GST Audit for FY 2023-24: Comprehensive Guide on Preparation and Documentation

Introduction

As the financial year 2023-24 concludes, businesses with significant turnovers need to prepare for the mandatory GST audit. Ensuring compliance with the Goods and Services Tax (GST) laws is crucial for avoiding penalties and ensuring smooth operations. This comprehensive GST Audit Checklist will walk you through the entire process of preparing for a GST audit, including key preparation steps, essential documentation, common challenges, and best practices. By the end of this guide, you’ll have a clear understanding of how to efficiently manage your GST audit for FY 2023-24. We also provide GST Registration services to help streamline your compliance process.

1. What is a GST Audit?

A GST audit is a process where a taxpayer’s records, returns, and other documents are examined by a tax official or a qualified professional to verify the accuracy of the information provided and to ensure compliance with GST laws. The purpose of the audit is to ensure that the taxpayer has correctly reported turnover, taxes paid, refunds claimed, and input tax credit (ITC) availed.

Types of GST Audits:

Type of Audit	Description
Turnover-based Audit	Mandatory for businesses with an aggregate turnover exceeding ₹2 crores in a financial year.
Special Audit	Directed by tax authorities if discrepancies are noticed during the audit or inspection.
Departmental Audit	Conducted by GST officers under Section 65 of the CGST Act to ensure compliance with GST laws.

2. Who Needs to Undergo a GST Audit?

For FY 2023-24, any business with an aggregate turnover exceeding ₹2 crores is required to undergo a GST audit. The aggregate turnover includes the total value of all taxable supplies, exempt supplies, exports, and inter-state supplies.

Key Points:

• The audit must be conducted by a Chartered Accountant (CA) or a Cost Accountant.
• The taxpayer is required to submit the audited financial statements along with a reconciliation statement in Form GSTR-9C.

3. Key Preparation Steps for GST Audit

Preparing for a GST audit requires meticulous planning and organization. Here are the key steps to ensure you’re ready:

1. Review GST Returns

The first step in preparing for a GST audit is to review all the GST returns filed during the financial year. This review ensures that the data in the returns is consistent with the books of accounts and financial statements.

GST Return Type	Description	Frequency	Due Date
GSTR-1	Details of outward supplies of goods/services made by the business.	Monthly/Quarterly	11th of the next month
GSTR-3B	Summary return including details of outward and inward supplies, tax liability, and ITC.	Monthly	20th of the next month
GSTR-9	Annual return consolidating all monthly/quarterly returns.	Annually	31st December of the next financial year
GSTR-9C	Reconciliation statement certified by a CA comparing financial statements with GST returns.	Annually	31st December of the next financial year

Checklist for Review:

• Cross-check GSTR-1 and GSTR-3B: Ensure that the details of outward supplies reported in GSTR-1 match the summary return GSTR-3B.
• Identify Missing Invoices: Ensure that all sales and purchase invoices are accounted for and correctly reported in the relevant returns.
• Verify Amendments: Check for any amendments made to the returns and ensure they are accurate and necessary.

2. Reconciliation of ITC

Reconciliation of Input Tax Credit (ITC) is a critical step in the GST audit preparation process. ITC reconciliation involves matching the ITC claimed in the GST returns with the ITC available as per GSTR-2B.

ITC Reconciliation Process:

• Match ITC Claimed with GSTR-2B: Ensure that the ITC claimed in GSTR-3B aligns with the ITC available in GSTR-2B.
• Verify ITC Eligibility: Confirm that ITC is claimed only on eligible inputs and services as per GST laws.
• Check for ITC Reversals: Identify instances where ITC needs to be reversed, such as non-payment to suppliers within 180 days.

ITC Reconciliation Parameter	Description
Eligible ITC	ITC that can be claimed based on valid tax invoices and services received.
Ineligible ITC	ITC that cannot be claimed, such as ITC on motor vehicles, personal expenses, or goods lost/stolen.
Reversed ITC	ITC that must be reversed due to non-compliance with GST conditions (e.g., non-payment within 180 days).

3. Cross-Check Financial Statements

Cross-checking your financial statements with your GST returns is essential to ensure consistency and accuracy.

