GST Audit



GST Audit

With the completion of more than one year since the introduction of GST, it’s critical to start focusing on various compliances such as input and output reconciliations, preparation and filing of annual return and GST audit certification. All of these compliances will form an important basis for the first audit/scrutiny/assessment under the GST law. The law prescribes multiple audits conducted by the authorities, an external auditor appointed by the authorities or audit certification by a person appointed by the company. The following are the audits which companies should be prepared for :

  • Audit by commissioner under section 65 of the CGST Act, 2017
  • Special audit in terms of section 66 of the CGST Act, 2017
  • Audit as part of the annual return process by an external Chartered Accountant (in Form 9C and 9D – draft submitted by the ICAI)

Then go into details each of those points, e.g. interest income is generally charged by finacle in most of the branches, but there would be some customers for whom manual interest reversal entry would be required to be made. So, you should check if that reversal calculations have been made properly or not.

Then, you can also check other misc income like cheque bounce charges, as many of times they are reversed. So, you can check if SOP was followed or not while doing that.


It’s important that companies start preparing for these audits in order to avoid any loss of credits, applicability of interest/penalties, etc. Some of the key aspects to be considered by companies are as follows :

  • Reconciliations :Ensure reconciliations of output tax/input tax between the books of accounts, returns and e-waybills issued (output side)/tax discharged by the vendors (input side).
  • Tax positions :Review the tax positions adopted by the company and also whether these are correctly reflected in documentation.
  • Credits :Review if any ineligible credits have been availed (including review of credits availed) and in the process also ensure completeness of credits.
  • Applicability of other provisions like free of cost services/goods, valuation, and cross-charges between related persons/distinct persons.

Now is the perfect time for companies to ensure that they are well prepared for all the audits to be conducted by the authorities.