VAT Audit Procedure
This query is : Resolved
CA D.A. Udhwani
(Querist)
03 December 2009
How to do VAT Audit in Maharashtra
CA Kamal Gangaramani
(Expert)
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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