How GST officer will prepare for Audit of Taxpayer

By | November 25, 2018
(Last Updated On: November 25, 2018)

How GST officer will prepare for Audit of Taxpayer

Following are guidelines for GST Officer for preparing for audit of taxpayer

Risk Analysis of Taxpayers

Risk analysis need to be done and the risk factors have to be identified.

This includes scrutiny of data available in GST backend such as

  • Invoice Verification,
  • e-waybills mismatch found between GSTR 1, 3B and GSTR2A
  • Closing stock statements
  • annual return,
  • audit statement,
  • credit note,
  • debit note,
  • refund received
  • ITC claimed etc.

Checking of Compliance Level

The Compliance level of the taxpayer will be analysed and following will be verified :-

  • belated filing and
  • non filing of the returns and
  • statutory documents

The taxpayer details should be checked for

  • branches,
  • commodities dealt with,
  • present status,
  • audit objections,
  • Methods of Tax Payment opted by the taxpayer etc.

Checking of Assessment Records

The assessment records including following should be obtained from the respective office by the GST officer

  • Registration File,
  • Assessments completed,
  • Crime files/ OR files,
  • notices issued,
  • penalty imposed,
  • Refund Application Pending/Granted etc.

Checking of Tax performance

Tax performance of the taxpayer for the past five years should also be analysed.

Preparing Taxpayer Folder

  • Gathering Information :- A Taxpayer Folder shall be prepared with as many as possible information/ inputs gathered from the available sources including external agencies.  Gather all available information. This ensures that as detailed information as possible and can be used for the actual audit, the information collected needs to be confirmed .
  • Review all gathered information. This helps to identify whether or not the audit scope should be redefined. As this is the final step prior to the actual audit, the auditor must ensure that all key issues are addressed and that a risk hypothesis has been developed.
  • Adjustments :- As the auditor will now begin to develop a position, any necessary adjustments to the audit scope should be made.

Acquiring Knowledge about Taxpayer Industry

Acquire basic knowledge about the nature of the trade or industry.

  • In the case of a manufacturing concern, the officer should study the manufacturing activities involved, the raw materials used, the input – output ratio etc. Necessary data for this may be gathered from the
    • Department of Industries and Commerce,
    • Rubber Board,
    • Taxpayer community,
    • Publications,
    • Internet etc.
  •  The officer should have a general awareness about the major suppliers to the taxpayer and his major buyers/clients, the peculiarity of the commodities dealt with by him viz.,
    • General Demand,
    • Price and Gross Profit ratio prevailing in the market,
    • Whether B2B or B2C Sales,
    • Whether the Commodities dealt with are prone to misclassification / evasion,
    • Proceedings pursuant to previous Audit Visits,
    • Pattern of Suppression detected by enforcement agencies during the previous years,
    • Export Documents submitted etc.
  • Similarly Separate action plan should be devised for
    • traders,
    • manufacturers and
    • Works Contractors,
    • service providers. :Construction sites can be visited to ascertain the progress in work / completion, number of units of Flats/ Villas etc.

Pre Audit Discussion

  • Pre Visit discussion with the team members and the designated officer should be conducted in order to identify the core areas to be focused during the Audit Visit.
  •  Separate action plan for the Principal Business Place and Branches/Godowns shall be devised based on the careful consideration of the materials in hand and the resources available.
  • It has also to be decided as to whether the visit needs to be confined only to the principal place of business
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 :

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