Audit & Assurance Services

A GST audit is an examination of the statements, records, returns, and related documents furnished by a registered person. Its purpose is to verify whether the sales, output tax paid, input tax refund claimed, and ITC availed—as stated in the annual report—are true and fair. A GST audit acts as a reconciliation statement between audited financial statements and the annual return. Furthermore, it assists in assessing whether the taxpayer is compliant with all GST provisions.

AJAY D KUMAR & ASSOCIATES is a leading GST Audit Firm in the North West district of Delhi. Our team of experienced GST consultants provides comprehensive audit services to ensure your business remains compliant.

For whom is a GST Audit compulsory?According to Section 35(5) of the CGST Act, 2017, every registered person whose turnover in a financial year exceeds Rs. 2 crores is required to have their accounts audited by a CA or CMA. The following documents must be submitted with the filed GST Annual Return:

1. A copy of the audited financial statements.
2. A reconciliation statement (Form GSTR-9C).
3. Other prescribed documents.

Note on Turnover: While "turnover" is not specifically defined in the Act, Section 2(6) defines "aggregate turnover" as the value of all outward supplies (taxable, exempt, exports, and inter-state) under the same PAN. This excludes taxes levied under the GST Act and inward supplies where RCM is applicable.

Checklist for a GST Audit

An auditor should cover the following points during a GST audit assignment:

1. Registration Certificate

• Verify if the registration is new or migrated from the old regime.
• Review details of business verticals, factories, warehouses, and ISDs.
• Check if additional places of business are included in the certificate and if any amendments are required.

2. Invoicing and Documentation

• Ensure Tax Invoices or Bills of Supply follow GST provisions.
• Verify receipt vouchers for advances and proper issuance of credit/debit notes.
• Check the correctness of invoicing series and maintenance of delivery challans and e-way bills.

3. Supply

• Confirm correct classification of supplies (Taxable, exempt, export, zero-rated, nil-rated, SEZ, or deemed exports).
• Identify supplies as Inter-state or Intra-state and classify them as goods or services.
• Review composite/mixed supplies and transactions related to job work or the negative list.

4. Time of Supply (TOS)

• Determine if the TOS for goods and services complies with Sections 12 and 13 of the CGST Act.
• Ensure proper treatment of reverse charge cases, changes in GST rates (Section 14), and continuous supply scenarios.

5. Input Tax Credit (ITC)

• Reconcile ITC availed with inward supply records, vendor invoices, and monthly returns.
• Check for restricted or blocked credits and ensure proper ITC claims on capital goods.
• Verify that payments to suppliers were made within 180 days and reconcile GSTR-3B with GSTR-2A.

6. Classifications & ISD

• Verify HSN/SAC codes and check for applicable advance rulings or notifications.
• For Input Service Distributors (ISD), ensure separate registration and correct distribution of ITC as per law.

7. Returns, Payments, and RCM

• Review all filed returns and reconcile GSTR-9 with GSTR-1 and GSTR-3B.
• Check for timely tax payments, interest liabilities, and late fees.
• Verify compliance with Section 9 regarding Reverse Charge Mechanisms (RCM).

8. Value and Place of Supply

• Ensure all inclusions and discounts are correctly handled under Section 15.
• Identify the Place of Supply to confirm if a transaction is Intra-state, Inter-state, or an Export (under LUT/Bond).

9. Refunds and Inward Supplies

• Confirm eligibility for refunds and track any sanctioned or re-credited amounts.
• Classify inward supplies correctly and check for any stolen stock or assets where ITC was claimed.

10. Maintenance of Books and General Compliance

• Ensure books are maintained (manual or electronic) for each place of business.
• Check for compliance with the Anti-profiteering clause and review any ongoing department proceedings or judicial pronouncements.

Appointment and Records

How is a GST Auditor appointed? A registered person can appoint an auditor at the start of the year. The selection is made by:

• Proprietor: For sole proprietorships.
• Partner: For Firms or LLPs.
• Board of Directors: For Companies.

What records are examined? Auditors examine registers for inward/outward supplies, inventory registers, expense ledgers, ITC records, e-way bills, and other necessary documents.

Submission and Penalties: The auditor must add comments to Form GSTR-9C regarding any mismatches. They must confirm if financial statements match the books and if the information provided is authentic. While there is no specific audit penalty, a general penalty of Rs. 25,000 applies for non-compliance.

GST Audit at AJAY D KUMAR & ASSOCIATES

Our team provides:

• Monthly ITC comparisons and discrepancy findings.
• Consultancy on ITC eligibility and reversals.
• Reconciliation of annual returns with audited financial statements.
• Recommendations for internal controls and a non-compliance cost matrix.