\nTime of Supply, Place of Supply
\nClassification and Valuation of
\nSupplies
\nACCOUNT
\nNTANTS OF INDI<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n>Issue of Invoice
\nOr
\n>Receipt of Payment
\nTime of supply will be the earliest
\nof the follows in case of Invoice not
\nissued within time-
\n>Provision of Service
\nOr
\n>Receipt of Payment
\nTime of supply will be in case of
\nInvoice not issued – Date of receipt in
\nrecipient's book
\nGuidance Note on GST Audit
\n11
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nTime of Supply in case of services \u2013 Reverse Charge
\n–
\nPayment
\nmade within
\n60 days
\nDate of
\npayment
\nentered in
\nthe books
\nDate
\nwhen
\ndebited in
\nbank
\nEarliest of the
\nfollowings
\nPayment not
\nmade within
\n60 days
\nPayment not
\nmade within
\n60 days
\nAssociated
\nEntities(Cross
\nBorder
\nTransaction)
\nDate of
\nDate of
\nEntry
\nPayment
\nChange in Rate of Tax in respect of supply of goods or services
\nSec14. Where there is a change in rate of tax of supply of goods or services,
\ntime of supply has to be determined in the following manner:
\nSupply is completed before the change in rate of tax
\nInvoice issued
\nbefo<\/p>\n
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\nsuppliers of goods other than composition dealers will have to pay tax at
\nthe time of issue of invoice only.
\nDate of receipt of Payment in case of change in rate of tax
\nNormally the date of receipt of payment is the date of credit in the bank
\naccount of the recipient of payment or the date on which the payment is
\nentered into his books of account, whichever is earlier. Further, the date
\nof credit in the bank account is relevant if such credit is after four working
\ndays from the date of change in rate of tax.
\nThe way of calculation of time of supply is adequately covered by the
\nprovisions of Sections 12, 13 and 14, one has to keep in mind these
\nprovisions and calculate time of supply which is the pivot to determine
\nwhen the liability to discharge tax will arise.
\nPlace of supply (IGST)
\nPlaces of supply provisions have been framed for goods and services,
\nkeeping in mind the destination\/consumption principle. In other words,
\nthe place of supply is bas<\/p>\n
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\nSupply on board a conveyance
\n(vessel, aircraft, train etc.)
\nPlace of supply
\nLocation of goods at time of termination
\nof movement for delivery to recipient
\nPrincipal Place of Business of third
\nperson
\nLocation of goods at the time of delivery
\nto the Recipient
\nPlace of Installation \/ assembly
\nLocation where goods are taken on
\nboard
\nGuidance Note on GST Audit
\n13
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nSection 11- Place of sup.ply of goods imported into, or exported from
\nIndia
\nNature of supply
\nGoods imported into India
\nGoods exported from India
\nPlace of supply
\nLocation of Importer
\nLocation outside India
\nSection 12-Place of supply of services where location of supplier and
\nrecipient is in India.
\nNature of supply
\nSupply to Registered Person
\nPlace of supply
\nLocation of Recipient
\nSupply to Un-registered Person(Location of Location of Recipient
\nRecipient available)
\nSupply to Un-registered Person(Location of Location<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nplace of business, as mentioned in the certificate of registration,
\na true and correct account of\u20ac\u2022
\nProduction or manufacture of goods
\nInward and outward supply of goods or services or both
\nStock of goods
\n(a)
\n(b)
\n(c)
\n(d)
\nInput tax credit availed
\n(e)
\nOutput tax payable and paid and
\n(f)
\nSuch other particulars as may be prescribed
\n(2)
\n(3)
\n(4)
\n(5)
\nProvided that where more than one place of business is
\nspecified in the certificate of registration, the accounts
\nrelating to each place of business shall be kept at such
\nplaces of business:
\nProvided further that the registered person may keep and
\nmaintain such accounts and other particulars in electronic
\nform in such manner as may be prescribed.
\nEvery owner or operator of warehouse or godown or any other
\nplace used for storage of goods and every transporter, irrespective
\nof whether he is a registered person or not, shall maintain records
\nof the consigner, consignee and other relevant details of the goods
\nin su<\/p>\n
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\n17, where the registered person fails to account for the goods or
\nservices or both in accordance with the provisions of sub-section
\n(1), the proper officer shall determine the amount of tax payable
\non the goods or services or both that are not accounted for, as if
\nsuch goods or services or both had been supplied by such person
\nand the provisions of section 73 or section 74, as the case may
\nbe, shall, mutatis mutandis, apply for determination of such tax.
\nEvery registered person required to keep and maintain books of
\naccount or other records in accordance with the provisions of
\nsub-section (1) of section 35 shall retain them until the expiry of
\nseventy-two months from the due date of furnishing of annual
\nreturn for the year pertaining to such accounts and records:
\nProvided that a registered person, who is a party to an appeal or
\nrevision or any other proceedings before any Appellate Authority
\nor Revisional Authority or Appellate Tribunal or court, whe<\/p>\n
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\ndetails of tax payable (including tax payable in accordance with
\nthe provisions of sub-section (3) and sub-section (4) of section
\n9), tax collected and paid, input tax, input tax credit claimed,
\ntogether with a register of tax invoice, credit notes, debit notes,
\ndelivery challan issued or received during any tax period.
\n(5) Every registered person shall keep the particulars of –
\nGuidance Note on GST Audit
\nCOST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\n(6)
\n(7)
\n(8)
\n(9)
\n(a)
\n(b)
\n(c)
\nnames and complete addresses of suppliers
\nnames and complete addresses of the persons to whom he
\nhas supplied goods or services
\nthe complete address of the premises where goods are
\nstored by him, including goods stored during transit along
\nwith the particulars of the stock stored therein.
\nIf any taxable goods are found to be stored at any place without the
\ncover of any valid documents, the proper officer shall determine
\nthe amount of tax payable on such goods as if such goo<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nsuch principal separately;
\nparticulars including description, value and quantity
\n(wherever applicable) of goods or services received on behalf
\nof every principal;
\nparticulars including description, value and quantity
\n(wherever applicable) of goods or services supplied on
\nbehalf of every principal;
\ndetails of accounts furnished to every principal; and
\ntax paid on receipts or on supply of goods or services
\neffected on behalf of every principal.
\n(12) Every registered person manufacturing goods shall maintain
\nmonthly production accounts showing quantitative details of raw
\nmaterials or services used in the manufacture and quantitative
\ndetails of the goods so manufactured including the waste and by
\nproducts thereof.
\nGuidance Note on GST Audit
\n17
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\n(13) Every registered person supplying services shall maintain the
\naccounts showing quantitative details of goods used in <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nchallans relating to stocks, deliveries, inward supply and outward
\nsupply shall be preserved for the period as provided in section 36
\nand shall, where such accounts and documents are maintained
\nmanually, be kept at every related place of business mentioned
\nin the certificate of registration and shall be accessible at every
\nrelated place of business where such accounts and documents
\nare maintained digitally.
\n(17) Any person having custody over the goods in the capacity of a
\ncarrier or a clearing and forwarding agent for delivery or dispatch
\nthereof to a recipient on behalf of any registered person shall
\nmaintain true and correct records in respect of such goods
\nhandled by him on behalf of such registered person and shall
\nproduce the details thereof as and when required by the proper
\nofficer.
\n(18) Every registered person shall, on demand, produce the books of
\naccounts which he is required to maintain under any law for the
\ntime being in force.
\nGeneration and maintenance of ele<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\npreserved in such manner that, in the event of destruction of
\nsuch records due to accidents or natural causes, the information
\ncan be restored within a reasonable period of time.
\n(2)
\nThe registered person maintaining electronic records shall
\nproduce, on demand, the relevant records or documents, duly
\nauthenticated by him, in hard copy or in any electronically
\nreadable format.
\n(3) Where the accounts and records are stored electronically by any
\nregistered person, he shall, on demand, provide the details of
\nsuch files, passwords of such files and explanation for codes.
\nused, where necessary, for access and any other information
\nwhich is required for such access along with a sample copy in
\nprint form of the information stored in such files.
