Checklist for GST Audit of Composition Tax payer

By | January 29, 2021
(Last Updated On: January 29, 2021)

CHECKLIST FOR COMPOSITE DEALER

Sr NoSource DocumentsManner of Ratio
Calculation/ Study
Utilization of the Ratios/Study in Audit
1GSTR 9 A as well as Profit & Loss accountReconciliationTo check whether turnover is under the specified limit as per the Act
2GSTR 9 A &
Profit & Loss Account/ Income
& Expenditure
Account
Break up of Sales/Revenue from operationsBreak up is to be checked with regard to income from Supply of Goods or Services with regard to study of exclusion as provided under Section 10 of PGST Act, 2017
3Balance Sheet & GSTR-9 A
Return
ITC availedAs Composition taxpayer is not entitled to availment of ITC it needs to be verified.
4GSTR-9 A ReturnITC reversalITC reversal is required while opting in composition scheme from regular tax regime.
5Profit & Loss
Account and GSTR 9A Return
Expenditure incurred on inward
supply vis a vis tax paid under RCM
The expenditure incurred on inward supply (on which tax is liable to be paid under RCM) as provided in expenditure side of P& L Account can be matched with the value of such inward supply as mentioned in GSTR 9A, if any discrepancy found, checks can be performed in details during audit.
6Profit & Loss
Account and GSTR 9A Return
Amount of GST shown on expenditure sideAs per Section 10 (4) of PGST Act, 2017, a composition dealer cannot recover tax from his customers on outward supply and tax is supposed to be borne by him from his own pocket. In other words Tax amount should be a part of the cost and should reflects in the expense side of P&L account. This can be verified and also reconciled with GSTR-
9 Are turn
7Profit & Loss Account/Trial Balance.Scrap Sales: SalesIf ratio in the current year is lower, it may be on account of the clearance of scrap without payment of Tax
8Director’s Report in Annual Report and Quantitative details of
production from Profit & Loss Account
Power Consumption/Fu el consumption(Qty
): Production Quantity
To identify suppression of production resulting into supply of unaccounted Goods without payment of Tax
9Annual Report and documents pertaining to installed machinery.Quantity of actual production (Nos./Kgs./Lt) : installed capacityIf the ratio is decreasing, there is a possibility of suppression of production and subsequent supply of Goods without payment of Tax
10Schedule
of Quantitative details
of tax
Audit Report as required under Section 44AB of Income Tax Act,1961
Study of Quantitative details
of raw Material as well as Finished Goods
Along-with the Profit & Loss Account, quantitative details of the consumption of major raw materials is also required to be given. Such quantitative details show the quantity of major raw material consumed and Production thereof. Such information may be helpful in working out the input-out ratio which can indicate suppression of production of goods and supply thereof without payment of Tax.
11Balance SheetSchedule of Current LiabilitiesFrom the grouping of this schedule, Advance received from Buyers can be noticed. If any advance is received, then payment of Tax in the light of “time of supply of services” can be verified.
12Trial BalanceStudy of Income AccountsUnusual income accounts may also be noticed in the Trial Balance. However, such accounts will not be reflected in the Profit & Loss Accounts as these accounts are adjusted against other accounts. Such account may be selected for finding of exact nature and detailed scrutiny.
13Trial BalanceStudy of Expenditure AccountsSome of the expenditure accounts on which RCM is applicable should also be selected to find out whether Taxpayer has paid Tax or not.
For instance, Payment made towards Sponsorship services may be clubbed in the category of Advertisement and Sales Promotion Expenses which can be identified only from the Trial Balance
Category: GST

About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email : Taxheal@gmail.com

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