Dr.

Babasaheb Ambedkar Marathwada University

Aurangabad.

In partial fulfillment of the degree M.Com of Service Course in Entrepreneurship

Development

M. S. P. Mandal’s
Deogiri College, Aurangabad.

Project Report
On
THE STUDY OF 3 A’s OF GST”

Submitted By
Renuka Baswaraj Sutar
(SERVICE COURSE)

2022-2023

Under Guidance

Prof. Kharat N. G. Prof. Dr. Ratnaparkhe S.D.

M.Com, M.S.W., G.D.C. & A. M.Com., M.B.A., NET, G.D.C. & A., L.L.B., Ph.D.
(H.O.D. (P. G.) & Co-ordinator)
Department of Commerce.

1
 CERTIFICATE

This is to certified that this,

(THE STUDY OF 3 A’s OF GST)

Is the bonafide work of,

Mr. (Renuka Baswaraj Sutar),

Exam Seat No: -------------------------------------,

She/he carried out the research under my supervision certified further, that to the best
of my knowledge the work reported herein is completed as per the requirements of Dr.
Babasaheb Ambedkar Marathwada University, Aurangabad in partial fulfillment of the degree
M.Com a subject of Service Course in Commerce titled Entrepreneurship Development for
the Academic year 2022-2023.

Signature of the Guide. HOD (P.G.) & Coordinator P.G. Studies.

2
 Declaration
I, (Renuka Baswaraj Sutar),
Student of the M.Com/M.A./M.Sc studying in Deogiri College, Aurangabad, solemnly
declare that the project
(THE STUDY OF 3 A’s OF GST)
Was carried out by me in partial fulfillment of Masters Degree of M.Com / M.A. /
M. Sc a subject of Service Course Program under the Dr. Babasaheb Ambedkar
Marathwada University, Aurangabad.

This project was undertaken as part of academic curriculum as per university rules
and norms and by no commercial interest or motive. It is my original work and not
elsewhere for any other purpose earlier.

PLACE: Aurangabad. Renuka Baswaraj Sutar

Date: / /2022-23 Signature.

3
 Acknowledgement
“Gratitude is not things of expression; it is more a matter of feeling.” There is
always a sense of gratitude which one express for other for their help and supervisor
in achieving the goals.
I too express my deep gratitude to each and every one who has been helpful me
in completing the project report successfully.

First, of all, I am highly thankful to Prof. Dr. S. D. Ratnaparkhe, Prof. Kharat N.

G., for allowing me to pursue my project

“THE STUDY OF 3 A’s OF GST”

My special thanks to Dr. Maturkar V. M. and Prof. Kharat N. G. who encouraged

me, properly guided me in each and every possible way throughout my projects
reports.
I also give my regard and sincere thanks to who has devoted their precious time in
guiding me and helping me with it in time.

Renuka Baswaraj Sutar

Sign---------------------------------
Seat No:-

4
EXECUTIVE SUMMARY

5
 EXECUTIVE SUMMARY

The objectives of the project were to study the 3 A’s of GST which are Audit,
Accounts & Annual Returns.

The first A of GST is Audit. In audit under GST is the process of examination of
records, returns and other documents maintained by a taxable person. The purpose is to verify
the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed,
and to assess the compliance with the provisions of GST.

The second A of GST is Accounts. Under the GST regime, multiple tax levies have
been replaced by a single GST tax. This has led to major changes in the accounts the business
owners must maintain. Previously, you would have maintained individual accounts for VAT,
excise, CST and other service taxes with separate input, output, and credit entries for each.
Now, the new tax regime means a completely new list of accounts, featuring the components
of GST.

And the third A of GST is Annual Returns. In which GSTR 9 is an annual return to be
filed once in a year by the registered taxpayers under GST including those registered under
composition levy scheme. It consists of details regarding the supplies made and received during
the year under different tax heads i.e. CGST, SGST and IGST. It consolidates the information
furnished in the monthly/quarterly returns during the year.

6
 INDEX

CHAPTER NO. PARTICULARS PAGE NO.

