Area wise working / checklist for annual return and GST audit

[Sandeep Rawat]

Area wise working / checklist for annual return and GST audit

As this is first year of annual return and GST audit, registered person as well as professional are also in dilemma situation for fulfilling the compliance under GST law so that the requite information which is required in filing the annual return and GST audit could be prepared in time and order.

In this regards I have prepared areas wise working plan/checklist which prescribed the requisite documents and actions for the annual return and GST audit.

GST REGISTRATION CERTIFICATE

• Have you checked whether the Supplier has applied for New Registration or has he Migrated?
• Have you checked the registration details of: Registered Person, Business Verticals, Factory / Warehouse / Godown, ISD and in respect of other place of business?
• Whether GSTIN is displayed in Name Board viz., Godown /Branches / other places of business?
• Whether the additional place of business within the State is incorporated in registration certificate?
• Whether the Separate Registration is taken for Input Service Distributor?
• Whether any amendment is required to be made to the Registration Certificate?

INVOICING DOCUMENTATION

• Whether Tax Invoice or Bill of supply is issued as per GST law? Whether it contains all the relevant particulars as required under law?
• Whether Tax Invoice for supply of goods is issued on or before the removal / delivery of goods?
• Whether Tax Invoice for supply of services is issued within 30 days from date of supply of service?
•    Whether bill of supply is issued for exempt supplies non-  GST supplies?
• Whether the Revised Invoice is issued in case of New Registration?
• Whether Receipt voucher is issued for receipt of advance?
• Whether Self-invoice and payment voucher is issued in case of RCM transactions under section 9(4)?
• Whether refund voucher is issued for refund of advance received?
• Whether Credit note/ Debit notes are issued as per the provisions of the GST law as per section 34?
• Whether Credit note/Debit Note is issued before 30th September of the Subsequent Financial Year?
• Have you checked correctness of Tax Invoice /Bill of supply with the appropriate Supply Register/ GSTR 1?
• Whether the Tax Invoice/Bill of supply is cancelled for genuine reasons, if any like Name of party /details where applicable?
• Whether any Invoice cum Bill of supply is raised for specific transactions?
• Whether the transport documents are maintained and verified?
• Whether any copies of Credit Note and Debit Note are raised otherwise than as specified in section 34?
• Whether the Delivery challan/E- way bill Register is maintained?
• Whether Series of documents issued as per clause 13 of GSTR 1 matches with Books of Account from July 2017 to March 2018?

GOODS SENT TO JOB WORK

• Whether the conditions are fulfilled for claiming input tax credit on goods (including capital goods) sent for job work?
• Whether the Principal has sent goods to the job worker under the cover of delivery challan?
• Whether the registered person has furnished FORM ITC 04 for the quarters in which goods were sent out for job work?
• In case the registered person has supplied goods directly from the place of business of job worker, whether he has satisfied the conditions laid down in proviso to Section 143 (1) of GST Act?
• In case the job worker is unregistered, and such  job  worker has   supplied   any   waste/   scrap generated during the job work from his place of business directly, whether the registered person has paid tax on such supply?
• Have you checked any goods are sent for job work and returned within specified time?

SUPPLY

• Whether the kind of outward supplies like Taxable supply, Exempted supply, Zero- rated supply, NIL rated supply, Supplies to SEZ unit / developers / Deemed Export and Merchant Export etc. are appropriately classified under GST law?
• Whether any transactions which falls within the scope of supply has not been identified by the  registered person
• Have you checked  Interstate supply as per section 7(5) of IGST Act 2017?
• Have you checked Intra State supply as per section 8  of  IGST Act 2017?
• Whether the Zero-rated supply is verified as per the provisions of the law?
• Whether the supplies made by registered person falls within the meaning of Composite /non- composite/ Mixed supply? If yes, whether the same has  been offered to tax as per section 8 of CGST Act?
• Have you checked for sale of capital goods and the  GST charged and as to whether  they are included in the returns filed ?
• Whether Interstate supply is regarded as Intra state supply and vice versa?
• Whether abatement provisions, if any, are applicable (like one third for land) is compiled with?
• Whether the transactions are correctly classified as supply of goods or supply of services?
• Have you checked the deemed supply as per schedule I?
• Are there any transactions wherein the goods sent for job work not received back is treated as supply?

TIME OF SUPPLY

• Whether Time of supply provisions have been complied as per Section 12 and 13 of the CGST Act?
• In case of change in rate of tax in respect of goods or services, whether the time of supply has been determined as per Section 14 of GST Act?
• Whether time of supply is compiled for continuous supply of goods /continuous supply of services should be verified?
• Whether  Time of supply is complied for Reverse charge?
• Whether  Time of supply is compiled for goods sent on approval?

