GST Annual Return & Audit (Planning, Commencement and Documentation) including Expectations from Auditors and Auditors Responsibility.

Planning: Annual return Compilation of data: Data required in various table of GST annual return should be compiled. Relevant table of GSTR 1 or GSTR 3b shall be used for this purpose Check the end use of data. Some of the data from GST annual return will go to GSTR 9C. Correction through GST annual return

Planning: GST Audit Scope of Audit Preparation of Audit program Disclaimers Disclosures to be covered in Audit report Can we go beyond GSTR 9C Auditor’s liability.

Commencement & Documentation: GST Audit “audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder.

Check the formation of entity and a brief note on its activities Type of Entity Structure Nature of business Proprietorship/HUF Partnership Company/LLP Govt. Entity Trust Related Parties Subsidiaries/Holdings Distinct Entities Translation of various provisions

Drafting the audit program Turnover: a. Turnover is booked in correct code and correct tax is charged on it. b. Whether exempted turnover is booked as taxable or vice versa. c. Whether Domestic turnover is booked as export or vice Versa. d. Cross Charge For common supplies e. Valuation

a. Brief checklist: Turnover is booked in correct code and correct tax is charged on it. Rely on the work of other expert Schedule I supplies If any supply between D/R person is already invoiced the it will not fall in schedule I. But valuation will be as per rules. When the recipient is eligible for ITC it will be invoice value. Employer employee transactions. M/s. Caltech Polymers Pvt. Ltd. M/s National Aluminium Company Ltd. Management representation Analysis of the rules of HSN Disclosure in Audit report

b. Brief checklist: Whether taxable turnover is booked as exempted or vice versa. Rely on the work of other expert Management representation Adherence to the existing AAR’s and AAAR’s Disclosure in Audit report with quantification of consequences , If possible.

c. Brief checklist: Whether Domestic turnover is booked as export or vice Versa. Check the basic conditions related to export of goods & Services. In case of export of services check the payment in foreign currency is recd or not. Check the provisions of section 13 of IGST Act Check if the supply is falling in intermediary services. Global Reach Education Services Pvt Ltd M/s Toshniwal Brothers Disclosure in Audit report with quantification of consequences , If possible.

d. Brief checklist: Cross Charge For common supplies Analysis of structure of an organization and its inter se relationship. A brief note on activities of all distinct persons registered under a single PAN will help. Check whether ISD registration is taken by the taxpayer. Even if ISD is there cross charge for goods will still be required. Adherence to the existing AAR’s and AAAR’s.: Relevant AAR M/S Columbia Asia Hospitals Private Limited (GST AAR Karnataka) Disclosure in Audit report with quantification of consequences , If possible.

e. Brief checklist: Valuation Provisions of section 15 as well rules Verification of pure agent supplies Supplies whish were liability of supplier but provided by recipient M/s Nash Industries (I) Pvt Ltd Asia columbia Hospitals

Drafting the audit program Taxes paid: Taxes paid in wrong heads. Mismatch in tax paid in GSTR 3b and payable according to GSTR 1 Less tax paid due to over statement of input tax credit More tax paid

Drafting the audit program Input Tax Credit Calculate the actual figure of input tax credit which was allowed as per GST provisions Calculation of total input tax credit availed for the year: This figure will be compiled from GSTR 3b filed upto 25th October. If there is any overstatement of input tax credit in any return. If it is then it was adjusted in return of coming months Input tax credit availed via Tran 1 or Tran 2 Calculate reversal and compare with the reversal done by taxpayer.

Drafting the audit program compliance with the provisions of this Act or the rules made thereunder. Maintenance of records As per Section 35 a true and correct account of: Production or manufacture of goods Inward and outward supply of goods or services or both Stock of Goods ITC availed Output tax payable and paid Prescribed particulars in rule 56 & 57

Drafting the audit program compliance with the provisions of this Act or the rules made thereunder. b. Various documents required to be maintained Section When to issue Name of Doc 31(1)(a) At the time of Taxable supply Tax Invoice 31(3)(a) Within 1 month of registartion Revised Invoice 31(3)(b) Less Than 200 rupees Consolidate Invoice 31(3)(c) Supply under Section 10 or 11 (Consolidate is also allowed) Bill of supply 31(3)(d) Receipt of Advance payment Receipt Voucher 31(3)(e) Refund due to non-supply(Against Receipt Voucher) Refund Voucher 31(3)(f) Purchase from unregistered supplier Self Invoicing 31(3)(g) Payment to supplier by taxpayer covered under RCM Payment Voucher Rule 138 Movement of Goods E-way bill

Drafting the audit program compliance with the provisions of this Act or the rules made thereunder. c. Filing of various returns - GSTR 3b and GSTR 1 - ITC 04 for goods sent for job work - GSTR 6 by ISD d. Other misc provisions

Checklist for Audit Check the constitution of entity and a brief note on its activities. Check booking of turnover and consolidation of various departments. Make a note on common services provided by head office to branches. (AAR of Asia Columbia Hospitals.) Make a list of exempt and non business supply to calculate reversal. Check Tran 1 and ITC taken via tran 2 Reconcile the turnover in books with GST return.

Checklist for Audit Check the instances where the ITC is taken but it is not reflected in GSTR 2A. We need to see if the invoice for same inward supply is there or not. Check calculation for refund in case of exports. The formula went through many changes on various dates. Take care of all those changes. Check the RCM liability for both RCM till 13-10-2014. After that only 9(3) RCM was there. Check the HSN codes and tax rates taken up for various supplies.

Checklist for Audit Whether proper books are maintained as per GST requirement. We may take a declaration from client. Whether the Software has an audit trail for correction. Whether composition levy related default is there. E- Way bills Gap between GSTR 3b and GSTR 1

Expectations from Auditors & Auditors Responsibility Part II consists of reconciliation of the annual turnover declared in the audited Annual Financial Statement with the turnover as declared in the Annual Return furnished in FORM GSTR-9 for this GSTIN.