CA. Gangadhar V. Haldikar THE INSTITUTE OF COST ACCOUNTANTS OF INDIA KOLHAPUR-SANGLI CHAPTER GST Audit Presented By CA. Gangadhar V. Haldikar Kedar Kumbhojkar & Co.

Overview Governing Statutory Provisions of the Act Section 35 Accounts and Records Section 44 Annual Return and Reconciliation Statement GST Rules Kedar Kumbhojkar & Co.

Statutory Provisions : Section 35 Accounts and Records provides - Persons who shall maintain Accounts and Records Which records to be maintained Where it shall be maintained In which form it shall maintained – i.e. Electronically or manually Empowers the commissioner to notify the class of person to maintain additional accounts or documents Empowers commissioner to permit such class of taxable person who are not in position to maintain accounts and records; to maintain the accounts and records as prescribed by him A registered person who shall get his accounts audited by a Chartered Accountant or a Cost Accountant A registered person shall submit the statement under section 44(2) Kedar Kumbhojkar & Co.

Statutory Provisions : Section 44 Annual Return and Reconciliation Statement provides - Class of registered persons who is required to file annual returns Class of registered persons required to furnish Annual return along with copy of audited annual accounts and reconciliation statement between value of supplies declared in return with the audited financial statement and such other particulars as prescribed Are the words “audited annual accounts” and “audited financial statement” can be used as synonyms or interchangeable terms for each other? Kedar Kumbhojkar & Co.

What is Annual Accounts and Annual Audited Financial Statements? It is not defined what is Annual Accounts and Audited Financial Statements but the intention of the Act can be predicted from its wordings. Extract of section 35 is produced below – Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of— (a) production or manufacture of goods; (b) inward and outward supply of goods or services or both; (c) stock of goods; (d) input tax credit availed; (e) output tax payable and paid; and (f) such other particulars as may be prescribed: Hence Auditor is going to certify the true and correct view of annual accounts and which includes all the details of accounts and records maintained as prescribed in section 35. Hence Audited Annual Accounts and Audited Financial Statements can not be used as interchangeable terms. Kedar Kumbhojkar & Co.

GST Rules All the procedural aspects are prescribed in GST Rules hence the relevant rules are Rule No.56 to Rule 58 i.e. for maintenance of Account and Records. Rule No.80 from Returns Chapter which prescribes the details about filing of Annual Return and prescribed the turnover limit for getting accounts to be audited. Which is as below – Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner. Kedar Kumbhojkar & Co.

Who is required to get its annual accounts ? Every registered person whose aggregate turnover during a financial year exceeds two crore rupees Now following questions arises - What is aggregate turnover ? - Aggregate turnover is turnover in state or turnover on PAN India basis? - Whether financial year include period April to June 2017? Kedar Kumbhojkar & Co.

Aggregate turnover is defined in section 2(6) as below – “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess Let us see some hypothetical cases for applicability of GST Audit. Kedar Kumbhojkar & Co.

Case Studies Case 1: M/s ABC Exports Pvt. Ltd. is engaged mainly in Exports of goods out of India. At the same time it supplied goods in domestic market as well amounting to Rs.1,20,000/- during the year. Total outward supply from export of goods is Rs.99.60 Lakhs ? Is M/s ABC Exports Pvt. Ltd. liable for Audit? Case 2: M/s ABC Hospital Pvt. Ltd. is engaged in rendering Heath Care Services. At the same time it has given a small part of Hospital Premises to Medical Shop at Rs.15000/- per month. Total outward supply from health care services is Rs.99.60 Lakhs ? Is M/s ABC Hospitals Pvt. Ltd. liable for Audit? Case 3 : M/s ABC Wines Pvt. Ltd. is engaged in trading of liquor for human consumption. At the same time it has raised invoices on his supplier towards the few gift items distributed by it like glasses, jars, etc. amounting to Rs.90,000/- during the year. Total outward supply from trading is Rs.99.60 Lakhs ? Is M/s ABC Hospitals Pvt. Ltd. liable for Audit? Kedar Kumbhojkar & Co.

Case Studies Case 4: M/s ABC Pvt. Ltd. is engaged manufacturing of goods. It is operating through 2 units one located at Kolhapur and other is located at Belgaum. The total outward supply at Kolhapur Unit is Rs.120 Lakhs and that of Belgaum Unit is Rs. 70 Lakhs. Is M/s ABC Pvt. Ltd. liable for Audit? Case 5: M/s ABC Pvt. Ltd. is engaged manufacturing of goods. It is operating through 2 units one located at Kolhapur and other is located at Belgaum. The total outward supply at Kolhapur Unit is Rs.120 Lakhs and that of Belgaum Unit is Rs. 70 Lakhs. Also Kolhapur unit transferred stock of Rs. 21 Lakhs to its Belgaum unit during the year. Is M/s ABC Pvt. Ltd. liable for Audit? Kedar Kumbhojkar & Co.

Case Studies Case 4: M/s ABC Pvt. Ltd. is engaged manufacturing of goods. It is operating through 2 units one located at Kolhapur and other is located at Belgaum. The total outward supply at Kolhapur Unit is Rs.120 Lakhs and that of Belgaum Unit is Rs. 70 Lakhs. Is M/s ABC Pvt. Ltd. liable for Audit? Case 5: M/s ABC Pvt. Ltd. is engaged manufacturing of goods. It is operating through 2 units one located at Kolhap ur and other is located at Belgaum. The total outward supply at Kolhapur Unit is Rs.120 Lakhs and that of Belgaum Unit is Rs. 70 Lakhs. Also Kolhapur unit transferred stock of Rs. 21 Lakhs to its Belgaum unit during the year. Is M/s ABC Pvt. Ltd. liable for Audit? Case 6 : M/s ABC Pvt. Ltd. is engaged manufacturing of goods. The total outward supply is Rs.199.80 Lakhs and also it has interest income of Rs.21 Lakh on FD. Fixed deposits are offered to bank for issue of Bank Guarantees without which company shall not get work orders. Is M/s ABC Pvt. Ltd. liable for Audit? Kedar Kumbhojkar & Co.

Let us see “FORM GSTR-9C Central government as well state government of Maharashtra has already notified the Form GSTR-9C. It is divided into Part A i.e. Reconciliation statement and Part B Certification by Auditor which is nothing but the report to be given by auditor who has conducted audit of reconciliation statement. As reconciliation statement and GST Audit can be conducted either by a person who conducted the audit of financial statement or by other practicing CA / CMA, there are two different formats are given in the form notified. Let us see the format of reconciliation statement - Kedar Kumbhojkar & Co.

Thank you Kedar Kumbhojkar & Company Chartered Accountants CA. Gangadhar V Haldikar Partner cagangadhar@kedarkumbhojkar.com You can visit us at www.kedarkumbhojkar.com Kedar Kumbhojkar & Co.