20 Important points in GST Audit

Summary

This video covers a comprehensive 20-point checklist for conducting a GST audit. It emphasizes critical aspects like verifying GST registration, ensuring accurate invoice authorization, checking compliance for exports, reviewing tax rates on output supplies, and confirming the proper handling of advance payments and reverse charge mechanisms. The checklist also highlights the importance of calculating refunds, reconciling GST returns, and avoiding penalties for late filings. The guidance is designed for business owners, accountants, and tax professionals to ensure smooth and compliant GST filings.

Takeaways

• 😀 Ensure that your profit and loss account is updated and subscribed to the latest GST details.
• 😀 Verify that all registered persons are authorized on the GST portal before proceeding with any transactions.
• 😀 Cross-supply and inter-company transactions should be properly recorded in accordance with GST compliance.
• 😀 Double-check that export supplies are declared correctly and in alignment with GST regulations.
• 😀 Review the calculation of GST refunds to ensure accurate claims are made in the relevant forms.
• 😀 Confirm that all output supplies are taxed at the correct GST rate based on the applicable rules.
• 😀 Follow proper cancellation procedures for GST registration if required, ensuring compliance throughout.
• 😀 Advance payments and services should be handled carefully, ensuring their proper GST treatment.
• 😀 Interest rates on taxable transactions must be applied correctly to prevent potential issues.
• 😀 Ensure proper handling of Reverse Charge Mechanism (RCM) for services and goods as per GST norms.
• 😀 Job work and subcontractor services should be examined for correct GST treatment, preventing discrepancies.
• 😀 Properly record input tax credits to avoid discrepancies in claims and ensure eligibility for refunds.
• 😀 Separate taxable and non-taxable transactions, applying the appropriate GST rates to each.
• 😀 Make sure that the consumption of captive energy is properly handled for GST purposes.
• 😀 Loans and advances must be reported correctly, ensuring accurate GST treatment on advance payments.
• 😀 Confirm timely and accurate filing of GST returns (e.g., GSTR 9, 9C), avoiding delays and penalties.
• 😀 Ensure proper interest accounting for late GST payments to avoid non-compliance issues.
• 😀 Review and confirm that all interdepartmental transactions are recorded correctly in your accounts.
• 😀 Conduct a final thorough review of all areas of GST compliance to ensure everything is in order for the audit.

Q & A

What is the 20-point GST audit program mentioned in the video?

The 20-point GST audit program provides key guidelines for auditing GST compliance. It covers areas such as verifying invoices, checking tax rates, reviewing export supplies, ensuring proper refund calculations, and more. It helps businesses ensure they meet GST requirements effectively.

Why is it important to check the Profit & Loss account subscription during a GST audit?

Checking the Profit & Loss account subscription is important to ensure that all GST accounts are properly registered and updated. This helps in avoiding discrepancies and ensures that all transactions are correctly reported on the GST portal.

How can you verify if an invoice is properly authorized for GST purposes?

To verify if an invoice is properly authorized, check whether it is signed by an authorized person who is registered on the GST portal. This ensures the authenticity of the invoice and confirms compliance with GST regulations.

What should you do to ensure compliance with export supply declarations?

To ensure compliance with export supply declarations, verify that all export supplies are accurately declared in the GST returns and comply with relevant GST export laws. This includes confirming that any applicable refunds are processed correctly.

What steps should be followed to calculate GST refunds correctly?

To calculate GST refunds correctly, businesses should carefully review the tax paid on inputs and outputs, confirm that they meet the conditions for a refund, and ensure that the refund claims are filed in accordance with the GST regulations.

Why is it necessary to check for discrepancies in tax liability during a GST audit?

Checking for discrepancies in tax liability helps identify any mismatches between the taxes paid and taxes collected. This ensures that the business is paying the correct amount of GST and avoids any penalties or legal issues related to underreporting or overreporting taxes.

What should you check regarding tax rates during a GST audit?

During a GST audit, verify if the correct tax rate has been applied to all output supplies. This includes checking if any tax exemptions or reductions were applied appropriately, as well as confirming that the tax rate follows the legal standards.

What is the Reverse Charge Mechanism (RCM) in GST, and why is it important to check during an audit?

The Reverse Charge Mechanism (RCM) is when the recipient of goods or services is required to pay the GST instead of the supplier. It's important to check RCM compliance during an audit to ensure that any applicable RCM transactions are reported and taxed correctly.

What steps should businesses take to handle job work transactions during a GST audit?

For job work transactions, businesses should ensure that the GST on such transactions is recorded correctly. This includes verifying whether the applicable tax is being charged and whether the correct procedures for job work compliance are being followed.

What is the importance of checking the Reverse Charge Mechanism (RCM) liability in a GST audit?

It is essential to check RCM liabilities in a GST audit to ensure that the correct tax is paid on services or goods where the recipient is liable to pay the tax instead of the supplier. This helps avoid any potential legal issues or penalties for non-compliance.

How should businesses handle delays in GST return filings and what are the consequences?

If a business experiences delays in filing GST returns, it should calculate any interest or penalties based on the delay. This helps in mitigating any legal issues and ensures that businesses remain compliant with GST filing deadlines.

What should businesses do to ensure compliance with energy supply and loan approval reporting under GST?

Businesses should verify that energy supplies and any associated tax obligations are reported correctly. Similarly, they need to ensure that loan approvals and associated documentation are completed within the required timelines and meet all relevant GST guidelines.