\nRecords to be maintained by owner or operator of godown or
\nwarehouse and transporters.
\n1.
\n2.
\n3.
\n4.
\nEvery person required to maintain records and accounts in
\naccordance with the provisions of sub-<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nand goods stored in transit by him along with the Goods
\nand Services Tax Identification Number of the registered
\nconsigner and consignee for each of his branches.
\nevery owner or operator of a warehouse or godown shall
\nmaintain books of accounts with respect to the period for
\nwhich particular goods remain in the warehouse, including
\nthe particulars relating to dispatch, movement, receipt and
\ndisposal of such goods.
\nThe owner or the operator of the godown shall store the goods in
\nsuch manner that they can be identified item-wise and owner-
\nwise and shall facilitate any physical verification or inspection by
\nthe proper officer on demand.
\nTax Invoice and other such instruments in GST
\nGoods
\nThe time for issuing invoice is depend on the supply of goods or service.
\nA registered person supplying taxable goods shall, before or at the time of
\nremoval of goods (where supply involves movement of goods) or delivery or
\nmaking available thereof to<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nRefund voucher in case of refund under
\nRule 51
\nPayment voucher in case of payment of invoice under Rule 52
\nDebit and Credit Note in case of rate difference or discount if any under
\nRule 53
\nInput service distributor invoice for ISD Distribution under Rule 54
\n20
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nDelivery Challan in case of Job work\/ Sale on approval basis under Rule 55
\nPoints to be noted.
\nAll the records required to be maintained can be preserved in electronic
\nform.
\nIf the records are not kept as per requirement then provisions of penalty.
\nand offences may become applicable.
\nThis Section mandates the upkeep and maintenance of records, at the
\nplace(s) of business, in electronic or other forms.
\nFurnishing of an audited statement of accounts and reconciliation
\nstatement is also contemplated for persons having turnovers exceeding the
\nprescribed limit.
\nThere is no relaxation <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nor services received for the execution of works contract
\nDescription, value and quantity (wherever applicable) of goods
\nGuidance Note on GST Audit
\n21
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nor services utilized in the execution of works contract
\nThe details of payment received in respect of each works
\ncontract and
\nThe names and addresses of suppliers from whom he has
\nreceived goods or services
\nAccounts and records to be maintained by Agents:
\nParticulars of authorization received by him from each principal
\nto receive or supply goods or services on behalf of such principal
\nseparately
\nParticulars including description, value and quantity (wherever
\napplicable) of goods or services received & Supplied on behalf of
\nevery principal
\nDetails of accounts furnished to every principal and
\nTax paid on receipts or on supply of goods or services effected
\non behalf of every principal.
\nGodown and warehouse owner or operators, and transporters
\nTra<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nrequired
\nCheck documents for principle place of business of each state
\nspecific registration
\n22
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nCheck whether all documents of respective states are kept at
\nrespective place or not
\nMultiple site in same or different states
\nCheck whether state specific registration is mandatory or not
\nCheck whether all documents of all sites in operation are kept
\nat principle place of business
\nPhysical copies of the documents
\nCheck whether all copies of invoices on which ITC is claimed is
\navailable or not
\nCheck whether all copies of sales invoices are available or not
\nCheck whether Advance voucher, payment voucher, refund
\nvoucher are prepared or not
\nTime period preserving the records
\nRecords are required to be maintained for 72 months from the
\ndue date of filing Annual Return
\nCheck whether necessary mechanism is available to preserve
\nthe rec<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nOF COST
\nINSTITUTE OF
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nCheck the documentary evidences for use of goods for provision
\nof taxable output services
\nOutward Supplies
\nSupply as defined in section 7, sub-section 1, “all forms of supply of goods
\nor services or both such as sale, transfer, barter, exchange, license, rental,
\nlease or disposal made or agreed to be made for a consideration by a person
\nin the course or furtherance of business;”
\nCheck list for verification of the outward supplies documents in GST
\nAll the elements of Rule 46 have to be verified for each and every document.
\nNumber of HSN Codes digits have been mentioned on the tax invoices as
\nper Notification No 12\/2017 – Central Tax Dated 28th June 2017.
\nVerify for any cancellation of tax invoices, as per the current provisions of
\nGST, there is no provision for cancellation of tax invoices except as per the
\nprovisions of Section 67, Sub-section 12. If there are any cancellation of tax
\ninvoic<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nbe classified into a different item and which could result in short recovery
\nof the tax and which attracts penal provisions as per section 73 and section
\n74. The rate of interest and penalty are applicable as per the provisions of
\nSection 51 and Notification No 13 – Central Tax dated 28th June 2017.
\nVerify if there is any reverse charge applicable on the outward supplies? If
\nyes,
\n24
\nVerify if there are marked separately on the invoice?
\nAre they accounted in a separate ledger?
\nIs there a separate serial number for such tax invoices or who
\nthey are being identified and tracked?
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nVerify if there are any outward supplies on which taxes are levied over and
\nabove MRP? If yes report them in the audit report and also in the audit
\nworkings and findings.
\nConfirm that for each and every outward supply there is a corresponding
\ndo<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nas per the provisions of Section 34 of the CGST Act as it is applicable only
\nin case outward supplies for which the tax invoice issued by the taxpayers
\nand not for the purchase returns.
\nIn case of zero rated supplies, verify if the exports are happening on the
\npayment of duties or without payment of duties.
\nVerify if the bond is executed in case of without payment of duties and ITC
\nis not claimed as per the process.
\nVerify if there are any invoices which are issued before the execution of the
\nbond and exported without payment of duties, report the same in the audit
\nreport and record it in the audit observations and findings documents.
\nVerify if any input tax credit is taken on the inward supplies related to
\nexports without payment of duties, if found report the same in the audit
\nreport and record it in the audit observations and findings documents.
\nVerify if there any refund claims on the exports without payment of duties
\nfor exports if any are pending, report the<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nVerify if there are any Bill To and Ship To transactions, in these transactions,
\nthe place of supply will the location of the principal supplier who has passed
\non the lead and not of the party to whom the goods are being shipped.
\nVerify if there are any export of services, if yes, validate for each and every
\ncategory of transaction or each and every transaction satisfies all the
\nconditions specified in the provisions of Section 2, sub-section 6. If any of
\nthe conditions is not met, the same should be qualified and reported in the
\naudit report.
\nVerify if any taxes are paid on a provisional basis as the taxpayer is not
\nable to assess the taxable value or correct classification or tax rate etc.,, If
\nany such transactions are there, the same should be reported in the Audit
\nreport and also verify the procedures to be followed as per the provisions
\nare followed correctly and such observations if any should be part of the
\naudit report.
\nVerify if the tax <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nXXXX
\nXXXX
\nReverse Charge – Section 9 (4)
\nXXXX
\nXXXX
\nInter Branch Transfers
\nXXXX
\nXXXX
\nJob Work – goods not returned within stipulated time
\n–
\n\u00c2\u00b7 Section 143
\nXXXX
\nXXXX
\nGST on Samples
\nXXXX
\nXXXX
\n26
\nGuidance Note on GST Audit
\nTax Research Department, The Institute of Cost Accountants of India
\nF COST
\nACCOUNT
\nM
\nGST collected on the late fee, delayed payments
\nXXXX
\nXXXX
\nSales Returns – Credit Notes Issued
\nXXXX
\nXXXX
\nCredit Notes issued for other reasons to customers
\nXXXX
\nXXXX
\nSale of assets
\nXXXX
\nXXXX
\nPurchase Returns
\nXXXX
\nXXXX
\nTransfer to Agents – where sales are not confirmed by
\n–
\nagent Schedule 1
\nXXXX
\nXXXX
\nGST liability on the reversal of ITC if supplier not paid
\nwithin 180 days
\nXXXX
\nXXXX
\nGST paid on asset transferred to their GSTIN'S
\nXXXX
\nXXXX
\nGST collected on employee Benefits – Schedule 1
\nXXXX
\nXXXX
\nGST on assets on which input tax credit is claimed and
\ngiven as free – Schedule 1
\nXXXX
\nXXXX
\nGST collected on Reimbursements from employees
\nXXXX
\nXXXX
\nTotal GST Liability to be reduced<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nGST Audit
\nValuation is an important aspect of the GST Audit. Valuation determines
\nwhat value the taxes are being paid. In case of if the buyer and seller are
\nnot related, then the transaction value is to be considered for the valuation
\npurpose basis on provisions of Section 15 of the CGST Act.