1 INTRODUCTION 10

2 COMPANY PROFAIL 13

3 THEORETICAL BACKGROUNDS

4 RESEARCH METODOLOGY 21

5 DATA ANALYSIS & INTERPRETATION 26

6 SUGGESTIONS & RECOMMENDATIONS 29

7 CONCLUSION 43

8 REFERENCE 45

7
INTRODUCTION

8
 INTRODUCTION

In the study if 3 A’s of GST first we need to know the actual concept of GST. GST is
the crucial form of Indirect Taxation which is said to be the indirect taxation reform ever since
our Independence. The GST is said to bring about the economic integration said by our Union
Finance Minister Arun Jaitley during the Budget speech at 2016. The Goods and Service Tax
is levied on the manufacture, sale and consumption of the goods and services. Through the
implementation of GST, all other taxes like Value Added Tax, Sales Tax will be removed and
a uniform tax system on goods and services will be followed.

As Audit is first A of GST. It is one of the important aspects in an organization. Audit

is the process of examination of records, returns and other documents maintained by a taxable
person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed
and input tax credit availed, and to assess the compliance with the provisions ofGST.

Every registered taxable person whose turnover during a financial year exceeds the
prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant.
He shall electronically file:

1. an annual return using the Form GSTR 9B along with the reconciliation statement by
31st December of the next Financial Year,
2. the audited copy of the annual accounts,
3. a reconciliation statement, reconciling the value of supplies declared in the
return with the audited annual financial statement,
4. And other particulars as prescribed.

When Goods & Service Tax is implanted in July 2017, the second A of GST which is
Accounts is also affected. In spite of initial transition challenges, GST has brought in clarity
in many areas of business including accounting and bookkeeping.

While the number of accounts are more apparently under GST. Once you go through the
accounting entries you will find it is much easier for record keeping. One of the biggest
advantages a trader will have is that he can set off his input tax on service with his output tax
on the sale.

After an essential study on the accounting treatment of various transactions under GST, the
queries are solved on how to record and pass entries for the inter-state sale of goods, how to
record utilization of input tax credit etc.

In third A of GST regime Annual Return, GSTR 9 is an annual return to be filed once in a
year by the registered taxpayers under GST including those registered under composition levy
scheme. It consists of details regarding the supplies made and received during the year under
different tax heads i.e. CGST, SGST and IGST. It consolidates the information furnished in the
monthly/quarterly returns during the year.

9
 All the registered taxable persons under GST must file GSTR 9.
However, following persons are not required to file GSTR 9

Casual Taxable Person

Input service distributors

Non-resident taxable persons

Persons paying TDS under section 51 of GST Act

10
THEORETICAL BACKGROUND

11
 THEORETICAL BACKGROUND
GST is a consumption based tax levied on sale, manufacture and consumption on goods
& services at a national level. This tax will be substitute for all indirect tax levied by state and
central government. Exports and direct tax like income tax, corporate tax and capitalgain tax
will not be affected by GST. India is adopting a dual GST, wherein the Central GST will be
called CGST and state SGST. The main road block is the coordination among states. Centre
and states have to come to a consensus on uniform GST rates, inter-state transaction ofgoods
and services, administrative efficiency and infrastructural preparedness to implement the new
tax reform. The present study is a study of the various aspects in connection with the
implementation of GST.

ACCOUNTING UNDER GOODS & SERVICE TAX

Goods and service tax or GST will be one tax to subsume all taxes. It will bring in “One
nation one tax” regime. While there will be certain initial transition challenges, GST
will bring in much clarity in many areas of business. One of the areas is accounting and
bookkeeping. Read on to find out about accounting entries under GST.
Current scenario:
Separate accounts have to be maintained for excise, VAT, CST and service tax. Here’s a
list of the few accounts currently any business has to maintain (apart from accounts like
purchase, sales, stock) –

Excise payable a/c (for manufacturers)

CENVAT credit a/c (for manufacturers)
Output VAT a/c
Input VAT a/c
Input Service tax a/c
Output Service tax a/c

For example, a trader Mr. X must maintain the minimum basic accounts –

Output VAT a/c

Input VAT a/c
CST A/c (for inter-state sales and purchases)
Service tax a/c [He will not be able to claim any service tax input credit as he
is a trader with output VAT. Service tax cannot be setoff against VAT/
CST]

GST Regime
Under GST all these taxes (excise, VAT, service tax) will get subsumed into one account.
The same trader X has to then maintain the following accounts (apart from accounts like
purchase, sales, stock) –
Input CGST a/c Output IGST a/c
Output CGST a/c Electronic Cash Ledger
Input SGST a/c Input IGST a/c
Output SGST a/c

22
While the number of accounts is more apparently, once you go through the accountingyou
will find it is much easier for record keeping. One of the biggest advantages X will have is
that he can set off his input tax on service with his output tax on sale.

