GST Audit FY 19-20 Checklist : 10 Points to keep in mind

GST Audit

GST Audit for the FY 18-19 is over and people are moving over to GST Audit FY 19-20. As per the Union budget 2021-22, FY 2019-20 is the last year of GST Audit, after this GST Audit will be abolished. The last date for FY 19-20 GST Audit was 31st December 2020, however, it has been extended till 28th February 2021. During last year’s audit many problems were faced by both the auditor and the person whose audit was conducted. Some of them are –

1.   Invoices for either sale or purchase were not available for many transactions.

2.  More ITC was claimed then Actual available.

3.  Either didn’t file the returns or filed with wrong information.

4.  Taken or utilized input tax credit without actual receipt of goods and services.

5.  Transported goods without e-waybill.

6.   Many a person dealt sales return as purchase and purchase return as sales in their books and didn’t show these in their returns.

Read Also: GST department issuing notice of GST audit for the FY 2017-18 and 2018-19

Who are liable for GST Audit?

For Business having aggregate turnover of more than Rs 5 crore, GST Audit for Financial Year 2019-20 is compulsory. In other words, businesses having aggregate turnover for Financial Year 2019-20 less than 5 crore, GST audit is optional for them.

Business having aggregate turnover of more than Rs 2 crore, GST Annual Return in form GSTR-9 for FY 2019-20 is compulsory. In other words, businesses having aggregate turnover for Financial Year 2019-20 less than 2 crore, GSTR-9 is optional for them.

Applicability of GSTR 9 and 9C for FY 2019-20 is as follows-

TurnoverGSTR 9GSTR 9C
less than 2 croresOptionalNot required
More than 2 crores upto 5 croresCompulsoryOptional
More than 5 croresCompulsoryCompulsory

Who are not required to file GSTR-9 and GSTR-9C?

Following person are not required to file GST Annual Return (GSTR-9) and GST Audit (GSTR 9C)-

  • Input Service Distributor
  • Tax deductor
  • Tax collector
  • Casual taxable person
  • Non-resident taxable person
  • Person supplying OIDAR service from Place outside India [Notification No 30/2019 Central Tax Non Rate]
  • Foreign Airlines are not required to submit Form GSTR9C [Notification No 30/2019 Central Tax Non Rate]

Checklist for GST Audit FY 2019-20

As this is the last year of GST Audit, one should correct all the mistakes done in previous years. There are few points which should be kept in mind by both the auditors and taxpayer’s while conducting GST audit. Checklist for GST Audit FY 2019-20 is as follows-

1. Reconciliation with GSTR 1 & 3b

It should be ensured that monthly or quarterly returns are in sync with books of accounts before filing GSTR 9. In other words, it can be said that books of accounts through which financial statements are prepared should be cross verified with GSTR 1 & GSTR 3b. After that GSTR-9 should be filed, followed by GSTR-9C.

Read Also: GSTR 9 & 9C for FY 2019-20 | GST Audit Turnover

2. Taxes on Reverse Charge Mechanism (RCM)

GST payable on supply covered under Reversed Charged Mechanism (RCM) basis should be paid in cash. ITC for the same can be availed in the same month. Auditor needs to take care whether taxes on RCM has been paid in cash or not.

3. Interest on late payment of GST

Interest calculations on liability @ 18% p.a. is required to be made and auditor is required to check whether same has been deposited timely by the taxpayer. Also, if notices have been issued by department for the payment of interest, whether same has been properly dealt with. If claimed excess Input Tax Credit (ITC), payment of interest at 24% on the excess tax amount is required.

Check: GST Interest Calculator

4. Reversal of Input Tax Credit for non – payment in 180 days

Date of invoice of supply and Date of payment should be checked that the difference does not exceed 180 days. ITC should be reversed for non-payment of invoice within 180 days and this should be checked by the auditor. This is most common mistake and need to be taken care of.

5. Requirement of E-Way Bill

Check that any E-way bill was issued or not, if required. If it’s issued then check is it tallying with invoices issued. Is there any Goods which was sent on approval basis, and it’s exceeding the time limit of 6 months and not offered to tax?

6. Matching GST Audit Turnover with Income Tax Turnover

Disclosing Turnover under Goods and Service Tax and Income Tax is matter of confusion now-a-days. As GST Turnover definition is somewhat different from Income Tax Turnover. However, now both the department will exchange the information with each other. Therefore, one needs to take care in reporting turnover under Income Tax and GST.

Read More : GST Turnover v/s Income Tax Turnover

7. GSTIN wise Audit

GST Audit is applicable when Total Turnover on PAN India basis exceeds 5 crore in FY 2018-19. However, GST Audit will be done GSTIN wise. Turnover will be checked on PAN basis that means all supplies made inclusive of exempted supplies made throughout the country either from 1 place or multiple branches will be considered, while checking turnover for GST audit.

For example, BabaTax has unit in Delhi having turnover of 2 crore, in Maharashtra 2 crore and in Gujarat 2 crore. Total turnover is, therefore, 6 crore. Therefore GST Audit is applicable to all its units.

Read Also: Form 26AS importance in GST- Never underestimate the power of 26AS

8. Stock transfer

In case of multiple branches, stock transfers among branches must also be reconciled. The stock held as per books of accounts and the GST annual return must be the same. Stock transfer outside the state is considered as supply under GST.

9. Bifurcation of ITC availed

The ITC has to be bifurcated in purchases and different kind of expenses like Freight, Employee’s cost, Bank charges, Capital Goods, etc. From Profit and Loss Account, expenses can be identified easily, it should be classified in proper heads.

Read Also: HSN and SAC to declared only above this limit

10. Other Points

  • The payment amount is equal to the invoice amount including GST. In case of any short payment, it would required ITC reversed to the extent of short payment, if payment amount is less than the amount of invoice plus GST.
  • Check whether both the inward supplies and outward supplies are charged with applicable rate or not.
  • Is there any supplies either inward or outward which contains exempted supplies.
  • Check if there’s any data gap, the auditor should inform the taxpayer. For checking these we can also use Pivot Table and VLook up function in Excel.

For any questions, you may reach us at Discussion Forum


The author of the above article is Sneha Bhalotia.

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon. 
Also, and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.

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