GST AUDIT An Approach Note. Indirect Taxation Process & Technology Advisory Compliance I Outsourcing

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Kerry Nichols
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1 GST AUDIT An Approach Note Indirect Taxation Process & Technology Advisory Compliance I Outsourcing

2 GST Audit An Overview What is GST Audit? On whom it applies to? Types of Audit & Who will do? Examination of records and other documents maintained or furnished by the registered person under this Act or rules made there under or under any other law for the time being in force to:- verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, assess GST Compliances with the provisions of this Act or the rules (Applicable Section : Section 2(13) of the CGST Act, 2017) A Registered Person under GST whose Aggregate Turnover* during a financial year exceeds the prescribed limit of Rs.2 Crore is liable to get his accounts audited by a Chartered Accountant or a cost accountant. Period for Computing Aggregate Turnover - Clarification awaited What you need to File? You need to file following on or before 31 st Dec 2018 Audited Annual Accounts Reconciliation Statements* under GSTR-9C Annual Return GSTR 9 : Normal Taxpayer GSTR 9A : Composition Suppliers GSTR 9B : E-commerce Operators Compulsory GST Audit Annually By Chartered Accountant or a Cost Accountant Audit u/s 35(5) of the CGST Act,2017 Audit by Tax Authorities - Adhoc By Commissioner or any officer authorized by him Audit u/s 65 of CGST Act, 2017 Special Audit - Adhoc By GST Department in Complex matters through CA or CMA Audit u/s 66 of CGST Act,

3 Consequences Benefits Benefits & Consequences GST Audit is a review mechanism which is undertaken periodically to find out the discrepancies & take corrective measures. Early notice of Discrepancies Corrective measures in a timely manner Maximization of credit availment Minimization of tax plus consequential interest & Penalty Timely Compliances Review mechanism Delay in Filing Annual Return Not getting Accounts Audited Rs. 100 per day during which such failure continues subject to a maximum of a quarter percent (0.25%) of the turnover in the State/UT Penalty up to 25,000/ for not getting accounts audited by Chartered Accountant or Cost Accountant

4 What you need to prepare Accounts & Records : Inward Supply Details of Inward & Outward supply, Stock of goods - in value and quantity with description, ITC claimed, Output Tax Payable and paid, details of advances paid/received with documentation proof of all (like Invoice, Debit Note, Credit Note, Receipt Voucher, Payment Voucher, Refund Vouchers. All records as per the place of business Details (With Documents) Outward Supply Details (With Documents) The names and complete addresses of suppliers and recipients and the complete address of the premises where goods are stored Manufacturer shall maintain monthly production accounts Qualitative Details You shall Arrange Details of advances Received/paid. Owner or operator of warehouse / godown / other storage spaces, and every transporter, shall maintain records of the consigner, consignee and other relevant details of the goods, even if he is not a registered person. Details of Receipt Bills of Supply Records to be maintain in the respective places which are appearing in the certificate of registration Voucher, Payment Vouchers & refund vouchers Debit/ Credit Notes raise and received details Issued/received

Our Understanding of your Challenges Knowledge Lack of clarity in the GST law : over 300 Notifications + several FAQs, Orders, Circulars,

due to mismatch in GSTIN; Discrepancy with the amount of credit / cash being utilized to off-set the liability; Duplication in invoices Transactions not

Maintenance & Review of Various Records Timeline Complete audit till September with in a fair manner with Correct information otherwise ITC would lapse

Where any discrepancies are noted during the course of the GST audit post September, it appears that no recourse would be available to the auditee

5 Our Understanding of your Challenges Knowledge Lack of clarity in the GST law : over 300 Notifications + several FAQs, Orders, Circulars, clarifications, flyers, press releases & tweets & Law is still evolving Business Understanding Challenges Process Errors in Transitional credit claims due to mismatch in GSTIN; Discrepancy with the amount of credit / cash being utilized to off-set the liability; Duplication in invoices Transactions not appearing in the financial accounts : stock transfers, free samples, free supplies Separate Audits for distinct registrations under the same PAN Maintenance & Review of Various Records Timeline Complete audit till September with in a fair manner with Correct information otherwise ITC would lapse in September of the following year. Whereas the annual return can be furnished by the end of December of the following year. Where any discrepancies are noted during the course of the GST audit post September, it appears that no recourse would be available to the auditee Technology conversant with various software's for GST Audit. DSC Issues Connectivity of Internet IT Infrastructure Untraceable Errors are bound to have been committed by registered persons while filing the returns

6 Why Us 20,000 Man hours of experience of GST implementation (impact assessment, transition, and post implementation support) Industry specific knowledge & expertise across: Manufacturing (Process & Discrete) Distribution Sugar Steel Agro-Chemical Shipping/Logistics Engineering Consumer Durables Professional Services Liquor Manufacturing & Distribution Utility etc.. Successful implementation of Indirect Tax Transformation: 50+ businesses in India on GST 22+ businesses in Middle-East on VAT Supporting 25+ businesses for Compliance Industries we serve Our Practice Our Experience Local & Global Why Us Our Team Technology Proficiency Our Knowledge Team of Chartered Accountants, MBAs & Engineering contributes to our Indirect Taxation Specialists Process Consultants Technology/ERP Specialist Program Managers & Analysts Deep rooted knowledge of Indirect Taxation of India, UAE, Saudi Arabia & Singapore Technology proficiency across platforms like SAP Microsoft Dynamics (AX & NAV) JD Edwards Oracle Apps 6