AUDIT UNDER GOODS & SERVICE TAX

Goods and Service Tax (GST) is structured for efficient tax collection, reduction in
corruption, easy inter-state movement of goods and a lot more.
The GST Law provides for self-assessment to facilitate easy compliance and payment of taxes.
It also explains the notices, the demand and recovery provisions when the taxes are unpaid,
short paid and/or returns are not filed.
Audit under GST is the examination of records maintained by a registered dealer. The aim
is to verify the correctness of information declared, taxes paid and to assess the compliance
with GST.

Audit Under GST

Audit by Taxable Audit by GST Tax

Person Authorities

File audited Returns +

Special Audit by
Audited Accounts +
General Audit CA nominated
Reconciliation
Statements Commissioner

A. Audit by Registered Dealer

Every registered dealer whose turnover during a financial year exceeds the Rs. 2 crore has to
get his accounts audited by a CA or a CMA.

B. Audit by GST Tax Authorities

General Audit: The commissioner or on his orders an officer may conduct an audit of any
registered dealer.
Special Audit: The department may conduct a special audit due to the complexity of the case
and considering the interest of revenue. The CA or a CMA will be appointed to conduct the
audit.

23
ANNUAL GST RETURN

Every registered person including those registered under composition

levy scheme shall furnish an Annual Return in GSTR-9.
However, the following persons are not required to file GSTR 9
Input service distributors
Persons paying Tax under Section 51 (Tax Deducted at Source)
Persons paying Tax under Section 52 (Collection of Tax at Source)
Casual Taxable Person
Non-resident taxable persons.

Types of GSTR 9:

There are 4 types of returns under GSTR 9:

Sr. No. Form GSTR Description

It is to be filed by the Regular Taxpayers who are filing

1 GSTR 9
GSTR 1, GSTR 2 & GSTR 3
to be filed by the persons registered under Composition
2 GSTR 9A
Scheme under GST.
It is to be filed by the e-commerce operators who have
3 GSTR 9B
filed GSTR 8 during the financial year.
It is is a specific return for the taxpayers whose annual
turnover is exceeds Rs 2 crores during the financial year.
4 GSTR 9C All such taxpayers are also required to get their accounts
audited and shall file a copy of audited annual accounts and
reconciliation statement of tax already paid and tax payable
as per audited accounts along with GSTR 9C.

24
Penalty for the Late filing of GSTR-9 :

GSTR 9 is to be filed on or before due date. If the GSTR 9 is not filed on or

before due date then penalty will be applicable as follows:

Sr. No. Under Act Penalty Applicable

1 CGST Rs. 100 per Day

2 SGST Rs. 100 per Day

3 IGST NIL

Total Rs. 200 per Day

However the maximum of such penalty will be 0.25% of the Total Turnover in
the respective State or Union Territory

25
COMPANY PROFILE

Firm Name Tax Consultancy Services

Register No. C-7/12/05-08

Address Near Pastapure Complex, Opp Bus Stand

Bidar Road,Udgir Dist-Latur

Services Income Tax Return, Vat Return, Audit,

GST Return, Account Finalize

About Us
Kapilkumar S.Birajdar is a reputed firm of Tax Consultancy Services in multi-disciplinary
practice under five core services verticals – Income Tax Return, Vat Return, Audit, GST Return
& Account Finalize.

We put forth great efforts to know your company or individual needs. Our services will be of
the highest quality, working diligently to deliver what was promised in a timely manner. We
will continue to grow, and will continue to offer specialized services; becoming skilled in newer
areas as the needs for our clients and communities require.

We are committed to fulfill the highest standards of our profession for our clients and the
public, and continually strive to set and uphold the highest standards of professional conduct
to ensure sound, sustained, and mutually profitable growth.

Mision and Vision

Our service idea is to establish a personal relationship with our clients, ranging from a small
sole trader to a large company. To us all our clients are equally important.
Our challenge is to provide professional service of the highest quality at a competitive
price, so that any company, whatever their size, you can have the support needed to
optimize business decisions.