\nSimilarly, in case of related parties, then the valuation is to be the
\ndetermined basis of provisions of Rule 28, 30 & 31.
\nAs per provisions of Rule 28, in case of related parties, the transaction has
\nto be valued on the basis of the open market value but the major difference
\nunder GST is the definition of the related party itself. As per GST provisions,
\none major difference is, a transaction is said to be related party transaction
\nif \u201cany person directly or indirectly owns, controls or holds twenty-five per
\ncent. or more of the outstanding voting stock or shares of both of them;”
\nand as per the provisions of the Companies Act it is d<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nThere is a difference between the related party and distinct person in GST,
\nas a result there is a difference in the valuation process also, the verification
\nin such cases had to be done carefully and qualified accordingly.
\nAll transactions related to related party transactions have to be verified
\n28
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nbasis on the above said provisions and if they are not as per the provisions,
\nthe same reported in the audit report and record it in the audit observations
\nand findings documents.
\nTransactions with consideration\/without consideration
\nUnder GST, there are some transactions where they are still treated
\nas supply even though there is no receipt of consideration on such
\ntransactions. Transactions which are required to be qualified as supply are
\ngiven specifically in the Schedule I of the CGST Act.
\nAll transactions where there is no consideration received should be identified
\nacco<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nis not levied and are falling under the provision of supply and without
\nconsideration, the same should be reported in the Audit report.
\nReconciliation Statements
\nMany reconciliation statements have to be provided and verified with the
\nfinancial statements as they help in identifying if all the transactions are
\nrecorded by the taxpayer correctly and taxes are levied on them accordingly.
\nDifference in tax liability – consideration is received
\nParticulars
\nTotal GST paid as per the financial
\nstatement
\nGST liability as per GST Audit Report
\nDifference
\nTax Base CGST SGST
\nIGST
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX
\nXXXXX XXXXX XXXXX XXXXX
\nIn the above reconciliation statement there are differences, list all
\ntransactions which have caused the differences. It has to be prepared for
\neach tax amount
\nIf the taxpayer is dealing with multiple tax rates within the same tax, then
\nthe statements have to be prepared at the tax rate level as it provides a
\ncomplete <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nInput Tax Credit
\nCOST
\nE INSTITUTE OF CO
\nACCOUNT
\nNTANTS OF INDIA
\nA. Important Definitions-
\n“Input Tax Credit”
\nAs per Sec. 2(63) of CGST Act, 2017, \u201cinput tax credit\u201d means the credit of
\n“input tax”;
\n“Input Tax”
\nAs per Sec. 2(62) of CGST Act, 2017, \u201cinput tax\u201d in relation to a registered
\nperson, means the central tax, State tax, integrated tax or Union territory
\ntax charged on any supply of goods or services or both made to him and
\nincludes\u20ac\u2022
\n(a) the integrated goods and services tax charged on import of goods;
\nthe tax payable under the provisions of sub-sections (3) and (4) of
\nsection 9;
\n(b)
\n(c)
\n(d)
\n(e)
\n“Input”
\nthe tax payable under the provisions of sub-sections (3) and (4) of
\nsection 5 of the Integrated Goods and Services Tax Act;
\nthe tax payable under the provisions of sub-sections (3) and (4) of
\nsection 9 of the respective State Goods and Services Tax Act; or
\nthe tax payable under the provisio<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nor intended to be used in the course or furtherance of his business and the
\nGuidance Note on GST Audit
\n31
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nsaid amount shall be credited to the electronic credit ledger of such person.
\nC. Conditions and Restrictions for taking ITC
\nAs per Sec. 16(2), no registered person shall be entitled to the credit of
\nany input tax in respect of any supply of goods or services or both to him
\nunless,\u20ac\u2022
\na. he is in possession of a tax invoice or debit note issued by a
\nsupplier registered under this Act, or such other taxpaying
\ndocuments as may be prescribed;
\nb.
\n\u00d9\u2020
\nd.
\nhe has received the goods or services or both.
\nExplanation. For the purposes of this clause, it shall be deemed
\nthat the registered person has received the goods where the goods
\nare delivered by the supplier to a recipient or any other person
\non the direction of such registered person, whether acting as an\n<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nthereon, in such manner as may be prescribed:
\nProvided also that the recipient shall be entitled to avail of the credit of
\ninput taxon payment made by him of the amount towards the value of
\nsupply of goods or services or both along with tax payable thereon.
\nAs per Sec. 16(3) of CGST Act, 2017, Where the registered person has
\nclaimed depreciation on the tax component of the cost of capital goods and
\nplant and machinery under the provisions of the Income-tax Act, 1961, the
\ninput tax credit on the said tax component shall not be allowed.
\nRule 36 of CGST Rules, 2017
\nDocumentary requirements and conditions for claiming input tax credit.-
\n32
\n1.
\nThe input tax credit shall be availed by a registered person,
\nincluding the Input Service Distributor, on the basis of any of the
\nGuidance Note on GST Audit
\nCOST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\n2.
\n3.
\nfollowing documents, namely,-
\na. an invoice issu<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nrespect of any tax that has been paid in pursuance of any order
\nwhere any demand has been confirmed on account of any fraud,
\nwillful misstatement or suppression of facts.
\nRule 37 of CGST Rules, 2017
\nReversal of input tax credit in the case of non-payment of consideration.-
\n1. A registered person, who has availed of input tax credit on any
\ninward supply of goods or services or both, but fails to pay to
\nthe supplier thereof, the value of such supply along with the tax
\npayable thereon, within the time limit specified in the second
\nproviso to subsection (2) of section 16, shall furnish the details
\nof such supply, the amount of value not paid and the amount
\nof input tax credit availed of proportionate to such amount not
\npaid to the supplier in FORM GSTR-2 for the month immediately
\nfollowing the period of one hundred and eighty days from the
\ndate of the issue of the invoice:
\n2.
\nProvided that the value of supplies made without consideration
\nas specified in Schedule I of the sa<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nand CGST Rules, 2017, in order to take Input Tax Credit:-
\n34
\n1.
\n2.
\n3.
\n4.
\n5.
\n6.
\n7.
\n8.
\n9.
\n10.
\n11.
\n12.
\nPossession of a tax invoice or debit note issued by a supplier
\nregistered under CGST Act, 2017 read with Rule 46 of CGST
\nRules, 2017.
\nReceipt of the goods or services or both
\nThe tax charged in respect of such supply has been actually paid
\nto the Government subject to provisions of matching concepts.
\nThe relevant information, as contained in the document is
\nfurnished in the Form GSTR-2 by Input Tax Credit receiver.
\nThe return is furnished under Sec. 39 of CGST Act, 2017.
\nIn case the goods against an invoice are received in lots or
\ninstallments, credit can be taken upon receipt of the last lot or
\ninstallment.
\nPayment is made within 180 days from the date of issue of invoice,
\nexcept in case of tax is payable under RCM.
\nIf payment is not made within 180 days from date of invoice then
\nthe amount of value not paid and proportionate input tax credit
\navailed on such unpaid amount<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAs per Sec. 16(4) of CGST Act, 2017, A registered person shall not be
\nentitled to take input tax credit in respect of any invoice or debit note for
\nsupply of goods or services or both after the due date of furnishing of the
\nreturn under section 39 for the month of September following the end of
\nfinancial year to which such invoice or invoice relating to such debit note
\npertains or furnishing of them relevant annual return, whichever is earlier.
\nThus, time limit for availing the ITC is due date of furnishing of the return
\nunder Section 39 for the month of September following the end of Financial
\nYear or furnishing of the relevant annual Return, whichever is earlier.
