gst-audit

name	gst-audit
description	GST Audit assistance under Section 35(5)/Section 65/66. Covers departmental audit (Section 65) representation and special audit (Section 66). Also assists with GST annual audit checklist, ITC reversal calculations, and reconciliation for audit submissions.
when_to_use	When a client receives a GST audit notice (Section 65/66), or when the CA needs to prepare for a GST audit, or conduct an internal GST audit review for a client.
effort	high
model	claude-sonnet-4-6
allowed-tools	["mcp__memory_bank__get_client","mcp__memory_bank__log_notice","mcp__memory_bank__get_firm_profile","Read","Write"]

GST Audit Assistance

FINANCIAL INTEGRITY: GST audit proceedings carry significant legal risk. All representations must be reviewed and signed by a qualified CA/advocate. Audit findings can result in large demands, interest, and penalties. Nothing is submitted without partner sign-off.

Section 65 vs Section 66 Audit

Feature	Section 65	Section 66
Type	Departmental Audit	Special Audit by CA/CMA
Who conducts	GST officers	CA / CMA appointed by Commissioner
Trigger	Routine or risk-based	Where accounts are complex / suspected evasion
Notice	FORM GST ADT-01	FORM GST ADT-03
Period	Within 3 months (extendable to 6M)	Within 90 days (extendable)
Reply	FORM GST ADT-02	FORM GST ADT-04

GST Audit Checklist — Areas of Scrutiny

1. Registration and Profile

• Registration certificate validity (active/cancelled)
• Correct entity type and HSN/SAC
• Authorised signatory current
• Business address matches records

2. Outward Supplies

• Revenue per books vs GSTR-1 (annual reconciliation)
• E-invoice compliance (if applicable)
• Advances received — GST on time-of-supply
• Reverse charge correctly identified and discharged
• Zero-rated exports: LUT validity / IGST payment
• Related party transactions at arm's length value

3. Input Tax Credit

• Section 16 conditions: tax invoice, receipt, supplier filing, payment
• Section 17(5) blocked credits: none claimed in ineligible categories
• Rule 42/43 reversals: proportionate reversal if exempt supplies
• GSTR-2B reconciliation: ITC not in excess of GSTR-2B
• Capital goods: correct classification and reduced ITC %

4. Returns and Payments

• All returns filed (no missed months)
• Tax paid by due date (no interest outstanding)
• Late fees paid where applicable
• PMT-06 challans for QRMP filers

5. E-way Bill Compliance (for goods movement)

• E-way bills generated for all consignments > Rs.50,000
• Validity not expired at time of movement
• Vehicle number updated in EWB

6. RCM (Reverse Charge Mechanism)

• GTA services — RCM discharged at 5% on freight paid
• Import of services — IGST under RCM
• Legal services from individual advocates
• Security services from unregistered persons
• Rent from government entities

7. TDS/TCS under GST (if applicable)

• TDS deducted on govt contracts > Rs.2.5L (Section 51)
• TCS collected on e-commerce sales (Section 52)
• Reflected in electronic cash ledger

Audit Representation Package

Documents to Prepare

1. Registration certificate + amendments
2. Annual turnover certificate
3. Books of accounts (electronic records: Tally/ERP)
4. GSTR-1, 3B, 9 for audit period
5. GSTR-2B downloads for all months
6. Purchase register + sales register
7. Bank statements
8. Inward / outward supply reconciliation statement
9. ITC register with supporting invoices
10. Explanation for any differences identified

Draft Response to FORM GST ADT-01

[Firm Letterhead]
Date: [date]

To,
The [Superintendent / Assistant Commissioner]
[Office Address]

Sub: Response to Notice in FORM GST ADT-01 dated [date] — [Client Name] | GSTIN [GSTIN]

Sir/Madam,

With reference to the above-mentioned notice for GST audit of [Client Name] for the
period [period], we hereby acknowledge the same and confirm the following:

DOCUMENTS AVAILABLE FOR AUDIT:
- Books of accounts maintained in: [Tally Prime / other software]
- Period covered: [FY start to end]
- Location: [office address] / [shared digitally via secure folder]

AUDIT SCHEDULE PREFERENCE:
We request that the audit be scheduled for: [proposed dates]
Contact person: [name, phone, email]

We assure full cooperation during the audit proceedings.

Yours faithfully,
[CA Name] [Membership No.]
[Firm Name]

Post-Audit — Reply to FORM GST ADT-02

If the audit results in a demand / observation:

• Review each para of ADT-02 carefully
• Identify: agreed items (pay via DRC-03) and disputed items
• File a detailed written reply para-by-para with supporting documents
• If demand > Rs.5 Lakh and dispute genuine, consider filing an appeal (Form APL-01)

ITC Calculation for Audit Findings

If auditors find excess ITC claimed, calculate:

• Principal ITC reversal
• Interest @ 24% per annum from date of claim to date of payment (Section 50)
• Penalty — equal to tax amount if fraud; 10% (minimum Rs.10,000) if not fraud

EXCESS ITC CALCULATION (for payment via DRC-03):
Excess ITC claimed: Rs.X
Interest @ 24% from [date of GSTR-3B] to [today]: Rs.X
Total payable via DRC-03: Rs.X

Recommendation: Pay DRC-03 immediately to stop interest accrual.