Mision

Transforming knowledge into value for the benefits of clients we offer our holistic
and specialized services about Tax, Accounting and Commercial Law advisory.

Vision

To be a point of excellence reference within Tax advisory services geared towards

companies, self-employed and individuals.

26
 GST – The Game Changer

The genesis of the introduction of GST in the country was laid down in the historic Budget Speech of 28th
February 2006, wherein the then Finance Minister laid down 1st April, 2010 as the date for the introduction
of GST in the country. Thereafter, there has been a constant endeavor for the introduction of the GST in the
country whose culmination has been the introduction of the Constitution (122nd Amendment) Bill in
December, 2014.

Why GST?

A common refrain in the popular discussions is what is the need for the introduction of GST? To answer that
question, it is important to understand the present indirect tax structure in our country. Presently the Central
Government levies tax on manufacture (Central Excise duty), provision of services (Service Tax), interstate
sale of goods (CST levied by the Centre but collected and appropriated by the States) and the State
Governments levy tax on retail sales (VAT), entry of goods in the State (Entry Tax), Luxury Tax, Purchase
Tax, etc. It is clearly visible that there are multiplicities of taxes which are being levied on the same supply
chain.
There is cascading of taxes, as taxes levied by the Central Government are not available as setoff against the
taxes being levied by the State governments. Even certain taxes levied by State Governments are not allowed
as set off for payment of other taxes being levied by them. Further, a variety of VAT laws in the country
with disparate tax rates and dissimilar tax practices, divides the country into separate economic spheres.
Creation of tariff and non- tariff barriers such as Octroi, entry Tax, Check posts etc. hinder the freeflow of
trade throughout the country. Besides that, the large number of taxes creates high compliance cost for the
taxpayers in the form of number of returns, payments etc

What is GST?

All the taxes mentioned earlier are proposed to be subsumed in a single tax called the Goods and Services
Tax (GST) which will be levied on supply of goods or services or both at each stage of supply chain starting
from manufacture or import and till the last retail level. So basically any tax that is presently being levied by
the Central or State Government on the supply of goods or services is going to be converged into GST.
GST is proposed to be a dual levy where the Central Government will levy and collect Central GST (CGST)
and the State will levy and collect State GST (SGST) on intra-state supply of goods or services. The Centre
will also levy and collect Integrated GST (IGST) on inter-state supply of goods or services. Thus GST is a
unifier that is going to integrate various taxes being levied by the Centre and the State at present and provide
a platform for forging an economic union of the country.
This tax reform will lead to creation of a single national market, common tax base and common tax laws for
the Centre and States. Another very significant feature of GST will be that input tax credit will be available
at every stage of supply for the tax paid at the earlier stage of supply. This feature would mitigate cascading
or double taxation in a major way. This tax reform will be supported by extensive use of Information
Technology [through Goods and Services Tax Network (GSTN)], which will lead to greater transparency in
tax burden, accountability of the tax administrations of the Centre and the States and also improve
compliance levels at reduced cost of compliance for taxpayers. Studies indicate that introductionof GST
would instantly spur economic growth and can potentially lead to additional GDP growth in the range of 1%
to 2%.

Advantages of GST

Advantages for the government:

 Will help to create a unified common national market for India, giving a boost to foreign investment and
“Make in India” campaign;

27
 Will mitigate cascading of taxes as Input Tax Credit will be available across goods and services at every
stage of supply;

 Harmonization of laws, procedures and rates of tax between Centre and States and across States;

 Improved environment for compliance as all returns are to be filed online, input credits to be verified
online, encouraging more paper trail of transactions at each level of supply chain;

 Similar uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage
between neighbouring States and that between intra and inter-state sales;

 Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, common
tax base, common system of classification of goods and services will lend greater certainty to taxation
system;

 Greater use of IT will reduce human interface between the taxpayer and the tax administration, which will
go a long way in reducing corruption;

 It will boost export and manufacturing activity, generate more employment and thus increase GDP with
gainful employment leading to substantive economic growth;

 Ultimately it will help in poverty eradication by generating more employment and more financial resources

Advantages to Trade and Industry:

 Increased ease of doing business;

 Reduction in multiplicity of taxes that are at present governing our indirect tax system leading to
simplification and uniformity;

 Elimination of double taxation on certain sectors like works contract, software, hospitality sector;

