GST audit checklist
Gaurav Yadav

Updated on February 2nd, 2024

GST structure can sometimes become complicated when a business has multiple registrations.

It becomes difficult for all the business units to comply with the GST laws in the entirety, and in some places, the GST laws and regulations get violated.

To address all these issues, a business should prioritize its routine ‘in-house audit’ that identifies such discrepancies in the GST data and helps the company with suggestions to rectify these errors.

But is there such a mechanism for the GST in house audit other than a CA's audit?

Let’s find it out in this short article the seven most important points in the GST audit checklist.

GST Audit Checklist – Why is an internal GST audit required?

Notification No. 29/2021 – Central tax

This notification has amended the CGST act by omitting the Section 35 sub-section (5) of the CGST Act, which mandated the requirement of an audit by a CA or CMA.

It simply means that the businesses are now NOT MANDATED to run audits by CA or tax professionals. Instead, they can self-certify the Form GSTR 9C PDF.

Now the onus of a clean and proper internal audit will fall upon the businesses.

To automate this process and file 100% correct Form GSTR-9C, businesses must have an auditing mechanism that will flag all the discrepancies from the entire year's GST returns and allow the decision-makers to address these issues.

An internal GST audit gives:

  •  A summarized picture of the entire financial year’s GST returns & related activities.
  •  Identifies red flags for the differences in GST paid and the actual GST liability.
  •  Identifies GST Input Tax Credit leakages and ensures optimal utilization of the ITC.
  •  Points out the pending GST liabilities so that the decision-makers can act on them and save revenue drain that goes into paying fines and late fees.

But is all this achieved by a manual audit by the team?

Well, you will need a superpower for numbers and that too with 100% accuracy! 

The simple answer is that you will have to bring automation into play for an internal GST audit.

An automated GST audit tool = less manpower = more accuracy = lesser time!

7 highlighting features to check in a GST audit tool

1. Software that thinks like a GST expert

  • Every business with multiple sub-units needs GST auditing software that can think and analyze the data similar to a GST expert.
  • Once this data is analyzed adequately, the generated report will help the tax managers or CAs or the upper management of the company understand the company's financial health and identify any leakages that are present in their taxation system.

2. Not just sampling!

  • The GST Audit tool should NOT work on a sampling basis as this does not provide an accurate report.
  • Many minute details will be missed, which may pile up in the future in the form of interests and fines.
  • Hence, the data scrutiny should be transaction-wise and month-wise, which will allow the decision-makers to get a Bird's Eye View of all the transactions and that too in a consolidated form.

3. Data analysed should be authentic

  • The auditing tool must have access to the authentic GST data.
  • Businesses should note that a GST auditing tool analyses the already filled returns, and based on it, the tool proposes the required changes.
  • Hence, it becomes essential that this tool has valid access to the GSTN data of the company.
  • Having this authentic data from the GSTN server will help the auditing tool compare the GSTN data and the data from the purchase register and books of accounts of every business sub-unit.

4. Generates a consolidated report

  • The entire purpose of GST auditing tools bowls down to a Report or an info-graphical result that will help the decision-makers understand the complete scenario of the business.
  • It should provide detailed reports like Input Tax Credit under GST distribution across multiple branches, outward GST liabilities, pending liabilities, exposure to fines and interests, Reverse Charge under GST report and more such reports in easy-to-understand info-graphical ways.
  • GST audit report format should be such that the decision-makers can get the gist of the entire business ecosystem through this report.

5. The tool should be fully automated

  • The primary purpose of a GST audit tool is to ease the efforts of the clerical team that goes into conducting an internal audit.
  • Even after tedious tasks, there is always a probability of introducing errors in the final data.
  • Hence, the GST audit report format must be generated in a way that requires minimum human input.
  • This will save a considerable amount of business time and allow the upper management of the business to maintain an accurate GST audit trail for future reference if a GST departmental audit occurs.

6. A tool that not just analyses data but also shows red flags

  • This tool should show the red flags where it encounters any discrepancy in the GST data.
  • The best example for this will be the ineligible ITC claimed by some of the business units.
  • The report generated should be such that it should also show the discrepancy and the exact reasons for their occurrences.
  • When the tool suggests corrective action, this prompts the decision-makers to take a better decision and avoid that error in the upcoming GST return filing software.

7. Easy integration with your existing GST filing software

  • It’s good that the GST audit tool well integrates with your existing GST filing software or ERP. However, it is not mandatory.
  • Most GST auditing tools work on a standalone model as they directly fetch the data from the GSTN server. However, when the Auditing tool easily integrates with your ERP and existing GST return filing tool, it becomes easy to compare the data from books of accounts vs GST audit reports.
  • Hence, it is desirable that the GST audit tool well integrates with your ERP system or the GST return filing software.

These are the highest priority features that a GST audit tool should have to perform a flawless internal audit and give you a complete picture of the business's financial health.

GSTHero’s Third Eye – A desired GST audit tool

GSTHero’s Third Eye is a business diagnostic cloud-based tool that allows you to check and verify every detail of the GST return filing activity.

Third Eye can be an ideal choice for businesses with multiple GST registrations and struggling with GST compliance.

Third Eye provides:

  • Minute-level reporting of all the GST transactions
  • Bird's Eye View of the GST structure of the company and its sub-units.
  • Total internal financial control in the hands of the business's upper management like CFOs, tax managers, CAs, Director level individuals, etc.
  • It helps you save on penalties and interest by flagging the outstanding liabilities and discrepancies in the yearly data.

To generate a free audit report of your business, feel free to reach out at:

In a nutshell

It is always better to be ready than to regret later.

This very well sums up the need for a GST audit tool to be ready for all the GST documentation required for GST departmental audit.

Hence, businesses are advised to have a robust audit mechanism that keeps you posted about the discrepancies in your return filing behaviour and suggests corrective actions.

Needless to say, this tool shall positively impact the revenue of the business as the business will save on the files and interests and will also cut down on the GST liabilities paid in cash.

Stay updated: stay ahead!

Until the next time…..

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Gaurav Yadav

About the author

Gaurav is an Engineer by training with a deep interest in Economics & Finance. He has been associated with the Fin-Tech industry for quite some time now. He writes for GSTHero for topics including GST Compliance, GST Structure, etc & aims to break down complicated technical jargon into simple terms for the taxpayers.

His expertise includes GST Laws, Corporate Finance & Macro-Economics.

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