\nE. Documentary evidences and conditions for availing the Input Tax
\nCredit
\nInput Tax Credit can be availed on the basis of following documents namely,
\n:-
\nTax Invoice
\nDebit Note
\nBill of Entry
\nISD Invoice
\nISD Credit note
\nTax invoice raised under RCM and Proof of payment of tax
\nInput Tax Cred<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\ncommissioning of plant and
\nmachinery which includes
\napparatus,
\nequipment,
\nmachinery, fixed to earth
\nby foundation or structural
\nsupport that used for making
\noutward supply and includes
\nsuch foundation and structural
\nsupports. (if not capitalized)
\n\u2022
\n\u2022
\nInadmissible
\nGoods which are capitalized in books of
\naccounts
\nGoods used for effecting
\nsupplies
\nexempt
\nGoods lost, stolen, destroyed, written
\noff, gifted, provided free of cost,
\nGoods used for construction of an
\nimmovable property (land, building
\nor any other civil structure) on own
\naccount
\nfood and beverages
\nMotor Vehicles
\nGoods used for personal consumption
\nGoods used for construction of land,
\nbuilding or any other civil structure,
\ntelecommunication tower, pipeline laid
\noutside the factory.
\nTax paid after demand made by
\ndepartment alleging suppression facts,
\nfraud, willful misstatement etc.
\nTax paid on detention, seizure on goods
\nand conveyance in transit.
\nTax paid on goods or conveyance
\nconfiscated.
\n36
\nGuidance Note on GST<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\non his own account
\nGoods used for personal consumption
\nTax paid after demand made by
\ndepartment alleging suppression facts,
\nfraud, willful misstatement etc.
\nTax paid on detention, seizure on goods
\nand conveyance in transit.
\nTax paid on goods or conveyance
\nconfiscated.
\nGuidance Note on GST Audit
\n37
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nAdmissible
\nInput Services-
\nAny service used or intended
\nto be used by a supplier in
\nthe course or furtherance of
\nbusiness
\nHousekeeping, security,
\nMarketing, sales Promotion
\nProfessional consultancy
\nTechnical Consultancy
\nBanking and Financial
\nTransportation both inward
\nand outward
\nCredit Rating
\nWorks Contract services used
\nfor supply of works contract
\nservices
\n.
\n\u2022
\n\u2022
\nInadmissible
\nIn respect of Motor vehicles and other
\nconveyance except used for following
\neffecting taxable supplies-
\nfurther supply of such vehicles or
\nconveyances; or
\ntransportation of passengers
\nimparting<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\ndemand made by department alleging
\nsuppression facts, fraud, willful
\nmisstatement etc. under Sec. 74.
\nTax paid on detention, seizure on goods
\nand conveyance in transit under Sec.
\n129.
\nTax paid on goods or conveyance
\nconfiscated under Sec. 130.
\n38
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nG. Input Tax Credit on goods and services partly used for business
\npurpose and partly used for Other Purpose, or partly used for effecting
\ntaxable supplies including zero rated supplies and partly for effecting
\nexempt supplies
\nAs per Sec. 17(1) of CGST Act, 2017, where the goods or services or both
\nare used by the registered person partly for the purpose of any business
\nand partly for other purposes, the amount of credit shall be restricted to
\nso much of the input tax as is attributable to the purposes of his business.
\nAs per Sec. 17(2) of CGST Act, 2017, where the goods or services or both are
\nused by the registered person partly <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nattributable to the purposes of his business shall be allowed.
\n2.
\n3.
\n4.
\n5.
\n6.
\nIf goods or services or both are used partly for effecting taxable
\nsupplies including zero-rated supplies and partly for effecting
\nexempt supplies: Credit of the input tax attributable to taxable
\nsupplies including zero-rated supplies shall be allowed.
\nNo credit of inputs, input services used exclusively for purpose
\nother than business or effecting exempt supplies
\nNo credit of in-eligible inputs and input services as listed in Sec.
\n17(5) of CGST Act, 2017.
\nEntire credit on inputs and input services used exclusively in or
\nin relation to taxable supplies including zero rated supplies is
\nadmissible.
\nOut of common credit, credit attributable to exempt supplies
\nshall be reversed, calculated as per below:-
\nGuidance Note on GST Audit
\n39
\nOF COST
\nACCOU
\n7.
\n8.
\n9.
\n10.
\n11.
\n12.
\nTax Research Department, The Institute of Cost Accountants of India
\nInput Tax Credit to be r<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nHowever, after final calculation of amount of input tax credit
\nneeds to be reversed is less than amount of input tax credit
\nreversed during the respective tax period then, the such amount
\nof input tax credit reversed in excess shall be claimed as credit
\nby registered person in his return for the month not later than
\nthe month of September following the end of the financial year to
\nwhich such credit relates.
\nH. Manner of reversal of input tax credit on capital goods which are
\nused partly for effecting taxable supplies including zero rated supplies
\nor partly for business purpose and partly for other purpose is given in
\nRule 43 of CGST Rules, 2017.
\na.
\nb.
\nThe Amount of input tax in respect of capital goods used
\nexclusively for non-business or used exclusively for effecting
\nexempt supplies shall not be allowed and shall not be credited to
\nhis electronic credit ledger.
\nThe entire amount of input tax in respect of capital goods used
\nexclusive for effecting taxable supplie<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nperiod on common capital goods during their useful life shall be
\ncalculated as Common Input Tax Credit\/60.
\nThe amount of input tax credit attributable to exempt supplies
\nshall be calculated as Total of input tax on common capital goods
\nattributable to tax period * Exempt Supply during the tax period\/
\nTotal Turnover during the tax period.
\nThe amount of input tax credit attributable to exempt supplies
\nshall be added to output liability.
\nFormula of calculation of input tax credit to be reversed on common
\ncapital goods:-
\nUseful life of capital goods shall be taken as five years.
\nTc= Input Tax Credit attributable to common capital goods
\nTm= Input Tax Credit attributable to tax period= Tc\/60.
\nTr= Sum total of Tm i.e. input tax credit attributable to tax period on all
\ncommon capital goods.
\nTe= Tr*E\/F
\nE= Exempt supplies during the tax period
\nF= Total Turnover during the tax period.
\nDetermination of Value of exempt supply and value of total turnover
\nfor <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nin case of a banking company or a financial institution including
\na non-banking
\nfinancial company, engaged in supplying services by way of
\naccepting deposits,
\nextending loans or advances;
\nthe value of supply of services by way of transportation of goods
\nby a vessel from the customs station of clearance in India to a
\nplace outside India.
\nTotal Turnover:
\n“Turnover in State\u201d or \u201cturnover in Union territory\u201d includes:-
\nThe aggregate value of all taxable supplies made
\nThe aggregate exempt supplies made
\nThe aggregate value of exports of goods or services or both
\n\u201cTurnover in State\u201d or \u201cturnover in Union territory\u201d excludes:
\nThe value of inward supplies on which tax is payable by a
\nperson on reverse charge basis
\nCentral tax, State tax, Union territory tax, integrated tax and
\ncess;
\nThe amount of any duty or tax levied under entry 84 of List I
\nof the Seventh Schedule to the Constitution and entry 51 and
\n54 of List II of the said Schedule; (i.e. dut<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\ntwo options:-
\ni.
\nii.
\nReverse the input tax credit attributable to exempt supplies
\nas per Rule 42 of CGST Rules, 2017 or
\nAvail 50% of eligible input tax credit that month and rest
\nshall lapse.
\nNo credit of tax paid on inputs and input services that are used
\nfor non-business purpose
\nNo credit of inadmissible inputs and input services
\nThe option once exercised shall not be withdrawn during the
\nremaining part of the financial year.
\nRestriction of 50% shall not apply to the tax paid on supplies
\nmade by one registered person to another registered person
\nhaving the same Permanent Account Number.
\nf. Option once exercised shall not be withdrawn during the
\nremaining part of financial year.
\nSummary of provisions of input tax credit in case of special
\ncircumstances :-
\nSr.
\nNo.