 Will mitigate cascading of taxes as Input Tax Credit will be available across goods and services at every
stage of supply;

 Reduction in compliance costs - No multiple record keeping for a variety of taxes - so lesser investment of
resources and manpower in maintaining records;

 More efficient neutralization of taxes especially for exports thereby making our products more competitive
in the international market and give boost to Indian Exports;

 Simplified and automated procedures for various processes such as registration, returns, refunds, tax
payments, etc;

 Average tax burden on supply of goods or services is expected to come down which would lead to more
consumption, which in turn means more production thereby helping in the growth of the industries

28
Advantages to Consumers:

 Final price of goods is expected to be transparent due to seamless flow of input tax credit between the
manufacturer, retailer and service supplier;

 Reduction in prices of commodities and goods in long run due to reduction in cascading impact of taxation;

 Relatively large segment of small retailers will be either exempted from tax or will suffer very low tax
rates under a compounding scheme - purchases from such entities will cost less for the consumers;

 Poverty eradication by generating more employment and more financial resources.

Advantages to States:

 Expansion of the tax base as they will be able to tax the entire supply chain from manufacturing to retail;

 Power to tax services, which was hitherto with the Central Government only, will boost revenue and give
States access to the fastest growing sector of the economy;

 GST being destination based consumption tax will favour consuming States;

 Improve the overall investment climate in the country which will naturally benefit the development in the
States;

 Largely uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage
between neighbouring States and that between intra and inter-state sales;

 Improved Compliance levels of the tax payers will contribute greatly in improving the revenue collection
of the States.

Current status

 In order to implement this tax reform, Constitutional (122nd Amendment) Bill (CAB for short) was
introduced in the Parliament and passed by Rajya Sabha on 03rd August, 2016 and Lok Sabha on 08th
August, 2016.

 The CAB was passed by more than 15 states and thereafter Hon’ble President gave assent to “The
Constitution (One Hundred And First Amendment) Act, 2016” on 8th of September, 2016. Since then the
GST council and been notified bringing into existence the Constitutional body to decide issues relating to
GST.

 On September 16, 2016, Government of India issued notifications bringing into effect all the sections of
CAB setting firmly into motion the rolling out of GST. This notification sets out an outer limit of time of
one year, that is till 15-9-2017 for bringing into effect GST.

29
 The Central Goods and Services Tax bill, Integrated Goods and Services Tax bill, Union Territories (without
legislature) Goods and Services Tax bill and Goods and Services Tax (Compensation to States) bill have
been passed by the Lok Sabha on 29.03.2017 and by the Rajya Sabha on 06.04.2017

 The following draft GST rules have been approved by the GST Council on 31.03.2017 and have been
placed in the public domain:
o Registration Rules

o Return Rules

o Invoice Rules

o Payment Rules

o Refund Rules

o Input Tax Credit Rules

o Valuation (Determination of the Value of Supply of Goods and Services) Rules

o Transitional Rules

o Composition Rules
GST Council Meetings

GST Council has met thirteen times since its constitution and some important decisions taken in the GST
Council meeting are:-
 Rules for conduct of business in GST Council;

 Timetable for implementation of GST;

 The threshold limit for exemption from levy of GST would be Rs. 20 lakhs for the States except for the
Special Category States, as enumerated in Article 279A of the Constitution, for which it will be Rs 10 Lakhs);

 The threshold for availing the Composition scheme would be Rs. 50 lakhs. Service providers and some
others would be kept out of the Composition Scheme;

 To compensate States for 5 years for loss of revenue due to implementation of GST, the base year for the
revenue of the State would be 2015-16 and a fixed growth rate of 14% will be applied to it;

 Approval of the Draft GST Rules on registration, payment, return, refund and invoice, debit/credit Notes
with the understanding that minor changes may be permitted with the approval of the Chairperson, if
required, based on suitable suggestions from the stakeholders or from the Law Department;

 All entities exempted from payment of indirect tax under any existing tax incentive scheme would pay tax
in the GST regime and the decision to continue with any incentive scheme shall be with the concerned
State or Central government. In case, the State or Central Government decides to continue with any
existing exemption/incentive scheme; it will be administered by way of a reimbursement mechanism.