INPUT TAX CREDIT

• Have you checked the input tax credit availed with invoices from vendors like Bill of Entry, Tax Invoice, Debit Note, Self-Invoice, ISD Invoice?
• Have you checked entries in Inward supplies records for input tax and reconciled with Invoices from the vendors?
• Have you checked the inward supplies records with Monthly return and ascertained reasons for variations, if any?
• Have you made a list of restricted input tax credit items as per the GST law?
• Have you tallied monthly return with Input tax credit receivable, if any?
• Have you reconciled tax collections with payments and transfer of the balance to appropriate accounts?
• Have you checked adjustment of tax set-off by relevant journal entries?
• Have you checked that input tax credit on capital goods is correctly availed?
• Whether Input Tax credit is reversed for the sale of capital goods as specified in GST law?
• Any Reversal of input tax credit for the goods sent for job work?
• Whether the recipient of supply has effected payment for such inward supply within 180 days from the date of Invoice?
• Whether input tax credit availed is debited to recoverable account for availing re-credit?
• Whether the supplier has availed both benefits of depreciation and input tax credit?
• Whether the documents (tax invoice/ debit note) on the basis on which input tax credit is claimed contains the mandatory details of recipient such as Name, GSTIN, Address and all other particulars as prescribed?
• Whether Input tax credit is reversed against the receipt of credit note
• Whether Input tax credit is bifurcated in to eligible, ineligible, blocked and common credits?
• Whether the common credits are reversed as per Rule 42 of CGST Rules?
• Whether input tax credit is availed on capital goods? If yes, whether credit is reversed as per Rule 43 of CGST Rules?
• Whether reconciliation of input tax credit between GSTR 3B and GSTR 2A is done?
• Whether Transitional Credit is availed as per the provisions of the law?
• Whether any ineligible transitional credit is reversed as per the law?
• Have you tallied monthly return with Input tax credit receivable?
• Any Reversal of Input Tax Credit for change in scheme from composition to Regular?

INPUT TAX SERVICE DISTRIBUTOR

• Whether separate registration is taken as per Provisions of law?
• Whether any tax is payable under reverse charge and obtained separate Registration?
• Whether eligible and ineligible input tax credit is apportioned as per the GST law?
• Is there is any reversal of Input tax credit and credit note is issued?
• Whether the calculation of Turnover for allocating the input tax credit is as per the law?
• Whether the ISD invoice containing the relevant particulars is issued correctly as per the provisions of the law?

CLASSIFICATIONS

• Whether the  classification of goods/ services is in conformity with the Schedules / Notifications?
• Whether the HSN classification is verified to confirm the rate of tax on goods and services?
• Whether the HSN details for inward and outward supply are verified?
• Whether the SAC code/HSN code is as per the law?
• Whether the HSN /SAC classification is same as followed in erstwhile law if applicable?
• Is there any specific Advance Ruling applicable?
• Whether there has been any change in rate of tax during the period by way of amendment in rate of tax notification or exemption notification?

RETURNS

• Whether the copies of GST returns filed by the registered person are reviewed?
• Whether reconciliation of GSTR 9 with GSTR1 and GSTR 3B is done?
• Whether interest which was due, has been paid while filing the Return?
• Whether any late fee which is due is paid while filing the return or any late fee which was waived?
• Whether transitional credit Returns are filed within the due date?
• Whether transitional credit Returns are not filed due to technical glitches?
• Whether the amendments details are filed correctly in the Returns?

GST COLLECTIONS AND PAYMENT VERIFICATION

• Have you checked whether tax payable is paid within the prescribed time as per GST law?
• Have you checked whether tax is being collected beyond tax payable? If yes, whether Sec. 76 is complied.
• Whether the tax payer charged wrongly IGST in place of CGST/SGST or vice versa?
• Have you followed the provisions of Rule 35 of the CGST Rules in respect of collection of taxes?
• Is there any excess collection of taxes?

REVERSE CHARGE

• Whether reverse charge tax is paid under 9(4) of the CGST Act 2017 up to 12th October 2017?
• Whether Reverse charge tax on notified supplies under section 9(3) and 9(5) of the CGST Act 2017 is duly paid?
• Whether reverse charge tax has been paid wrongly in lieu of CGST/SGST as IGST or vice versa?
• Whether corresponding input tax credit is availed on Reverse charge?
• Whether conditions of paying tax for RCM are fulfilled?

VALUE OF SUPPLY

• Whether all the inclusions to the value of supply as per section 15 of the Act have been verified?
• Whether discount offered to customers (pre/ post supply) is not included in the value  of supply after fulfilment of conditions under section 15(3) of the Act?
• Whether valuation rules have been applied as per the GST law?
• Whether the registered person has claimed any pure agent deduction as per Rule 33?
• In case the value of supply is inclusive of GST, whether the taxable value and tax amount is determined as per Rule 35 of CGST Rules, 2017?
• In case of exports, whether the rate of exchange of currency is determined as per Rule 34 of CGST Rules, 2017?
• Whether rate of tax charged for the supplies is as per the GST rate notifications issued/ amended from time to time?
• Whether CGST/SGST/IGST are charged in accordance with place of supply provisions?
• Whether the tax collected from the customers has been entirely remitted to Government?