\n1
\n2
\n3
\nProvision
\nApplication for registration
\nwithin 30 days from the
\ndate of becoming liable for
\nregistration
\nVoluntary registration
\nA person who ceases to pay
\ntax u<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nInputs held in stock Inputs contained in Semi-Finished\/
\nFinished goods held in stock Capital goods, which are
\nExclusively used for such supply
\nFrom the date from which such supply become taxable.
\ncase of sale\/merger\/ The input tax credit can be transferred to such
\ndemerger\/amalgamation\/sold\/merged\/demerged\/amalgamated\/leased
\ntransferred business in the manner prescribed.
\nlease or transfer of the business
\nwith the specific provision for
\ntransfer of liabilities
\nRegistered taxable person
\navailing input tax credit
\nswitches over as a taxable
\nperson
\nor
\nHe shall pay an amount, by way of debit in the
\nelectronic credit or cash ledger, equivalent to the
\ncredit of input tax in respect of :-
\nInputs held in stock Inputs contained in Semi-
\nFinished\/Finished goods held in stock Capital
\ngoods (Credit can be reduced by prescribed percentage
\npoints)
\nCheck Points:
\n1.
\n2.
\n\u00e0\u00a4\u00a4\u00e0\u00a4\u201a \u00e0\u00a4\u00b2\u00e0\u00a4\u201a \u00e0\u00a4\u00b5\u00e0\u00a4\u201a
\n3.
\n4.
\n5.
\n6.
\n7.
\n8.
\n9.
\n10.
\n11.
\n12.
\nEligibility of input tax credit on<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\ninput tax credit paid on taxes paid on reverse charge basis.
\nEligibility of input tax credit carried forward through Tran-1 form.
\n44
\nGuidance Note on GST Audit
\nCOST
\nTHE INSTITUTE OF CO
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nReverse Charge Mechanism
\nNTANTS OF INDIA
\nReverse Charge under GST
\nIn the normal course the tax is payable by the supplier of goods and \/
\nor services. However, provisions have been made in the GST Act that in
\ncertain cases, the tax liability is shifted on the recipient of goods and \/ or
\nservices. The advantages of such provisions are that the Government gets
\nmaximum revenue from comparatively lesser number of tax payers. The
\nrelevant provisions are as under \u2013
\n–
\nThus, criteria for Reverse Charge is twofold
\n(a)
\n(b)
\nSpecified categories of supplies of goods and services.
\nPurchase of goods and \/ or services from Unregistered suppliers.
\n(a) Reverse Charge on Goods and Services –
\ni) Reverse Char<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nselling agent.
\nAny
\nRegistered
\nperson.
\n45
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nDefinition of Agriculturist –
\nSection 2(7) of the CGST Act defines \u201cagriculturist\u201d means an individual or
\na Hindu Undivided Family who undertakes cultivation of land-
\n(a) by own labour, or
\n(b)
\nby the labour of family, or
\n(c)
\nby servants on wages payable in cash or kind or by hired labour
\nunder personal supervision or the personal supervision of any
\nmember of the family;
\nThus, any registered person purchasing these specified goods from the
\nspecified suppliers is required to pay the tax on Reverse Charge.
\nCheckpoints :
\n1.
\nVerify purchases of goods.
\n2.
\nVerify accounting of goods.
\n3.
\nVerify payment to supplier of goods.
\n4.
\na)
\nDate of receipt of goods.
\nb)
\n5.
\n6.
\nVerify payment of tax as per the provisions of Section 12(3) of the
\nCGST Act, at the earliest of the following dates –
\nc)
\nDate of payment as entered in the books of account of the
\nrecipie<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nconsultancy or assistance in any branch of law, in any manner
\nand includes representational Services before any court, tribunal
\nor authority.
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\n(d) Services supplied by an arbitral tribunal to a business entity.
\nSponsorship services provided to any-body corporate
\npartnership firm.
\n(e)
\n(f)
\n(g)
\n(h)
\n(i)
\n(i)
\n(k)
\n(1)
\nor
\nServices supplied by the Central Government, State Government,
\nUnion Territory or local authority to business entity (except
\nPostal and courier service, aircraft service, transport of goods or
\npassengers)
\nServices supplied by the Central Government, State Government,
\nUnion Territory or local authority by way of renting of immovable
\nproperty to a person registered under the CGST Act.
\nServices supplied by a director of a company or a body corporate
\nto the company or body corporate.
\nServices supplied by an insurance agent to any person carrying
\non<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nServices. Transport \/ Freight Charges are exempt from tax, but
\nGoods Transport Agency services are taxable.
\nVerify the process \/ system of determining liability under RCM.
\nConfirm that all vendors supplying these specified services are
\ncaptured in the working.
\nCheck appropriate tax rate has been applied for payment of tax.
\nCheck the payment is made by debiting the amount Cash Ledger.
\nCheck the tax is paid as per the provisions of Section 13(3) of the
\nCGST act, as earlier of the following dates –
\na.
\nDate of payment as entered in the books of account of the
\nGuidance Note on GST Audit
\n47
\nOF COST
\nINSTITUTE OF
\nACCOUN
\n6.
\n7.
\n8.
\nb.
\nTax Research Department, The Institute of Cost Accountants of India
\nrecipient or the date on which the payment is debited in his
\nbook of account, whichever is earlier, or
\nThe date immediately following sixty days from the date of
\nissue of invoice or any other document, by whatever name
\ncalled, in lieu thereof by the <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nservices as per Notification under CGST referred above. In addition, there
\nis an entry as under \u2013
\nS1.
\nNo.
\nCategory of supply of
\nservices
\n1 Any service supplied Any
\nby any person who is
\nlocated in a non-taxable
\nterritory to any person
\nother than non-taxable
\nperson.
\nSupplier of
\nservice
\nRecipient of service
\nAny person located in
\ntaxable territory other
\nnon-taxable
\nperson
\nlocated in a non-
\ntaxable territory.
\nthan
\nonline recipient.
\nIn view of this provision, when services are imported by any registered
\nperson, he is liable to pay the tax under Reverse Charge.
\nSection 7(4) of the IGST Act provides that – Supply of services imported
\ninto the territory of India shall be treated to be a supply of services in the
\ncourse of inter-state trade or Commerce. In view of these provision, in case
\nof import of services, the recipient has to pay IGST tax.
\nCheckpoints :
\n48
\n1. Verify all foreign exchange remittances pertaining to import <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nin the following categories of services, the tax on intra-State supplies shall
\nbe paid by the electronic commerce operator –
\n(i)
\n(ii)
\nservices by way of transportation of passengers by a radio -taxi,
\nmotor cab, maxicab and motor cycle ;
\nservices by way of providing accommodation in hotels, inns, guest
\nhouses, clubs, campsites or other commercial places meant
\nfor residential or lodging purposes, except where the person
\nsupplying such service through electronic commerce operator is
\nliable for registration under sub-section (1) of section 22 of the
\nsaid Central Goods and Services Tax Act.
\nv) Services of supply by person in non-taxable territory \u2013
\nSection 14 of IGST Act makes special provision for payment of tax by supplier
\nof online database access and retrieval services (OIDAR). It provides that
\nif the supplier of service is located in non-taxable territory and received
\nby non-taxable online recipient, the primary resp<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\npaid on RCM in respect of purchase of goods \/services from unregistered
\npersons.
\nNotification No.8\/2017 (Central Tax) Rate dt. 28.06.2017 exempted
\npurchase of goods and services from unregistered persons upto a value
\nof Rs.5000\/- per day. Further, as per Notification No. 38\/2017-Central tax
\n(Rate)dt. 13.10.2017 and Notification No. 32\/2017 Integrated Tax (Rate)
\ndt. 13.10.2017, all categories of registered persons are exempted from
\nthese provisions without any monetary limit. This Exemption is in force till
\n30th June, 2018.
\nIn view of this status, it should be seen what would the status of these
\nprovisions after 30th June, 2018.
\nCheckpoints –
\n1.
\n2.
\n3.
\n35
\n4.
\n5.
\n6.
