Goods and Services Tax

GOODS AND SERVICES TAX AUDIT

Goods and Services Tax – GST – By: – Sachin Jain – Dated:- 7-12-2018 – Audit Under GST Regime Audit this word is well versed within the industrial and commercial world, where an ordinary man interprets it as a compliance measure or activity to be done on yearly basis and on the other hand big players are well aware about the importance of audit. As we all know GST rolled in July 2017, it is also known as the biggest indirect tax reform in the Indian history. GST is a revolutionary in commodity and services tax. It has brought about an ideal shift in the methodology of levy and collection of taxes. GST being a self-assessment tax, audit procedures are introduced for ensuring proper compliance. Under the earlier Central Excise and Service Tax laws, there was no requirement for audit of accounts and furnishing reconciliation statement by an accountant except special audit. However, some state VAT laws stipulate audit of records by a Chartered Accountant and filing of VAT audit reports. T

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l year with the audited annual financial statement. So audit report is to be provided at the time of filing annual return. Key points * Turnover includes value of all exempt supplies and exports under the same PAN, on all India basis. * GST period comprises of 9 months i.e. July 2017 to March 2018, whereas the relevant section 35(5) uses the expression financial year, it is reasonable to understand that the turnovers for the whole of the financial year would also include the first quarter of the financial year 2017-18. However, clarification is required in this case from the government. The GST Audit would be undertaken for the first time in India. GST Audit will require a huge preparation from both the auditor and the auditee. It is different form Statutory audit and Tax audit. GST audit would require coverage of a larger number of records. The GST audit requires deep understanding of the GST laws the working of GST portal, the nature of supplies, various records of the auditee. Also,

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, exempt supply, registered and unregistered dealer etc. This again added to the compliance. A series of aspects need to be considered while preparing the following reconciliations; Reconciliation of GST Outward Supply i.e. GSTR-1 (Taxable, exempt, export etc.) with books of account; Reconciliation of GSTR- 2A with Input Tax Credit (ITC) availed in GST Return; Reconciliation of outward supply and ITC between GSTR-3B, GSTR-1 and Books of account; Reconciliation of GST Payable between GSTR 3B and books. Reconciliation of Taxable Turnover; Reconciliation of rate wise liability and amount payable thereon; Reconciliation of ITC declared in Annual Return (GSTR-9) with ITC availed on expenses as per audited Annual Financial Statement or books of account. (with various subheads of profit and loss account); Reconciliation of expenses subject to reverse charge as per books of accounts and GSTR 3B; Reconciliation of balance in E-Cash ledger, E-credit ledger, E-liability ledger with books. Key poi

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availed; Check all ITC which is not allowed as per section 17(5) of the CGST Act.; A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note pertaining to FY 2017-18 after filing GSTR 3B of September 2018. Given this, the taxpayer should identify all the invoices of inwards supply where ITC is not availed; It is to be noted that once the same is not availed it will become the cost for the Company; The ratio of reversal of ITC is required to recomputed on the basis of yearly details of supply and effect of the must have been considered while finalizing books; The taxpayer shall identify ITC where vendor s payment is pending for more than 180 days from the date of invoice; The amount of such ITC pertaining to FY 2017-18 must have been reversed along with interest on or before September 2018, the auditor should verify the same. Others The entity should also ensure the proper classification of goods and services and respective rate (mainly i

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not involve any estimate or the opinion; on the other hand A Report, on the other hand is a formal statement usually made after an enquiry, examination or review of specified matters under report and includes the reporting auditor s opinion thereon. Thus, where a certificate is issued the auditor shall be responsible for accuracy of what is stated therein. In case of a report, he is responsible for ensuring that the report is based on the factual data, true and fair to the best of his belief, knowledge and information furnished to him. Other types of Audit under GST Audit u/s 65 Audit u/s 66 1) Not compulsory, audit only for selected registered person only (By general or special order) 2) Audited by commissioner or officer authorized by him. 1) Not compulsory, audited id special direction issued by officer considering complexity of case. 2) Auditor to be nominated commissioner. Future Prospects GST and the structure of GST having compliance measures such as GST audit provides a very f

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