30
 Adoption of four slabs tax rate structure of 5%, 12%, 18% and 28%. In addition, there would be a category
of exempt goods and further a cess would be levied on certain goods such as luxury cars, aerated drinks, pan
masala and tobacco products, over and above the rate of 28% for payment of compensation to the states.

 GST rates on 1211 items were approved at the 14th GST Council meeting held at Srinagar on 18th and
19th of May 2017.

 At the 15th GST Council meeting held at New Delhi on 3rd June 2017, tax rates on the remaining goods
were approved

 22 states, and 2 Union Territories with Legislatures (Delhi and Puducherry) have already passed their
respective State GST Bill in their State Assemblies.

 Issue of cross empowerment and administrative division of taxpayers between the States and Centre has
been resolved.

The implementation of GST has the following challenges:

 Challenging time frame of rolling out GST by 1st July, 2017;

 Infrastructure and Technology up-gradation of tax system particularly of the States;

 Up-gradation of IT systems of trade & industry;

31
RESEARCH METHODOLOGY

32
RESEARCH METHODOLOGY

In this study exploratory research technique has been used & it is based on past
literature. Past literature has been collected from respective journals, annual reports,
Government official websites, newspapers and magazines & it covering wide collection of
academic literature on Goods and Service Tax. According to the objectives of the study, the
research design is of exploratory in nature.

This study is based on the secondary data sourced which focused on the various aspects
of goods and service act. Keeping in view of the set of objectives & research design has been
adopted to have greater accuracy in the depth analysis of the research study.

Research methodology is a way to systematically solve the research problem. The research
methodology used for findings solution of research problem is analytic methodology. Research
is a logical and systematic search for new and useful information on aparticular topic. It is an
investigation of finding solutions to scientific and social problems through objective and
systematic analysis.
Research methodology is a systematic way to solve a problem. It is a science
of studying how research is to be carried out. Essentially, the procedures by which
researchers go about their work of describing, explaining and predicting phenomena are
called research methodology. It is also defined as the study of methods by which knowledge
is gained. Its aim is to give the work plan of research.

OBJECTIVE OF STUDY
The broad objective of the report is to know about the how Goods & Service Tax affected
an organization and what are the activities mostly done by this department. Moreover, pointed
out the way of practice of accounts, audit & annual returns in Tax Consultancy Services. I tried
my best to investigate and compare practical accounting practice and real circumstance. Lastly,
I figure out the concise scenario of the organizations pre GST & post GST accounting policies.

33
 To study the implications of different aspects of accounting under Goods & Service Tax.

To study how to file Goods & Service Tax returns.

To study the accounts & records under Goods & Service Tax.

To study the audit procedure under Goods & Service Tax.

To study SWOT analysis of Goods &Service Tax.

Research Design
A study involves analysis of company and market survey of plastic. Research
design is the conceptual structure within which research is conducted.
The type of research adopted for the study of analysis of company is exploratory
research as the research does not require any manipulation of variables and does not
establish causal relationship between events. And some extended analytic methodology use
for company.

xploratory Research

Exploratory research is undertaken to explore an area where little is known or

to investigate the possibilities of undertaking a particular research study.
Exploratory research is a type of research conducted for a problem that has not
been clearly defined. Exploratory research helps determine the best research design, data
collection method and selection of subjects. It should draw definitive conclusions only with
extreme caution. Given its fundamental nature, exploratory research often concludes that a
perceived problem does not actually exist.

Source of Data
 Secondary Data

The secondary data are those which have already been collected by someone else and
which have already been passed through the statistical process. The methods of collecting
secondary data are published data or unpublished data. It takes short time and relatively
low cost.

34
 Data, which are not originally collected but rather obtained from published or
unpublished sources, are known as secondary data. In this research secondary data was
collected through sources like the Internet, research reports, magazines, and company
journals.

Study contains sector and company analysis. For that secondary data source is used.

 Primary Data

Primary data is data that is collected by a researcher from first-hand sources, using
methods like surveys, interviews, or experiments. It is collected with the research project in
mind, directly from primary sources.