\nVerify that the tax is paid upto 13.10.2017 in all eligible cases
\nwhere the purchase of goods and services exceed the value of
\n5000\/- per day.
\nEnsure that there is a mechanism ready to address the situation
\nif these provisions are introduced after 30th June, 2018.
\nVerify that invoice is raised for payment of tax under r<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n(a)
\n(b)
\nagricultural produce;
\ngoods, where consideration charged for the transportation
\nof goods on a consignment transported in a single carriage
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\n(c)
\n(d)
\ndoes not exceed one thousand five hundred rupees;
\ngoods, where consideration charged for transportation
\nof all such goods for a single consignee does not exceed
\nrupees seven hundred and fifty;
\nmilk, salt and food grain including flour, pulses and rice;
\n(e) organic manure;
\n(f)
\n(g)
\nnewspaper or magazines registered with the Registrar of
\nNewspapers;
\nrelief materials meant for victims of natural or man-made
\ndisasters, calamities, accidents or mishap; or
\n(h) defence or military equipments.
\n3. Services provided by-
\n4.
\n(a)
\n(b)
\nan arbitral tribunal to \u2013
\n(i) any person other than a business entity; or
\n(ii) a business entity with aggregate turnover up
\nto twenty lakh rupees (ten lakh rupees in the
\ncase of special ca<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nSports Board, School Games Federation of India, All India
\nSports Council for the Deaf, Paralympic Committee of India
\nGuidance Note on GST Audit
\n51
\nINSTITUTE OF
\nOF COST
\nACCOUN
\n(c)
\n(d)
\n(e)
\nTax Research Department, The Institute of Cost Accountants of India
\nor Special Olympics Bharat;
\nby the Central Civil Services Cultural and Sports Board;
\nas part of national games, by the Indian Olympic
\nAssociation; or
\nunder the Panchayat Yuva Kreeda Aur Khel Abhiyan
\nScheme.
\nReturn Filing
\nReturns under GST
\nThe basic features of the return mechanism in GST includes electronic
\nfiling of returns, uploading of invoice level information, auto-population of
\ninformation relating to input tax credit from returns of supplier to that of
\nrecipient, invoice level information matching and auto-reversal of input tax
\ncredit in case of mismatch. The returns mechanism is designed to assist
\nthe taxpayer to file returns and avail ITC.
\nWhat is GST Return?
\nA return is a document containing details of<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAs per the CGST Act (Note: subject to change by Notifications\/orders)
\nDue Date
\nReturn
\nParticulars
\nInterval
\nForm
\nGSTR-1
\nDetails of outward supplies of
\ntaxable goods and\/or services
\neffected
\nMonthly*
\n10th of the next
\nmonth
\nGSTR-9
\nAnnual Return
\nAnnually
\n31st March of next
\nfinancial year
\n20th of the next
\nGSTR-3B
\nProvisional return for every month Monthly
\nmonth
\n1.2. A dealer opting for composition scheme:
\nA composition dealer will enjoy the benefits of lesser returns & compliance along
\nwith payment of taxes at nominal rates. A composition dealer will file only 2 returns:
\nReturn
\nForm
\nGSTR-4
\nParticulars
\nInterval
\nDue Date
\nReturn for compounding Quarterly
\ntaxable person
\n18th of the month
\nsucceeding quarter**
\nGSTR-9A
\nAnnual Return
\n1.3. Returns to be filed by certain specific registered dealers:
\nMonthly
\n31st March of next
\nfinancial year
\nReturn
\nParticulars
\nInterval
\nDue Date
\nForm
\nReturn for Non-Resident
\nGSTR-5
\nMonthly
\nforeign taxable person
\n20th<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\na quarterly basis.
\nOther Registered persons having aggregate turnover of more than Rs.1.5
\nCrore shall furnish these returns on a monthly basis.
\nRevision of Returns:
\nThe mechanism of filing of revised returns for any correction of errors\/
\nomissions has been done away with. The rectification of errors\/omissions is
\nallowed in the return for subsequent month(s). However, no rectification is
\nallowed after furnishing of the return for the month of September following
\nthe end of the financial year to which such details pertain, or furnishing of
\nthe relevant annual return, whichever is earlier.
\nInterest on Late GST Payment
\nAn interest of 18 percent is levied on the late payment of taxes under the
\nGST regime. The interest would be levied for the days for which tax was
\nnot paid after the due date. An interest of 24 percent is levied on the wrong
\navailment of ITC Credit.
\nPenalty for non-filing of GST Returns
\nIn case a taxpayer does not file his\/her return within the due dates, h<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nDetails of reimbursement excluded from the taxable value
\nGuidance Note on GST Audit
\nCOST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\n\u00e2\u02dc\u0090
\n\u00e3\u2026\u0081
\n\u00e3\u2026\u0081\u00e3\u2026\u0081
\n\u00e2\u02dc\u0090
\n\u00e3\u2026\u0081\u00e3\u2026\u0081
\nwhere registered person acted as pure agent
\nDetails of supply of capital goods or plant and machinery on
\nwhich input tax credit had been availed- Sale of capital goods\/
\nvehicle\/tools
\nDetails of Export sales with payment\/ without payment of IGST
\nDetails of Debit \/ Credit notes issued under GST
\nDetails of Non GST Purchases- Petrol\/Diesel
\nTreatment of canteen recovery \/telephone recovery \/ bus
\nrecovery from employee
\nWhether balance of Cenvat Credit is transferred properly
\nthrough TRAN 1
\nDetails of Education Cess\/Secondary Higher Education Cess \/
\nKrishi Kalyan Cess Carry forward in Trans-1
\nWhether interest has been paid correctly in case of delay in
\npayment of tax
\nWhether refunds are claimed properly Levy on Mixed supply or
\nComposite supply, Works Contract
\nValue of<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nLiability. If there is any balance tax liability the same is required to be paid
\nto the government.
\nThere are 3 ledgers prescribed by the government that is required to be
\nmaintained by every tax payer –
\n1. Electronic Tax Liability Ledger
\nThe electronic tax liability ledger shows the total tax liability of a registered
\nperson at any point of time. This detail can be accessed on the GST portal
\nof a registered tax payer
\n\u00e3\u2026\u0081\u00e3\u2026\u0081
\nAmount of Tax Payable
\nInterest, Late Fee
\nAmount of Tax Payable along with interest on account mismatch
\nof credit based on provisions of Section 29 or Section 29A or
\nSection 43C
\nAny other amount payable by the taxpayer or directed by the
\nboard on account of any proceedings carried out
\nTax Deducted at Source
\nTax Collection at Source
\nTax Payable under Reverse Charge
\nAmount payable by the department against any interest, refund,
\npenalty, late fee or any other determined under the proceedings
\nof the A<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nITC available to the branch for the amount of credit transferred
\nby ISD
\nITC allowed on input held in stock and the semi-finished or
\nfinished goods would be credited to electronic credit ledger if
\nthe taxpayer applies for registration within 30 days of becoming
\nliable to pay tax.
\nITC available on the input held in stock and semi-finished
\nor finished goods by a taxpayer in the composition scheme
\nconverting to a normal taxpayer shall be transferred to electronic
\ncredit ledger.
\nAll the payments under GST have to be made by either using the input
\ntax credit available in the electronic credit ledger or through the electronic
\ncash ledger.
\nUtilizing ITC for the fulfillment of Tax liability:
\nIGST: After the IGST input tax credit is used for payment of IGST then the remaining
\nITC can be used to pay tax liability under CGST and SGST.
\nCGST: The CGST input tax credit cannot be used to pay the SGST liability but can
\nbe used to pay the liability under CGST.
\nSGST: The SGST input tax credi<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nof any service when,-
\n(i)
\nthe supplier of service is located in India;
\n(ii)
\nthe recipient of service is located outside India;
\n(iii) the place of supply of service is outside India;
\n(iv)
\nthe payment for such service has been received by the supplier of
\nservice in convertible foreign exchange; and
\n(v)
\nthe supplier of service and the recipient of service are not
\nmerely establishments of a distinct person in accordance with
\nExplanation 1 in section 8;
\nZero Rated Supply
\nAs per the GST Act, export of goods and Services supplied to other countries
\nand supplies to a unit located in Special Economic Zone or to a developer of
\nSEZ are considered as Zero Rated. Concept of zero rated supplies of goods
\nand services has following objectives –
\n(a)
\n(b)
\n(c)
\nTaxes paid on supplies which are Zero Rated are refunded.