  PLACE OF SUPPLY

• Whether the supply is inter State/Intra State has been identified based on the policy document of the entity?
• Whether    the   conditions for inter-State   supply   are   fulfilled as per IGST Act, 2017?
• Whether the conditions for intra- State supply are fulfilled as per IGST Act, 2017?
• Whether the conditions for export of goods are fulfilled?
• Whether the conditions are fulfilled for export of services?
• Whether there are any imports of goods/import of services?
• Whether the Zero-rated supply is with or without payment of taxes?
• Whether the conditions for location of supplier are fulfilled?
• Whether the supplier is intermediary under the GST Act and the conditions are fulfilled?
• Whether the supplier has declared sale in course of Imports, Non- territory supply, High Sea supply in the Return correctly?
• Whether the conditions for location of recipient are fulfilled?
• Whether the wrong payment of tax i.e. IGST in lieu of SGST/CGST is claimed as refund?
• Whether the wrong payment of tax i.e. SGST/CGST in lieu of IGST is claimed as refund?
• Whether the Supply by SEZ to DTA is treated as inter-State subject to fulfilment of conditions?

REFUND

• Whether the Supplier is eligible for Refund as per section 54?
• Whether the supplier has applied for Refund and whether it is sanctioned?
• Whether any Refund is Rejected or pending before the Authority?
• Whether the Refund is Re-credited to Electronic Credit Ledger?
• Whether the Manual /Electronic documents for Refund are verified?
• Whether the Accounting impacts are given for Refund applied, pending rejected or appealed?
• Whether any Refund is wrongly applied like input services/Capital goods credit for inverted duty structure?
• Whether Refund and Input Tax credit is claimed for the same transactions?
• Whether interest on delayed refund is receivable?

INWARD SUPPLY

• Have you checked purchase invoice/ delivery challans with purchase register?
• Have you checked the HSN Classification for inward supplies?
• Have you checked Inward supply with the Monthly returns?
• Have you checked whether any input tax is added to the cost of purchase where input tax credit is not allowable?
• Have you made a list of inward supply invoices for which there are no corresponding entries in inward supply records and GST return?
• Have you checked that inward supplies are classified between intra-State, inter-states, Imports etc.?
• Have you checked that purchases of capital goods are booked as fixed assets and the GST is paid thereon? Have you checked Assets which have depreciated 100%?
• Have you checked sale / deletion of fixed assets?

MAINTENANCE OF BOOKS OF ACCOUNTS

• Whether books of accounts are maintained as specified in section 35 r/w Rules 56, 57 and 58 of the GST Law?
• Whether Books of accounts are maintained electronically manually?
• Whether books of accounts are maintained at each place of business?
• Whether books of accounts are maintained manually or electronically? If the same is maintained electronically, whether the software used complies with the requirements of the law?
• Whether the copies of   Agreements/Agent agreement and other supporting documents are obtained?
• Whether the copies of Audited Financial Statements for each registration wise are obtained?
• Whether Transporter/Warehouse keeper has maintained the books of Account as per the law?
• Whether the Register E-way Bill/Delivery challan is maintained as per the law?
• Whether E- Way bills are used for valid purpose?
• Whether the register of ITC-01, ITC-02, ITC-03 and ITC 04 is maintained as per the GST law?
• Whether the supplier maintains the Cash/Bank Register for recording the transactions entity wise?
• Whether the books of Accounts maintained centralized or decentralized?

GENERAL

• Whether the registered person has complied with Anti-Profiteering clause?
• Whether reliance is placed on any notifications / clarifications / advance ruling / judgement in respect of rate of tax charged and collected.  Whether any conflicting Advance Ruling    order is applicable?
• Are there any department inspection proceedings for Transitional Credits or any other demands created?
• Have you checked for any adverse points in reports issued by Internal/ Statutory auditors or any other such reports?
• Have you checked for any adverse points in reports in the previous year?
• Have you checked that assessment orders /APPEAL orders/notices     issued by the department if any?
•  Is there any judicial pronouncement that could be applicable to the dealer?
• Have you discussed any adverse issues arising out of the audit with the client?
• Have you obtained the letter of appointment / issued the letter of acceptance of audit?
• Have you come across any unusual transactions?
• Have you checked miscellaneous receipts / other income?
• Have you come across any huge or unusual inward or outward supply transactions / tax credits /tax payments etc.?
• Have you noticed any comments on internal controls, periodicity of updation of accounts / records etc.?
• Whether the registered person has availed the facility of digital signature?
• Whether the Auditor has used appropriate Audit tools?

(Mr. Sandeep Rawat has vast experience & knowledge in dealing with Direct and Indirect Taxation.  He can be reached at  sandeeprawatca@gmail.com)