GST Audit tool
Gaurav Yadav

Updated on November 28th, 2023

GST Audit has become essential with every passing day.

This is especially true for businesses with multiple GST registrations. It becomes challenging for such businesses to keep track of all the GST activities in their various depots or sub-units with individual GST registration.

Hence, it becomes necessary for such businesses to have a centralized mechanism to check all the GST transactions in a single place.

In this short article, we will submit some facts about the GST audit tool and how it is different from your existing ERP system.

GST Audit Checklist – The new way of scrutiny with GST Audit tool

GST Audit checklist

The government has enabled businesses to self-assess their GST returns and self-certify them before filing.

This can seem easy for an individual with a lower annual turnover, but is it a feasible choice for a business with a large turnover and multiple GST registrations?

Most probably NOT!

It can be a very tedious task for the company's senior management to keep track of all the sub-units return filing pattern.

Due to this lack of a centralized tracking system, following are the problems that businesses may face:

  • Under-utilization of Input Tax Credit under GST
  • Pending outward liabilities keep on piling up
  • Month-wise & year-wise data of GST returns is missing
  • Miscommunication between the branches may cause inconsistency in the GST return filing behaviour
  • Businesses may attract a GST audit by department

So, do the businesses have any way to address all these issues using a business diagnostic tool?

The answer is YES!

What is the best way to do all of this in a single click?

A GST Audit Tool functions as a Business diagnostic Tool that will help decision-makers scrutinize the business's financial health and show red flags to the discrepancies spotted in the GST return filing.

Automating this process is the only option left with the businesses to ease this humongous process.

Now, the GST Audit tool comes into the picture that will help businesses to generate a consolidated report of ALL their GST REGISTERED units.

GST Audit Checklist that the Auditing tool like GSTHero ThirdEye shall address is as follows:

  • Independent & third-party review of your business is essential that provides a comprehensive perspective of the financial health of your business
  • Bring all the units/depots of your business under review to check their GST compliance status
  • Identify the ITC leakages in all the business units
  • To give an account of the total eligible Input Tax Credit
  • Monitoring inward & outward monetary flow of your business in a single report
  • Granular level reporting of each & every aspect related to GST activity for the business
  • Calculating the impact on your business due to the non-compliance with GST regulations
  • Identifying & mitigating the risks that may invite departmental audits

Businesses should note that your existing ERP tool is not designed to perform all these scrutiny tasks.

Hence, a dedicated GST audit tool is essential for businesses to address all these issues.

That is why; businesses must be equipped with GST Audit software that will save their revenue and protect the company from GST audit by department.

GST Audit Tool – Much more than your ERP & GST compliance

GST audit tool

When we talk to our existing clients regarding their GST Audit routine, the most frequent response we get is that,

‘Their ERP has all the compliance checkpoints, then why is an internal GST audit so necessary?’

This approach of businesses is not completely appropriate.

ERPs do have some compliance checks in place, but they are not explicitly designed to identify all the potential risks that may arise in future.

Hence, an audit under GST with a GST audit tool like GSTHero ThirdEye will help you identify the GST entries that are suspected to be incorrect or ambiguous.

Such entries may create trouble in the future.

For example:  If any business unit claims any ineligible ITC and if the business does not notice this, then this can be a strong reason for inviting GST audit by department.

Following are some of the direct actions that a GST auditing tool will facilitate:

  • Identifies the ineligible ITC claimed by the business by running a flawless reconciliation of your filed GST returns against the books of accounts data and other purchase registers or directly from your ERP database.

Note: Even if the businesses use their ERP for a manual reconciliation to spot their ineligible ITC, is it a feasible activity to undertake for all the company branches?

It will not only consume time & indulge more labour resources but will also NOT BE as accurate as the GST auditing tool.

Does your ERP show you red flags and potential exposures to such threats?

  • Helps businesses plan how much outward GST liability will be paid in cash

Input Tax Credit is one of the most beautiful features of the GST structure in India.

But there are many instances with large businesses where businesses do not have a complete idea about the GST Input Tax Credit accumulated by the multiple units of the business.

This makes the business pay its outward GST liabilities in cash. Thus, the accumulated ITC is left idle, and the business's working capital as a whole is impacted.

Hence, it is highly advised that the businesses utilize the ITC accumulated in their multiple registrations to pay off their liabilities.

Is accumulated ITC for every branch identified on a single dashboard by your ERP?

  • Smart calculation & prediction of future penalties

One of the best advantages that a GST audit tool can provide businesses is the prediction of the future penalties based on your current outstanding liabilities and if these liabilities are kept unpaid.

An innovative GST audit tool uses 'Predictive Analysis’ based on your GST returns to analyze the pending GST liabilities and help you show the red flags and exposure to penalties that may occur in future.

This forces the business to clear all their dues and not worry about any exposure to penalties or interest.

 Fines and penalties have a very severe impact on the companies with multiple GST registrations and can disturb the working capital flow of the business

Does your ERP run a Predictive Analysis and warn you about the risk exposure to fines & penalties?

These are some of the features that a GST Audit tool can help businesses with.

In a nutshell…

Businesses should understand the difference between your ERP system and the GST Audit tool.

GST audit tool helps you identify the errors in your GST returns filed and also suggests corrective actions so that the businesses are in a position to mitigate these risks before they harm their business.

Large businesses with multiple GST registrations shall have a centralized tool to look at the GST compliance and perform an unbiased and root-level GST audit of every GST transaction.

To check out our super auditing tool GSTHero Third Eye, feel free to reach out to us using the following contact information:

Phone: +918007700800


Stay updated; stay ahead!

Until the next time…

Your GST
Super-Audit Tool 
Is Here!

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

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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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