\nInput Tax credit on inputs, input services and capital goods used
\nin such supplies is allowed.
\nWhen the supplies are made without paym<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nDuty Drawback, Advance Authorization, EPCG obligation, MEIS
\netc.
\nShipping Bill details should be carefully entered in the GSTR-1
\nreturn. Otherwise, due to mis-matching, the refund will not be
\nprocessed.
\nIn case of Services, instead of paying tax on services, the service
\nprovider can claim Refund of Input Tax Credit as per the provisions
\nof Section 54 of CGST Act. Verify which option is exercised by the
\nassessee.
\nGuidance Note on GST Audit
\n59
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nImport of Goods and Services
\nImport of Goods and Services \u2013
\nDefinition of Import of Goods – Section 2(10) of the IGST Act, defines import
\nof goods as bringing goods into India from a place outside India.
\nImport of Services already dealt with under Reverse Charge Mechanism.
\nFor import of goods, instead of erstwhile CVD, IGST is charged and input
\ntax credit is allowed of such IGST paid.
\nCheckpoints –
\n1.\n<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nJob Work
\nCOST
\nE INSTITUTE OF CO
\nACCOUNT
\nNTANTS OF INDIA
\nJob Work
\nJob work means outsourcing of manufacturing activities for completion of
\na product beyond the premises of the principal manufacturer. The principal
\nmanufacturer gets the manufacturing facilities through job worker to meet
\nrequirement of customers. Job work is one of the most cost effective ways
\nto get the finished goods without any investment on plant and machinery
\nfor manufacturing process.
\nMeaning of Job work in Pre-GST era
\nIn pre-GST era Job Work was carried as per Notification No.214\/86-CE and
\ndefined \u201cJob Work\u201d means processing or working upon of raw materials or
\nsemi-finished goods supplied to the job worker, so as to complete a part or
\nof the process resulting in the manufacture or finishing of an article or any
\noperation which is essential for the aforesaid process.
\nMeaning of Job work under GST law
\nSection 2 (68) of CGST Act, 2017, \u201cJob work\u20ac<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nperson can send any inputs or capital goods, without payment of tax, to a
\nJob worker for job work and there subsequently send to another job worker
\nand likewise.
\nFacility of Job Working
\nAs per Section 143(1) of CGST Act, 2017, the inputs and capital goods can
\nbe sent for job work. As per Section 19 (7) of CGST Act, 2017, Mould and
\ndies, jigs and fixtures, or tools sent out to a job worker for job work.
\nGuidance Note on GST Audit
\n61
\nOF COST
\nACCOU
\nTax Research Department, The Institute of Cost Accountants of India
\nExplanation: For purposes of job work, input includes intermediate goods
\narising from any treatment or process carried out on the inputs by the
\nprincipal or the job worker.
\nConcessional Rate of 5% for Certain Job work
\nAs per Notification No. 11\/2017-CT (Rate) and No. 8\/2017-IT (Rate) both
\ndated 28-06-2017, effective from 01-07-2017 as amended from time to
\ntime.
\nServices by way of job work in relation to
\n1.
\n2.
\n3<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n13-10-2017].
\nManufacture of clay bricks falling under Tariff item 6901 00 10
\n[inserted w.e.f. 13-10-2017]
\nManufacturing of clay bricks falling under tariff item 6901 00 10
\n[inserted w.e.f. 13-10-2017]
\nManufacture of Handicraft goods as defined in Notification No.
\n32\/2017-CT dated 15-09-2017 [inserted w.e.f. 15-11-2017]
\nJob work of Manufacture of Umbrella
\nGST rate in respect of job work of manufacture of umbrella is 12% [(6%
\nCGST and 6% SGST)]w.e.f. 13.10.2017 Notification No. 11\/2017 CT (Rate)
\nand 8\/2017 IT (Rate)both dated 28.06.2017 amended we.f.13.10.2017
\nDocuments for movement of inputs and Capital goods to Job worker
\nRule 55 (1) (c) of CGST Rules, 2017 provides that for the purpose of
\ntransportation of goods for job work, the principal manufacturer may issue
\na delivery challan, serially numbered not exceeding sixteen characters, in
\none or multiple series, in lieu of invoice at the time of removal of goods for
\n62
\nGuidance Note on GST Audit
\nCOST
\nACCOUNT
\nTax Research Department, T<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\njob work:
\nIn terms of Section 19 (1) and 19(4) of CGST Act, the principal shall, subject
\nto such conditions and restrictions as may be prescribed, be allowed to
\ntake credit of input tax on inputs and capital goods sent to a job worker for
\njob work.
\nFurther, as per Section 19(2) and 19(5) of the CGST Act, the principal shall
\nbe entitled to take credit of input tax on inputs and capital goods, even
\nboth are directly sent to a job worker for job work without their being first
\nbrought to his place of business.
\nSection 19 (3) of CGST Act, where the inputs sent for job work are not
\nreceived back by the principal after completion of job work or otherwise or
\nare not supplied from the place of business of the job worker in accordance
\nwith clause (a) or clause (b) of sub-section (1) of section 143 within one year
\nof being sent out, it shall be deemed that such inputs had been supplied
\nby the principal to the job worker on the day when the said inputs were
\nsent out<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n(1)
\n(2)
\n(3)
\n–
\nThe inputs, semi \u2013 finished goods or capital goods shall be sent
\nto the job worker under the cover of a challan issued by the
\nprincipal, including where such goods are sent directly to a job-
\nworker.
\nThe challan issued by the principal to the job worker shall contain
\nthe details specified in rule 55.
\nThe details of challans in respect of goods dispatched to a job
\nworker or received from a job worker or sent from one job worker
\nto another during a quarter shall be included in FORM GST ITC-
\n04 furnished for that period on or before the twenty- fifth day of
\nthe month succeeding the said quarter.
\n(4) Where the inputs or capital goods are not returned to the principal
\nwithin the time stipulated in section 143, it shall be deemed that
\nsuch inputs or capital goods had been supplied by the principal
\nto the job worker on the day when the said inputs or capital
\ngoods were sent out and the said supply shall be declared in
\nFORM GSTR-1and the principal shall be liable to pa<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n64
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nFurther, the value of goods or services used by the job worker for carrying
\nout the job work will be included in the value of services supplied by the
\njob worker. After completion of job work, if the goods directly supplied
\nto the customers from the premises of the job worker, the value of such
\nsupply will be included in the aggregate turnover of the principal.
\nIt is to be noted that in the erstwhile Central Excise and Service Tax
\nprovisions where job work charges or supply of services are subject to
\nservice tax only, if the process carried by job worker does not amount to
\nmanufacture.
\nDocuments required for movement of goods for Job working :
\n(i) By the Principal to job worker \u2013
\n(ii)
\n(iii)
\n(iv)
\nThe principal shall move goods to job worker under cover of
\nchallan in terms of rules 45 and 55 of the CGST Rules. The
\nchallan meant for job work shal<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nand job worker 's name and address should be mentioned as
\nthe consignee, in terms of rule 46(o) of the CGST Rules. The
\nprincipal shall issue the challan under rule 45 of the CGST Rules
\nand send the same to the job worker directly. In case of import
\nof goods by the principal, after customs clearances of imported
\ngoods move directly from Customs station of import to premises
\nof job worker with a copy of Bill of Entry and the principal shall
\nissue challan under rule 45 of the CGST Rules and the challan
\nis to be sent directly to the job worker.
