VAT Audit Procedure
This query is : Resolved
03 December 2009
How to do VAT Audit in Maharashtra
06 December 2009
Refer Guidance note issued by WIRC
02 August 2025
### ✅ VAT Audit Procedure in Maharashtra (under **MVAT Act, 2002**)
(As relevant **before GST**, for periods like FY 2016–17 and earlier)
If you’re referring to how VAT Audit was done in Maharashtra **before the introduction of GST** (from April 2017), here's a step-by-step guide:
---
### 📌 **1. Applicability of VAT Audit (Section 61)**
VAT Audit was **mandatory** for dealers if:
* **Gross Turnover exceeded ₹1 Crore** during the financial year (up to FY 2012–13, it was ₹60 lakhs, then revised).
* Audit was to be conducted by a **Chartered Accountant** or **Cost Accountant**.
---
### 📌 **2. Due Date for VAT Audit**
* The VAT Audit Report in **Form 704** had to be filed **within 9 months** from the end of the financial year.
* Example: For FY 2015–16 → due by **31st January 2017**
---
### 📌 **3. Required Forms and Documents**
* **Form 704**: Audit Report (to be filed online)
* **Annexure A to K**: Including Sales, Purchases, Tax Payments, etc.
* **Profit & Loss Account and Balance Sheet** (signed and audited)
* **Tax Computation Sheet**
* **Reconciliation Statement** (VAT vs Books of Accounts)
---
### 📌 **4. Audit Process (Step-by-Step)**
#### 🟠 A. **Preparation**
* Collect books of accounts: Sales register, Purchase register, Ledger, Stock register, etc.
* Reconcile **VAT Returns filed (Form 231/233/234, etc.)** with books.
#### 🟠 B. **Audit Work**
* Verify classification of goods and VAT rates applied.
* Check ITC claimed vs eligible.
* Confirm inter-state sales (CST) and stock transfers.
* Verify branch transfers, debit/credit notes, and returns.
* Check tax paid, input credit reversals, and compliance with MVAT rules.
#### 🟠 C. **Filing Form 704**
1. **Login** to [www.mahavat.gov.in](https://www.mahavat.gov.in)
2. Upload **Form 704** (digitally signed)
3. Submit **Audit Report + Annexures + Financials**
4. Download Acknowledgment in **Form 704 A**
---
### 📌 **5. Important Notes**
* Digital Signature was **mandatory** for submission.
* Any discrepancies found during audit had to be paid via **Challan MTR-6**.
* Filing after the due date attracted **penalty under Section 61(2)**.
---
### 📎 Reference:
* [MVAT Form Downloads](https://mahagst.gov.in/en/forms)
* Section 61, MVAT Act, 2002
* Rule 65 & 66 of MVAT Rules
---
Let me know if you need:
* Sample filled **Form 704**
* Format of **Audit Working Papers**
* Specific **annexure explanation**
I can help you build the audit file structure step-by-step.
(As relevant **before GST**, for periods like FY 2016–17 and earlier)
If you’re referring to how VAT Audit was done in Maharashtra **before the introduction of GST** (from April 2017), here's a step-by-step guide:
---
### 📌 **1. Applicability of VAT Audit (Section 61)**
VAT Audit was **mandatory** for dealers if:
* **Gross Turnover exceeded ₹1 Crore** during the financial year (up to FY 2012–13, it was ₹60 lakhs, then revised).
* Audit was to be conducted by a **Chartered Accountant** or **Cost Accountant**.
---
### 📌 **2. Due Date for VAT Audit**
* The VAT Audit Report in **Form 704** had to be filed **within 9 months** from the end of the financial year.
* Example: For FY 2015–16 → due by **31st January 2017**
---
### 📌 **3. Required Forms and Documents**
* **Form 704**: Audit Report (to be filed online)
* **Annexure A to K**: Including Sales, Purchases, Tax Payments, etc.
* **Profit & Loss Account and Balance Sheet** (signed and audited)
* **Tax Computation Sheet**
* **Reconciliation Statement** (VAT vs Books of Accounts)
---
### 📌 **4. Audit Process (Step-by-Step)**
#### 🟠 A. **Preparation**
* Collect books of accounts: Sales register, Purchase register, Ledger, Stock register, etc.
* Reconcile **VAT Returns filed (Form 231/233/234, etc.)** with books.
#### 🟠 B. **Audit Work**
* Verify classification of goods and VAT rates applied.
* Check ITC claimed vs eligible.
* Confirm inter-state sales (CST) and stock transfers.
* Verify branch transfers, debit/credit notes, and returns.
* Check tax paid, input credit reversals, and compliance with MVAT rules.
#### 🟠 C. **Filing Form 704**
1. **Login** to [www.mahavat.gov.in](https://www.mahavat.gov.in)
2. Upload **Form 704** (digitally signed)
3. Submit **Audit Report + Annexures + Financials**
4. Download Acknowledgment in **Form 704 A**
---
### 📌 **5. Important Notes**
* Digital Signature was **mandatory** for submission.
* Any discrepancies found during audit had to be paid via **Challan MTR-6**.
* Filing after the due date attracted **penalty under Section 61(2)**.
---
### 📎 Reference:
* [MVAT Form Downloads](https://mahagst.gov.in/en/forms)
* Section 61, MVAT Act, 2002
* Rule 65 & 66 of MVAT Rules
---
Let me know if you need:
* Sample filled **Form 704**
* Format of **Audit Working Papers**
* Specific **annexure explanation**
I can help you build the audit file structure step-by-step.
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