GST Audit Checklist for Businesses : 10 Important Points For This Financial Year End

If taxpayers have paid more GST than they owe in certain situations, a streamlined process allows them to apply for a GST refund. In order to receive the refund in a timely manner, taxpayers must complete the necessary paperwork accurately and submit it. The refund will then be deposited directly into their bank accounts according to the GST refund procedure. It is important to note that the deadline for applying for a GST refund is March 31, 2023.

The refund can be requested for several reasons, including:

• ITC refund for inverted duty structure
• ITC for export under LUT
• Deemed export supplies
• Supplies to SEZ units and developers
• Finalization of provisional assessment
• Excess payment due to mistake,
• Refund of CGST & SGST paid by treating the supply as Intra-State.
• Supply held as inter-state supply

To learn more on steps to claiming GST Refunds, follow our detailed guide at GST Refunds.

According to the CGST Rule-2017 and as per GST Notification No. 16/2017 dated 07-07-2017, any registered person who chooses to export goods or services without paying IGST must provide a bond or a Letter of Undertaking (LUT) in the prescribed GST RFD-11 form.

• GST Composition Scheme
  The GST Composition Scheme enables small taxpayers to pay taxes at a reduced rate. If you want to participate in this scheme during the financial year 2023-24, you must either opt in or opt out by March 31, 2023, using Form CMP-02. This form must be used by both goods suppliers and service providers. According to GST Notification 14/2019, the threshold turnover limit for qualifying as a small taxpayer has been raised to Rs. 1.5 Crores in certain cases, up from the previous limit of Rs. 1 Crore
• QRMP Scheme in GST
  Individuals or businesses that are registered and have a combined turnover of up to Rs 5 Crore are permitted to submit their GST returns every quarter while making monthly tax payments under the GST Quarterly Return Monthly Payment (QRMP) program. This scheme has been in effect since January 1, 2021, which was the final quarter of the 2020-21 fiscal year. It is important for taxpayers to be aware that the deadline for opting in or opting out of the QRMP scheme for the 2023-24 fiscal year is April 30, 2023.

Ensuring that you utilize all your remaining input tax credit before the end of the financial year is crucial. As the financial year was to a close, it is necessary to conduct a GST reconciliation of your GSTR 2B with all your purchase invoices. This is a vital measure in order to obtain any pending ITC. The reconciliation should involve cross-checking the credit that was availed during the year, identifying and following up with any missing credit from vendors, as well as accounting for any additional credits related to expenses.

Why does your ITC remain unutilized?

When there are multiple GST registrations under a single PAN, it is difficult to track down the eligible Input Tax Credit available for all the business sub-units.

If the eligible ITC sits idle, it simply means that the business has to pay its GST liabilities in cash. This affects the working capital of a business, and the accumulated ITC sits idle in the sub-units or depots. Miscommunication between the branches and the head office can also be one of the reasons for this incident.

Businesses need to have a detailed GST Audit checklist report so that decision-makers can clearly understand the unutilized Input Tax Credit accumulated in all of their GST registered business units.

Following are some of the reasons that your business is availing lesser ITC than eligible ITC:

• Your supplier has not filed his GSTR-1 corresponding to the transaction you are missing out on.
• There has been an ITC reconciliation error that was not rectified.
• Your defaulting supplier was not informed about the discrepancy, and this error was never corrected.

GSTR 3B and GSTR 1 reconciliation is crucial because GSTR-1 return CAN NOT be filed if your previous tax period’s GSTR-3B is NOT filed.

Hence, taxpayers must understand that the GSTR-3B vs GSTR-1 reconciliation is essential.

Reconciliation between GSTR-3B and GSTR-1 is required because:

Vendors must receive payment within 180 days. It is essential to ensure all debts are settled promptly before the fiscal year ends to avoid carrying any unpaid invoices into the next fiscal year. If payment to the vendor is not made on time, it may lead to difficulties in reconciling accounts and claiming input tax credits. Therefore, it is crucial to pay outstanding invoices promptly to avoid any backlogs and facilitate the reconciliation process.

In case you decide to write off any inventory at the end of the year, it is crucial to note that as per Section 17(5) of the CGST Act 2017, you must reverse the Input Tax Credit (ITC) claimed on that inventory.

ITC should be reversed as per:

• Rule 42 of CGST Act, 2017 (ITC Reversal on Inputs)
• Rule 43 of CGST Act, 2017 (ITC Reversal on Capital Goods)

To learn more on ITC Reversal, follow the link provided.

Making corrections to GSTR-1 or GSTR 3B returns for the previous financial year in the March 2023 returns is advisable. Taxpayers should reconcile their books of accounts (Ledgers) with the uploaded returns and adjust any discrepancies in form GSTR 3B. Furthermore, errors made in GSTR-1, such as submitting incorrect GSTIN, B2C invoices instead of B2B invoices, or omitted invoices, can be corrected at this time.

As per Notification No. 03/2022-Central Tax (Rate) dated July 13th, 2022, existing taxpayers who provide Goods Transport Agencies Services and wish to pay tax under the forward charge mechanism have been given the option to do so on the portal. To exercise this option, they can go to Services >> User Services > Opting Forward Charge Payment by GTA (Annexure V) after logging in. The Annexure V FORM must be submitted on the portal every year before the start of the Financial Year, and once submitted, it cannot be withdrawn during the year.

Annexure V FORM filing deadline is March 15th of the preceding financial year. Annexure V is now available on the portal for GTA's to make their selection for the Financial Year 2023-24, and the deadline for submission is March 15th, 2023.

In this article, we have put forth TEN important points to be considered before the end of the current financial year.

You can always use GSTHero’s internal GST Audit tool to run an internal scrutiny of all your GST registrations. This will help you to check the compliance status of your business and identify any gaps in your GST Return filing.