On-Site Inspection Under GST | Steps to Prepare Your Business For the Inspection

The GST authorities carry out on-site inspection under GST to confirm the accuracy and completeness of information provided by taxpayers in their documents, records, and GST return filing. These inspections may also include examination of physical assets and stocks, and identification of any potential tax evasion or fraud. GST department may carry out such Inspections based on specific intelligence or risk analysis, or as part of routine checks. A team of GST officers typically conduct these inspections and may request access to various documents, equipment, and facilities owned by the taxpayers.

During the inspection, the GST officers can collect samples from the taxpayer’s premises and can also record statements from the taxpayer and his staff. The officers have a right to confiscate any goods or documents that deem to be suspected by the GST officer. In short, GST officers will be looking for cases of violation of the GST laws throughout this inspection.

Should the business worry about this inspection?

Prevention is always better than cure. Businesses are advised to make sure that their every GST return filing is clearly recorded. They should NOT claim any ineligible Input Tax Credit under GST and should respond to the GST notices received on time and with accurate justifications.

• The first and foremost step is to keep your books of accounts including transaction records, payment receipts, purchase records up to date and as clear as possible.
• Also, Purchase records are most essential for ITC reconciliation which enables claiming of eligible ITC.

• Have all your GST-related documents ready, such as your GST registration certificate, payment challans, and filled GST returns.
• Make sure that all invoices and documents are compliant with GST law and contain all necessary information.

• In-house GST audit becomes very important for the businesses with multiple GST registrations. For such medium sized enterprises, the probability of errors goes up and thus GST audit is the only way to identify such errors.

We do have the separate article for in-house audit under GST
5 reasons to conduct in-house audit

• The process of conducting a GST audit goes beyond merely verifying compliance requirements. It involves a thorough examination of previously filed GST returns, identification of any potential issues or warning signs, and taking steps to mitigate the risk of future penalties.

To learn more about GST Audit Tool, click on the link.

• Taxpayers are advised to ensure that their registration certificate is current, precise, and accurately reflects their current business activities.
• Taxpayers must also make certain that they have registered for all applicable GST registrations, including GST Composition Scheme, GST TDS, GST ISD, and GST E-Commerce, where appropriate.

• Taxpayers must create a comprehensive list of their goods and assets, such as raw materials, finished products, equipment, vehicles, and real estate.
• Additionally, they must maintain a record of physical stock movements, such as items received, dispatched, and transferred, and the related invoices and documents.

Taxpayers must grant access to their IT systems, including accounting software, ERP systems, databases, and servers, and ensure that GST officials have all necessary login credentials, passwords, and authorization levels. They should also have a data backup and a plan to restore it in the event of data loss or system failure.

Taxpayers should verify whether they have any ongoing legal proceedings or disputes with the GST authorities, such as assessments, audits, investigations, or appeals, and take necessary steps to resolve them. Taxpayers must also examine their tax payment history and ensure that they have paid all due taxes, interest, and penalties, if any.

In order to prepare your business for any GST inspections, it I essential to have internal checks and balances in place to help you identify red flags in the GST returns and carry out a flawless reconciliation that ensures you claim only the eligible Input Tax Credit.

By following the simple steps mentioned in the article, businesses can prepare themselves for the on-site GST inspection.

It's important for businesses to have a regular diagnostic system in place to prepare for GST audits by the government. To achieve this, they can use reliable GST audit software that not only consolidates their data but also saves them time and money.

It's worth noting that relying solely on their ERP system is not enough for businesses to review their GST filing data. Therefore, having separate GST audit software is crucial for any business with one or more GST registrations.

Stay updated; stay ahead!

Until the next time…..