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GST Testing under Internal Audit

Mandli Ravi Tej 
on 27 September 2019

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We are almost at the end of statutory audit season and many of us will be working in internal audits from now. Statutory compliance will be the compulsory component in the scope. We will be covering basic reconciliations as a part of GST testing. But we can further extend our testing procedures. Followings procedures can be performed as a part of GST testing. The following list is not exhaustive but covers basic procedures.

GST Testing under Internal Audit
  • Verify whether a certificate of registration prominently displayed in all locations where the business is done.
  • Verify whether GSTIN no. included along with the name of the business in displays (As per Rule 18 of CGST Rules, Every registered person shall display his Goods and Services Tax Identification Number on the name board exhibited at the entry of his principal place of business and at every additional place or places of business.)
  • Verify whether entity have obtained different registrations for branches in different states and whether all the additional place of business within the state were updated in registration certificate.
  • Verify whether customer master contain valid GST registration data (this can be done using the online tool available for free at (50 GSTINs at once)- https://app.sahigst.com/search-taxpayer ).
  • Verify whether Invoice discloses all the details to be disclosed as per the GST Act (Invoice number and date, Customer name, Shipping and billing address, Customer and taxpayer’s GSTIN (if registered), Place of supply, HSN code/ SAC code, Item details i.e. description, quantity (number), unit (meter, kg etc.), total value, taxable value and discounts, Rate and amount of taxes i.e. CGST/ SGST/ IGST, Whether GST is payable on reverse charge basis, signature of the supplier) on a sample Basis.
  • Verify whether a Self-invoice is created for all the RCM payments disclosing the details as per the Act (this self-invoice should also disclose all the requirements of a forward charge invoice as mentioned in above point).
  • GSTR 3B vs GSTR 1 vs Books reconciliation for output tax (Verify whether entity is performing that or not and reperform the same for accuracy and validity).
  • GSTR 3B vs GSTR 2A vs Books for reconciliation of input credit claimed and input details uploaded by the supplier in his GSTR-1 (Verify whether entity is performing that or not on periodical basis).
  • Verify whether the company filed all the returns before due date.
  • Verify whether the inputs claimed by the entity is eligible credit. (Entity should not claim blocked credits (refer sec 17(5)).
  • Verify whether the payments were made to suppliers within 180 days from the date of invoice for which input is claimed and input should be reversed in case of non-payment within 180 days.
  • Review of E-way bill system of the entity (Business is issuing e-way bill wherever necessary, details mentioned in the e-way bill match with the details of sales or purchase invoice as the case may be, etc).
  • Verify whether the entity is maintaining HSN/SAC wise details for Output, Inputs (which is required for filing the annual return (GSTR-9)).

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