GST audit

GST Audit Checklist: Procedure & Execution

CA Poonam Gandhi

Updated on January 25th, 2024

GST follows a trust-based mechanism. Accordingly, the registered person himself assess the tax liability; pay the taxes and files GST returns. Hence, GST audit is important to ensure the correctness of the self-assessment done by the registered person.

The present article discusses details from the GST Audit checklist necessary for a GST departmental audit.

Audit and types of departmental audits under GST

GST audit process

The term ‘Audit’ is defined under section 2(13) of the CGST Act. As per the term, audit means-

  • Examination of records, returns and other documents maintained/ furnished by the registered person;
  • The purpose of conducting such examination is to verify the correctness of turnover; taxes paid; refund claimed; Input Tax Credit under GST availed and compliance with the provisions of the CBIC -CGST Act and CGST rules.

There are following two types of departmental audit under GST-

Section under which audit can be conducted

Types of departmental audit

Audit conducting personnel

Section 65

Audit by tax authorities

Authorized departmental officer

Section 66

Special audit under GST

CA/ CMA nominated by the Commissioner

Audit under GST - Parameters to select a registered person for conducting GST audit procedure

Internal-Audit-in-GST-–-GSTR-1,-GSTR-2A,-GSTR-3B,-and-More
Following are some of the illustrative parameters based on which the registered person can be selected for conducting the GST audit by department:
  • Size of the turnover/ net profit
  • Quantum of refund claimed
  • Variation in turnover/ net profit as compared to the previous year
  • Involved in high-risk activities
  • Multiple branches/ multiple activities
  • Receipt of notices from other governmental entities
  • Previously GST audit never conducted
  • Waiver/ bankruptcy declared
  • Specific information/ details received from other governmental entities; etc

GST audit checklist - Records/ documents likely to be verified during GST audit

GST Return Filing
The following list of records, documents and information are likely to be furnished before the departmental officer during the course of GST audit by department-
  • Books of accounts
  • Balance sheet, annual report, income tax return and Form 26AS
  • Various types of returns filed under GST;
  • Income tax audit report (i.e., Form 3CA or 3CD and Form 3CB);Cost audit report;Internal audit report etc.
  • Cost audit report;Internal audit report etc.
  • Tax invoices; bill of supply; debit notes; credit notes; receipt and payment vouchers; delivery challans etc.
  • Copies of invoices on basis of which the input tax credit is availed;
  • Turnover as per profit and loss account with turnover reflected in GST returns;
  • GST Input tax credit availed with Form GSTR-2A;
  • Reverse tax paid with corresponding expenses booked in the accounts.
  • Sample copies of the purchase order; work orders and any other agreements entered.
  • Stock register; job-work register; fixed assets register; production/ process registers etc.
  • Sample E-way bills.

Departmental GST audit procedure

GST audit process

STEP-1: Intimation regarding the conduct of GST audit

  • Firstly, the department will issue a notice intimating the conduct of an audit.
  • Such notice must be served to the registered person at least 15 working days prior to the conduct of the audit.

    • STEP-2: Commencement of GST audit by department

  • The audit will be marked as commenced within later of the following dates-
  • The date on which records/ documents/ information called for by the officer is submitted by the registered person; or
  • The actual commencement of the audit at the place of business of the registered person.

    • STEP-3: Manner of conducting the audit

    GST audit can be conducted by the officer at either of the following place-

    • At the place of business of the registered person; or
    • At his own office.
  • Verification of various records; returns; documents and information will be done by the departmental officer.
  • In general, for the selected audit period, the officer will ensure the correctness of the following-

    • Turnover;
    • Exemptions/ deductions claimed;
    • Rate of GST applied;
    • Input tax credit (availed as well as utilised);
    • Refund claims;
    • Any other issues relating to GST.
  • Notably, during the course of the audit, the departmental officer can ask the registered person to-
    • Facilitate him to verify the books of accounts and any other documents; and
    • Furnish such information as required by him.

    • STEP-4: Completion of the audit

  • On completion of the audit, the officer will inform the findings/ discrepancies noted by him to the registered person.
  • The registered person will have to appropriately reply to the findings/ discrepancies raised by the officer.
  • After considering the reply filed by the registered person, the officer will conclude the audit by noting the final observation in Form GST ADT-02 (or Form GST ADT-04 in case of a special audit)

    • Course of action post completion of departmental GST audit

    Once the audit is completed, based on the observation of the officer and counter reply of the registered person, any of the following action will be adopted by the proper officer-

    Conclude the matter

    Under the following circumstances, the matter would be marked as closed without any further action-

    1. After completion of the GST audit, there are no observation/ findings of the officer; or
    2. The observation/ findings of the officer are satisfactorily replied by the registered person. Accordingly, the findings are dropped by the officer.

    Issuance of show cause notice

    Show cause notice under section 73 or section 74 will be issued to the registered person, if during an audit, it is observed that there is any-

    1. Non-payment/ short payment of taxes; or
    2. Erroneous refund claim; or
    3. Availing of ineligible ITC or wrong utilisation of the GST Input Tax Credit;
    4. Any other non-compliance.

    Synopsis

    Types of departmental audit and its details thereof are summarized hereunder-

    Particulars

    Section 65

    Section 66

    Format under which notice intimating conduct of audit is communicated to the registered person

    Form GST ADT-01

    Form GST ADT-03

    Duration of audit

    Three months. Commissioner can extend the same to further period of six months.
    The nominated Chartered Accountant/ Certified Management Accountant will submit audit report within 90 days.

    Period of audit

    Financial year or part or multiples thereof
    Financial year or part or multiples thereof

    Format and time period under which observations will be intimated to the registered person

    Form GST ADT-02
    Within 30 days from the date of completion of the audit.

    Form GST ADT-04

    The process of the GST audit by department is summarised hereunder-

    • Intimation of audit;
    • Verification of records/ documents and information by the departmental officers/ authorised person;
    • Communication of findings/ discrepancies;
    • Noting of final observation of the audit.

    Your GST
    Super-Audit Tool 
    Is Here!

    Power to pinpoint every single GST risk exposure and potential loss in the future, right now

    Get Audit Report Today!
    gsthero third eye
    CA Poonam Gandhi

    About the author

    Poonam Gandhi is a Chartered Accountant and a Lawyer, with practical experience of 9+ years in the field of Indirect Taxation.

    Follow us:

    Share0
    Tweet0
    Share0