Internal Audit under GST – Checking GSTR 3B vis-à-vis GSTR 1 & GSTR 2A

Discover the advantages and key methods of performing effective internal audits for GST, ensuring regulatory compliance and operational excellence.

GST Internal Audit

GST Internal Audit is a process of examining the GST returns and records of a business to ensure compliance with the GST laws and regulations. It is a voluntary exercise that can be undertaken by businesses of all sizes, regardless of their turnover.

How Internal Audit Under GST Can Be Helpful?

Internal audit under GST can be helpful in the following ways:

• It can help businesses to identify and rectify any errors or omissions in their GST returns and records.
• It can help businesses to ensure that they are complying with all the applicable GST laws and regulations.
• It can help businesses to reduce their risk of being penalized by the GST authorities.
• It can help businesses to improve their overall financial management and reporting systems.

Applicability of Internal Audit

Internal audit under GST is applicable to all registered businesses, regardless of their size or turnover. However, it is particularly important for businesses with a high turnover or complex GST transactions.

Internal Audit Certification

There is no specific certification required to conduct an internal audit under GST. However, it is recommended that internal auditors be qualified professionals with experience in GST auditing.

Internal Audit Report

The internal audit report should include the following:

• The scope of the audit.
• The findings of the audit.
• Any recommendations for improvement?

The internal audit report should be submitted to the management of the business for review and action.

Benefits of Internal Audit Under GST

Internal audit under GST can provide a number of benefits to businesses, including:

• Reduced risk of GST penalties.
• Improved compliance with GST laws and regulations.
• Improved financial management and reporting systems.
• Increased business efficiency and profitability.
• Enhanced trust and confidence from stakeholders.

Overall, internal audit under GST is a valuable tool that can help businesses to improve their compliance and performance.

GSTR 3B vis-à-vis GSTR 1

• The total outward supplies reported in GSTR 3B should match the total of the outward invoices reported in GSTR 1.
• The type of supply (e.g., taxable, exempt, nil-rated, reverse charge) and the applicable GST rate should be the same in both GSTR 3B and GSTR 1.
• The value of the supply should be the same in both GSTR 3B and GSTR 1, except for cases where the taxpayer is eligible for a refund or input tax credit.

GSTR 3B vis-à-vis GSTR 2A

• The total inward supplies reported in GSTR 3B should match the total of the inward supplies reported in GSTR 2A.
• The type of supply (e.g., taxable, exempt, nil-rated, reverse charge) and the applicable GST rate should be the same in both GSTR 3B and GSTR 2A.
• The value of the supply should be the same in both GSTR 3B and GSTR 2A, except for cases where the taxpayer has claimed input tax credit on the inward supply.

Amendment in GSTR 1

The auditor should check that all amendments made to GSTR 1 have been reflected correctly in GSTR 3B.

Checking Particulars of Invoice

The auditor should check that all the particulars of the invoice have been correctly reported in GSTR 1, such as the invoice number, date, value, and GST rate.

Reviewing E-Way Bill Vis-à-Vis Invoices

The auditor should review the e-way bill vis-à-vis invoices to ensure that all taxable supplies have been accompanied by a valid e-way bill.

Goods Stored With Job-Workers Before 30 June 2017

The auditor should check that the business has correctly reported the value of any goods that were stored with job workers before 30 June 2017 and that the business has paid the applicable GST on these goods.

GST Internal Audit FAQs

What is a GST Internal Audit?

A GST Internal Audit is a voluntary review of a business's GST compliance. It is conducted to ensure that the business is complying with all applicable GST laws and regulations.

Who is responsible for conducting a GST Internal Audit?

A GST Internal Audit can be conducted by the business itself or by an external auditor. If the business chooses to conduct its own internal audit, it should appoint a qualified individual who has experience in GST auditing.

How often should a GST Internal Audit be conducted?

The frequency of GST internal audits will vary depending on the size and complexity of the business. However, it is generally recommended that businesses conduct internal audits at least once a year.

What are the key areas covered in a GST Internal Audit?

A typical GST Internal Audit will cover the following areas:

• GST registration and compliance.
• GST return filing and payment.
• Input tax credit claims.
• E-way bills.
• Invoicing and record keeping.

Can businesses conduct their own GST Internal Audits, or do they need to hire external auditors?

Yes, businesses can conduct their own GST Internal Audits. However, it is important to note that internal auditors should be qualified individuals who have experience in GST auditing. If a business does not have the in-house expertise to conduct its own internal audit, it should hire an external auditor.

What are the consequences of non-compliance identified during a GST Internal Audit?

If non-compliance is identified during a GST Internal Audit, the business should take immediate steps to rectify the situation. Failure to do so may result in penalties from the GST authorities.

Are there any specific records or documents that should be maintained for a GST Internal Audit?

Yes, businesses should maintain all records and documents related to their GST transactions. These records include:

• GST registration certificate
• GST returns
• Input tax credit invoices
• E-way bills
• Invoices and other sales records
• Purchase orders and other procurement records

How long should businesses retain records related to a GST Internal Audit?

Businesses should retain records related to GST internal audits for at least 7 years.

Is a GST Internal Audit mandatory for all businesses?

No, a GST Internal Audit is not mandatory for all businesses. However, it is recommended that all businesses conduct internal audits on a regular basis to ensure that they are complying with all applicable GST laws and regulations.