35
DATA INTERPRETATION

36
 DATA INTERPRETATION

1) Audit Procedure

Audit
Procedure

Audit procedures involve a systematic review of the accounting records and systems of
control of the entity being audited. The particular procedures adopted depend on the type of
project being audited as well as the efficiency of the entity’s accounting and systems of internal
control. Audit procedures should be thorough and properly planned so as to provide adequate
time to collect and compile information on each of the points mentioned in the auditor’s terms
of reference. Besides covering the functional areas such as financial performance, operating
procedures and financial controls, the Bank requires the following basic procedures directly
related to the verification of financial transactions should be applied in all audits. These
procedures include:
I. A substantial test of the financial transactions of the entity against supporting
documentation to enable him to be satisfied with the authenticity and correctness of the
transactions, their complete and proper citing in the books of account;
II. An examination of the adequacy of the recording of assets and liabilities of the entity
and of the methods of their valuation;
III. In connection with (I) & (II) above, request by auditors of direct confirmation from
creditors and debtors of amounts stated in the books as payable by and due to the entity,
respectively; and,
IV. Conduct of an on-site visit by auditors to undertake physical count of the fixed assets,
stocks and petty cash.

The extent of carrying out various procedures will vary depending on the type of project
being audited. For example, projects for agriculture, health and education normally involve the
construction of buildings, warehouses, equipments and the build up of materials and supplies,
etc. Auditors would need to conduct a physical check of the facilities and supplies, more so
than for a road construction project where most of the equipment and material used for
construction are provided by the contractor.

37
 Audit formats as in Goods & Service Tax Rules, 2017
Form GST ADT - 01

Reference No.: Date:

To,

GSTIN …………………………………….
Name ………………………………………
Address ……………………………………
Period - F.Y.(s) - …………………………….

Notice for conducting audit

Whereas it has been decided to undertake audit of your books of account and records for
the financial year(s) ……….. to ...............in accordance with the provisions of section 65. I
propose to conduct the said audit at my office/at your place of business on --.

And whereas you are required to:-

I. Afford the undersigned the necessary facility to verify the books of account
and records or other documents as may be required in this context, and

II. Furnish such information as may be required and render assistance for timely
completion of the audit.

You are hereby directed to attend in person or through an authorized representative on

………………….. (Date) at… .......................................(place) before the undersigned and to
produce your books of account and records for the aforesaid financial year(s) as
required for audit.

In case of failure to comply with this notice, it would be presumed that you are not in
possession of such books of account and proceedings as deemed fit may be initiated as per the
provisions of the Act and the rules made there under against you without making any further
correspondence in

This regard.

Signature ………………..

Name ……………………

Designation ……………..

38
 Form GST ADT – 02

Reference No.: Date:

To,

GSTIN ………………………………..
Name ……………………………………
Address ………………………………….
Audit Report No. ……….. Dated ……..

Audit Report under section 65(6)

Your books of account and records for the F.Y. .................... has been examined and this
Audit Report is prepared on the basis of information available / documents furnished by you
and the findings are as under:

Short payment of Integrated tax Central tax State /UT tax Cess

Tax

Interest

Any other amount

[Upload pdf file containing audit observation]

You are directed to discharge your statutory liabilities in this regard as per the provisions of
the Act and the rules made there under, failing which proceedings as deemed fit may be
initiated against you under the provisions of the Act.

Signature …………………….

Name …………………………

Designation ………………….

39
 Form GST ADT - 03

Reference No.: Date:

To,

GSTIN …………………………………….
Name ………………………………………
Address ……………………………………
Tax period - F.Y.(s) - ……………………………..

Communication to the registered person for conduct of special audit under section 66

Whereas the proceedings of scrutiny of return /enquiry/investigation/… are going on;

And whereas it is felt necessary to get your books of account and records examined and
audited by ................................................ (name), chartered accountant / cost accountant
nominated by the Commissioner;

You are hereby directed to get your books of account and records audited by the
said chartered accountant / cost accountant.

Signature ………………………..

Name ……………………………

Designation ………….………….

40
 Form GST ADT – 04

Reference No.: Date:

To,

GSTIN ………………………………..
Name ……………………………………
Address ………………………………….

Information of Findings upon Special Audit

Your books of account and records for the F.Y.…………… has been examined by ------------
--- (chartered accountant/cost accountant) and this Audit Report is prepared on the basis of
information available / documents furnished by you and the findings/discrepancies are as
under:

Short payment of Integrated tax Central tax State /UT tax Cess

Tax

Interest

Any other amount

[Upload pdf file containing audit observation]

You are directed to discharge your statutory liabilities in this regard as per the provisions of the
Act and the rules made thereunder, failing which proceedings as deemed fit may be initiated
against you under the provisions of the Act.

