Procedure you should follow after GST Audit notice

Last Updated On: Dec. 14, 2020, 10:24 p.m.


The audit consists of an examination of assessees accounts and visits to the campus or offices. Article 65 of the Central Goods and Services Tax Act needs an authorized officer to provide the 15-day notice prior to initiating the audit and complete the same in 6 months.

The assessee has been questioned by the GST officers to provide the copies of financial statements, GSTR-1, 2, and 3B returns TRAN-1 form for transitional credit and with GSTR-9 yearly return. Below are the businesses that need to be ready for the GST audit.


Assessee’s Preparations:

The assessee has proper credential planning so to face the inquiry from the council. It is because the department has given only 15 days for furnishing the replies, said the experienced people. Nirmal Singh of tax consultancy firm Nangia Andersen LLP states that the audit consists of provoking investigation of tax records and processes. This will be much more difficult for the assessee who has various operations.

The various approaches taken by the state GST officials sums to the difficulty. Jigar Doshi, partner at tax consultancy TMSL LLP comments that some state authorities have undergone asking the internal control measurement, stock count, and the other thing that might look to be different from the indirect tax audit.

Lack of uniformity and non-standardized notices received from different state GST authorities hardly depicts that “we have moved to a uniform tax regime,” he said.


What is the Method of Responding to the Taxpayer?

GST council overtook the assessee for auditing on particular parameters such as turnover, risk factors, credit utilization, and alerts generated through the GST platform. If the assessee is opted the council problems notice need it to compose the sufficient credentials for proving the activities in the reporting time.

Itis totally based on the cases about the need for more documents the council might be sought for the particular documents with the potential documents the assessee should have to manage the state-wise master file said, Nirmal Singh.

The master file should include documents such as financials, income tax and transfer pricing audit reports, copies of GST returns, tax credit register, sample agreement with customers, and summary of payment conditions to customers.

The transaction documents comprising the manufacturing process, invoices, and E-way bills must also be maintained by the assessee.

Let us suppose A retailer has an engagement all across 29 states of India. It is on the basis of central and state GST in all the states. The same is to say that it will plan goods for local suppliers in every state. Central or state GST authorities might seek the details and thus a state-wise master file is needed for the audit.


What Should Taxpayers Account For?

In arrangement for a GST audit, companies should concentrate on two fundamental aspects- tax positions and utilization of input tax credit.

Tax Sites- The goal of a GST audit is to check whether an assessee has stuck to government notifications and court patterns.

The government ltd claim the input tax credit on missing the invoices of 10% of the liable credit generated from the details on the valid invoices. Various input goods and services can be classified again which results in the reduction or rise in the GST rates.

“This is the right time for taxpayers to corroborate tax positions by conducting a GST health check review for key tax policies. In case of any discrepancies, tax can be paid along with applicable interest. Businesses may avoid attracting penalties if this is already done prior to receiving an audit notice.” said Jigar Doshi, partner, TMSL LLP.

Moreover, the court said that the legacy problems of the service tax and VAT era shall also be related to the extent even in the GST arrangements.

Tax credit: the gone examinations through the council have found vanishing and non-tracing the exporters who involve in the tax credit bogus by presenting the fake exports. The trade organization Federation of Indian Exporters Association seeks that some of its people might have been using the tax credit in the wrong manner.

The assessee shall settle the turnover reported in the audited financials and the one who has reported in GST returns to make sure that the supplies lying within the GST act are correctly reported.

“Businesses must carry out reconciliation between GSTR-2A (monthly returns on purchases) & GSTR-3B (monthly return on inward and outward supplies) to ensure that only eligible credits have been availed. Any gaps arising on account of such reconciliations must be identified and documented.”


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