\nGuidance Note on GST Audit
\n65
\nINSTITUTE OF
\nOF COST
\nACCOU
\n(v)
\n(vi)
\nTax Research Department, The Institute of Cost Accountants of India
\nIn piecemeal return by the job worker:
\nAfter completion of job work, if the piecemeal quantities are
\nreturned by the job worker to another job worker or to the
\nprincipal, the challan issued originally by the principal cannot
\nbe endorsed and a fresh challan is require<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n66
\n\u00e3\u2026\u0081\u00e3\u2026\u0081
\nWhether unregistered job workers place is added in registration
\nas additional place of business.
\nIs GST on RCM paid for all job work charges for the job work
\ncharges paid to unregistered job worker upto 13.10.2017
\nWhether job work goods are received back within 180 days
\nwhich are disclosed in the Trans-1 against the stock lying at
\njob workers end.
\nIf the job work material is not received within specified time
\nlimit, whether GST is paid on the same by treating the same as
\nsupply.
\nValuation in case of job work for the related party
\nClearance of material directly from job workers premises
\nClosure of the delivery challans in time limit 1 year for RM and
\n3 years for capital goods.
\nProper filing of ITC-04 on due date
\nWhether Scrap generated at job workers premises is brought
\nback or cleared from the job worker premises on payment of
\nGST.
\nE way bill for the job work material sent through delivery
\nchallan
\nJob work register showing the outward, inward and bala<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nservices used by its branches. It distributes the tax paid, to such branches on
\na proportional basis by issuing an ISD invoice.
\nThe branches can have different GSTINs but must have the same PAN as
\nthat of ISD.
\nInsight on ISD under GST regime
\nPoint of Difference
\nGST Regime
\n1. Who can be Input An office of the supplier of goods and\/or services
\nservice distributor?
\n2.
\nDocument based Receives tax invoices issued by supplier towards
\non which credit can be receipt of input services
\ndistributed
\n3. How to distribute By issuing an ISD invoice for the purposes of
\ncredit?
\ndistributing to a supplier of taxable goods and\/or
\nservices having the same PAN as that of the office
\nreferred to above
\n4. Type of tax credit that The credit of CGST (SGST in State Acts) and\/or IGST
\ncan be distributed
\npaid on the said services
\n5. To whom can it be To supplier having the same PAN. i.e., credit cannot
\ndistributed?
\nbe distributed to outsourced manufacturers or service
\nproviders<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nof a relevant month to be filed in GSTR-6 by 13th* of the
\nsucceeding month by ISD.
\nThe recipient of the tax credit can view the tax credit so distributed
\nby ISD in GSTR-2A that is auto-populated and in turn, can claim
\nthe same by filing GSTR-2.
\nAn ISD need not file annual returns as ISD.
\nDistribution of Input Tax credit: The credit of tax paid under
\nreverse charge mechanism is not available for distribution to the
\nrecipients. So, the ISD has to utilize such credit only as a normal
\ntaxpayer.
\n1) The tax credit available against any specific input services
\nused entirely by one of the recipients can be allocated only
\nto that recipient for utilization of such credit and not
\nto other recipients.
\n2)
\nThe tax credit available against the input services
\nused commonly by more than one recipients of the ISD shall
\nbe allocated to those recipients on a proportionate basis
\nin the ratio of the turnover of all such recipients that are
\noperation<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAs per Section 20 of CGST Act, 2017 The Input Service Distributor shall
\ndistribute the credit of central tax as central tax or integrated tax and
\nintegrated tax as integrated tax or central tax, by way of issue of a document
\ncontaining the amount of input tax credit being distributed in such manner
\nas may be prescribed.
\n(1) ISD may distribute the credit in following manner
\n(2)
\nCredit of
\nCredit as
\nCGST
\nCGST (If Recipient is in Same
\nState)
\nIGST (If Recipient is in other
\nState)
\nIGST
\nIGST (If Recipient is in other
\nState)
\nCGST (If Recipient is in same
\nState)
\nThe Input Service Distributor may distribute the credit subject to
\nthe following conditions, namely: \u2014
\n–
\n(a) the credit can be distributed to the recipients of credit
\nagainst a document containing such details as may be
\nprescribed;
\n(b)
\n(c)
\nthe amount of the credit distributed shall not exceed the
\namount of credit available for distribution;
\nthe credit of tax paid on input services attributable to a
\nrecipient of credit shall be<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nthe credit of tax paid on input services attributable to all
\nrecipients of credit shall be distributed amongst such
\nrecipients and such distribution shall be pro rata on the
\nbasis of the turnover in a State or turnover in a Union
\nterritory of such recipient, during the relevant period, to
\nthe aggregate of the turnover of all recipients and which are
\noperational in the current year, during the said relevant
\nperiod. (In simple term If credit is attributable to more
\nthan one recipient, then credit shall be distributed on PRO
\nRATA basis of the turnover in a state of such recipient,
\nduring the relevant period, to the aggregate turnover of all
\nsuch recipient.)
\nProcedure for distribution of ITC by ISD [Rule 39]
\nRule 39 of CGST Rule. Procedure for distribution of input tax credit
\nby Input Service Distributor.- (1) An Input Service Distributor shall
\ndistribute input tax credit in the manner and subject to the following
\nconditions, namely,-<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n(e)
\n(f)
\nin making exempt supply, or are otherwise not registered for any
\nreason, shall be the amount, “C1”, to be calculated by applying
\nthe following formula
\nC1 = (t1\u00c3\u00b7T) \u00c3\u2014 C
\nwhere,
\n\u201cC\u201d is the amount of credit to be distributed,
\n“t1” is the turnover, as referred to in section 20, of person R1
\nduring the relevant period, and
\n“T” is the aggregate of the turnover, during the relevant period,
\nof all recipients to whom the input service is attributable in
\naccordance with the provisions of section 20;
\nthe input tax credit on account of integrated tax shall be
\ndistributed as input tax credit of integrated tax to every recipient;
\nthe input tax credit on account of central tax and State tax or
\nUnion territory tax shall-
\n(i)
\nIf recipient is in same state
\nUTGST respectively.
\n–
\nthen as CGST, SGST and
\n(g)
\n(h)
\n(i)
\n(j)
\n–
\n(ii) If recipient is in other state \u2013 then as IGST.
\nInput Service Distributor shall issue an Input Service Distributor
\ninvoice, as p<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n71
\nGuidance Note on GST Audit
\nOF COST
\nACCOU
\n(2)
\n(3)
\nTax Research Department, The Institute of Cost Accountants of India
\ndistributed in terms of clause (d), and the amount so apportioned
\nshall be-
\n(i)
\n(ii)
\nreduced from the amount to be distributed in the month
\nin which the credit note is included in the return in FORM
\nGSTR-6; or
\nadded to the output tax liability of the recipient where the
\namount so apportioned is in the negative by virtue of the
\namount of credit under distribution being less than the
\namount to be adjusted.
\nIf the amount of input tax credit distributed by an Input Service
\nDistributor is reduced later on for any other reason for any of the
\nrecipients, including that it was distributed to a wrong recipient
\nby the Input Service Distributor, the process specified in clause
\n(j) of sub-rule (1) shall apply, mutatis mutandis, for reduction of
\ncredit.
\nSubject to sub-rule (2), the Input Service Distributor shall, on
\nthe <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nlaw wherein the credit of CGST cannot be utilized against SGST
\nand vice versa.
\nInput Service Distributor is not liable to furnish the details
\nGuidance Note on GST Audit
\nF COST
\nACCOUNT
\nTax Research Department, The Institute of Cost Accountants of India
\nM
\nof inward and outward supplies. Input Service Distributor is
\nliable to file return in GSTR-6 on or before 13th of the month
\nsucceeding the tax period. The details relating to input tax
\ncredit distributed is communicated to the recipient in Part B
\nof GSTR-6A.
\nISD is not required to file Annual Return.
\nISD registration is for one office of the taxpayer which will be
\ndifferent from the normal registration.
\nThe revenue generating units have GST liability, so rightly
\nthe ITC on those services used by them must be allocated to
\nthem to use the tax credit to set off against their tax liability.
\nDifferent offices of a taxpayer can apply for ISD registration.
\nDifferent offices like marketing division, security division <\/p>\n