Financial Statement	Reconciliation Focus
Profit and Loss Account	Ensure that the revenue reported in the profit and loss account is consistent with the turnover reported in GST returns.
Balance Sheet	Verify that the liabilities related to GST, such as output tax payable and ITC receivable, are accurately reported.
Cash Flow Statement	Cross-check that the cash flows related to GST payments match the payments reported in GST returns.

4. Prepare Reconciliation Statement (GSTR-9C)

GSTR-9C is a reconciliation statement that compares the figures declared in the audited financial statements with those reported in the GST annual return (GSTR-9). It is a critical part of the GST audit.

Section of GSTR-9C	Description
Part I	Basic details of the taxpayer and the auditor, similar to GSTR-9.
Part II	Reconciliation of turnover declared in audited financial statements with turnover declared in annual return (GSTR-9).
Part III	Reconciliation of tax paid and payable, including reasons for differences, if any.
Part IV	Reconciliation of ITC claimed and ITC availed, including adjustments and reversals.
Part V	Auditor’s recommendations on tax liability and any additional liability identified during the audit.

4. Essential Documentation for GST Audit

Proper documentation is critical for a smooth GST audit process. Below is a list of essential documents required for the GST audit:

Document Type	Details
GST Returns	Copies of all GSTR-1, GSTR-3B, GSTR-9, and GSTR-9C filed during the year.
Tax Invoices	All sales and purchase invoices, including credit and debit notes.
Books of Accounts	Ledger, cash book, stock registers, and bank statements.
Input Tax Credit Documents	Invoices, bills of entry, and other documents supporting ITC claims.
Tax Payment Challans	Challans for all GST payments made during the year.
Contracts and Agreements	Copies of contracts and agreements related to business transactions.
Financial Statements	Audited balance sheet, profit and loss account, and cash flow statement.
Audit Reports	Reports from internal or statutory audits, if applicable.

5. Common Challenges in GST Audits

GST audits can be challenging, especially when dealing with complex transactions or large volumes of data. Some common challenges include:

• Data Reconciliation Issues: Discrepancies between the returns filed and the books of accounts can lead to audit objections.
• Incomplete Documentation: Missing or incomplete documentation can result in the disallowance of ITC or other audit issues.
• Frequent Changes in GST Laws: Keeping up with changes in GST laws and ensuring compliance can be difficult.
• Classification Disputes: Incorrect classification of goods or services can lead to disputes over tax rates and liability.

6. Best Practices for a Successful GST Audit

To ensure a successful GST audit, follow these best practices:

Best Practice	Details
Maintain Accurate Records	Keep detailed and accurate records of all transactions, including invoices, contracts, and payments.
Regular Reconciliation	Regularly reconcile your GST returns with your books of accounts to identify and resolve discrepancies early.
Stay Updated on GST Laws	Keep yourself informed about the latest changes in GST laws and regulations to ensure compliance.
Seek Professional Help	If you face challenges in preparing for the audit, consider seeking assistance from a GST professional or consultant.

7. How ApkiReturn.com Can Help

At ApkiReturn.com, we understand the complexities involved in preparing for a GST audit. Our expert team of Chartered Accountants and tax professionals can assist you in:

Service Offered	How ApkiReturn.com Can Help
Comprehensive GST Audit Preparation	We help you review your GST returns, reconcile ITC, and prepare the necessary documentation for the audit.
Accurate GSTR-9C Filing	Our experts ensure that your GSTR-9C is accurately prepared and filed, minimizing the risk of audit objections.
Ongoing Compliance Support	We provide continuous support to help you stay compliant with GST laws throughout the financial year.

Click here to learn more about our GST services.

8. Final Thoughts

The GST audit for FY 2023-24 is a critical compliance requirement for businesses with an aggregate turnover exceeding ₹2 crores. Proper preparation and documentation are key to ensuring a smooth audit process and avoiding penalties. By following the steps outlined in this GST Audit Checklist and seeking professional assistance when needed, you can navigate the GST audit with confidence.

At ApkiReturn.com, we are committed to helping businesses like yours stay compliant and prepared for GST audits. Our comprehensive GST Audit Checklist ensures you have everything covered, from documentation and reconciliation to filing. Our team is here to support you every step of the way. Contact ApkiReturn at +91 766 515 6000 for more information and expert guidance. 

Stay compliant, stay confident.

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