7 Our Approach Understand Data Collection Analysis GST Audit Report Understand the nature and complexity of the business / operations of the auditee. Understand current Processes, Software's, IT Infrastructure of auditee. Prepare a standard questionnaire in order to become familiar with the business etc. Collection of data : Registration details, additional places of business, registrations in other States, details of authorized signatories / persons in charge; List of accounts and records maintained, and information on software used; Such other details as mentioned in SLIDE click here Analyzing and understanding the contracts, transition issues, ITC mechanism, restrictions, blocked credits, supplies, etc. Analyze the analytical ratios & Processes Check the transaction not appearing in the financial accounts. Record the findings on the basis of data shared. Prepare GST Audit Report (Section 35 (5) and Section 44 (2) of the CGST Act, 2017 read with Rule 80 of the CGST Rules, 2017) Proper estimation of the timelines for Commencement and closure. Create an entity-level checklist with a view to ensure that all the transactions are adequately covered in the process of conduct of an audit. During the course of the audit, any discrepancies found shall be corrected / rectified by declaring the correct turnovers in the annual returns. Standard Auditing Practices are adopted, proper disclosures are made, views / opinions are either noted or expressed Deliverable: GST Audit Report 7

Panelist for GST at Doordarshan Global experience on Process design, Internal Audit & Internal Controls Framework, Process Re-engineering, Risk Assessment Bhavesh Gupta, Managing Partner FCA, B.

8 Our Team Gaurav Shukla, Partner FCA, B. Com Exp: 14 Years Leading Indirect Taxation (India & Middle-East) & Risk Advisory Practice Speaker for MSME Foundation, MSME Clusters for GST Panelist for Simplify GST by Economic Times Expert Panelist for GST at Doordarshan Global experience on Process design, Internal Audit & Internal Controls Framework, Process Re-engineering, Risk Assessment Bhavesh Gupta, Managing Partner FCA, B. Com, disa Exp: 15 Years Leading Technology Advisory & Outsourcing Practice Advisory on strategic initiative for expanding & efficiently managing the business Finance Controlling, Restructuring & Transformation are his core competency An effective Change Leader that help clients adopting new processes, technology He effectively manages the expectation of stakeholders & top management Empanelled as an Expert by Economic times for their Ask the Expert initiative Chirag Chawla Indirect Taxation & Audit CA, B.Com (7 Yrs. Exp.) Specialized in GST (India) & VAT(UAE) Program Management, Implementation & Transition of GST India & VAT UAE Internal Audit assignments for Chemical Manufacturing, Utility, Service and Automotive industry assignments for implementing IFC Framework for FMCG, Solar, Discrete manufacturing, Sugar manufacturing & Steel Manufacturing Gaurav Verma Indirect Taxation & Technology CA, B.Com (8 Yrs. Exp.) Specialized in GST (India) & VAT(UAE) Program Management, Implementation & Transition of GST India & UAE VAT Technology selection and implementation for financial accounting application Technology review & assessment for VAT & GST Process design & SOP implementation and review Amit Thakur Compliance Lead CA, B.Com (10 Yrs. Exp.) He has handled the companies in the area of Real estate, Chemical Manufacturing, Recruitment & staffing, Online selling, Foster Caring (UK), Hotels He manages the practice for GST & TDS Compliance which includes GST assessment verification of books for compliance liabilities He has exceptional capabilities in preparing and presenting clients cases to relevant authorities Himanshu Vikal Indirect Taxation CA, B.Com (5 Yrs.) He has supported various businesses in assessing the impact of GST on business process, working capital and cash flow He has been involved in various Corporate and Association Trainings for GST & E-Way Bill Also worked on IFC assignments Nikita Gupta Indirect Taxation GST CA, B.Com (3 Yrs.) She has successfully managed the end to end GST transformation cycle including impact assessment on business process, cash flow, transition support and post implementation reviews Design SOP for Compliance of GST Nitin Gupta Practice Lead Risk Advisory MBA (12 Yrs. Exp.) Hemant Bijlani Finance Controlling & Statutory Audit CA (12 Yrs. Exp.) Nitisha Anand Corporate Law & Secretarial Services CS, LLB (6 Yrs. Exp) Lalit Rajput Corporate Law & Secretarial Services CS (5 Yrs. Exp) Veer Singh Accounting & MIS CA (6 Yrs. Exp.)

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9 India E-23, First Floor, Netaji Subhash Marg, Daryaganj, New Delhi, India, To Take It Forward Dubai SBC, Level 8, Dusseldorf Business Point, Al Barsha 1, Dubai, UAE Contact: Gaurav Shukla, Partner Gaurav.Shukla@outcomess.com 9

Goods & Service Tax: Clarification required on various issues under Business Processes on GST. Date:

Goods & Service Tax: Clarification required on various issues under Business Processes on GST Date: 31-10-2015 Multiple Line item-wise HS Code updation is mandatory for Sales Register & Purchase Register