Signature ………………………..

Name ……………………………

Designation ………….………….

41
2) Accounting Entries under Goods & Service Tax
Accounting of transactions is the main activity in accounting function. In case of indirect taxes
such as VAT / Central Excise / Service tax, it may so happen that assesse may bepaying
all taxes promptly and utilizing the credits according to law. However, the necessary accounting
entries with respect to avail of credit, utilization of credit and payment of taxes might have been
missed out. In such cases, it is important to ascertain the existing system of passing of entries
and suggest for passing necessary entries. This could be very critical with respect to
identification of eligible credits for disclosure in the return and carry forward in GST regime.

Let us consider a few basic business transactions

Example 1: Intra-state
Mr. A purchased goods Rs. 2,00,000 locally (intrastate). He sold them for Rs. 3,00,000 in
the same state. He paid legal consultation fees Rs. 10,000. He purchased furniture for his
office for Rs. 40,000 from XYZ Furniture
(Assuming CGST @8% and SGST@8%)

No. Particulars Dr. Cr.

1 Purchase A/c ....................... Dr. 200,000.00
Input CGST A/c ................... Dr. 16,000.00
Input SGST A/c .................... Dr. 16,000.00
To Creditors A/c 232,000.00
2 Debtors A/c .......................Dr. 348,000.00
To Sales A/c 300,000.00
To Output CGST A/c 24,000.00
To Output SGST A/c 24,000.00
3 Legal fees A/c ..................... Dr. 10,000.00
Input CGST A/c.................... Dr. 800.00
Input SGST A/c Dr.
.................... 800.00
To Bank A/c 11,600.00
4 Furniture A/c .....................Dr. 40,000.00
Input CGST A/c.................... Dr. 3,200.00
Input SGST A/c .................... Dr. 3,200.00
To XYX Furniture A/c 46,400.00
5 Output CGST A/c ................... Dr. 24,000.00
Output SGST A/c ................... Dr. 24,000.00
To Input CGST A/c 20,000.00
To Input SGST A/c 20,000.00
To E-Cash Ledger A/c 8,000.00
686,000.00 686,000.00

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Total Input CGST = 16,000+800+3,200 = Rs. 20,000
Total Input SGST = 16,000+800+3,200 = Rs. 20,000
Total output CGST = 24,000
Total output SGST = 24,000
Therefore Net CGST payable = 24,000-20,000 = 4,000
Net SGST payable = 24,000-20,000 = 4,000

Example 2: Inter-state
Mr. X purchased goods Rs. 3,00,000 from outside the State. He sold Rs. 3,00,000 locally. He
sold Rs.2,00,000 outside the state. He paid telephone bill Rs. 10,000. He purchased an A/C
for his office for Rs. 24,000 (locally)
Assuming CGST @8% and SGST@8%

No. Particulars Dr. Cr.

Purchase A/c .......................... Dr. 300,000.00
1 Input IGST A/c ...................... Dr. 48,000.00
To Creditors A/c 348,000.00
Debtors A/c ........................ Dr. 348,000.00
To Sales A/c 300,000.00
2
To Output CGST A/c 24,000.00
To Output SGST A/c 24,000.00
Debtors A/c ........................ Dr. 232,000.00
3 To Sales A/c 200,000.00
To Output IGST A/c 32,000.00
Telephone Expenses A/c ..…Dr. 10,000.00
Input CGST A/c ..................... Dr. 800.00
4
Input SGST A/c ...................... Dr. 800.00
To Bank A/c 11,600.00
Office Equipment A/c................ Dr. 24,000.00
Input CGST A/c ...................... Dr. 1,920.00
5
Input SGST A/c ...................... Dr. 1,920.00
To ABC Furniture Shop A/c 27,840.00

Setoff against CGST output

Output CGST ........................ Dr. 18,720
1
To Input CGST A/c 2,720
To Input IGST A/c 16,000
Setoff against SGST output
2 Output SGST ....................... Dr. 2,720
To Input SGST A/c 2,720
Setoff against IGST output
Output IGST
3 ......................... Dr. 32,000
To Input IGST A/c 32,000
Final payment
...................OutputCGSTA/c 5,280
4
Output SGST A/c
.................... Dr. 21,280
To E-Cash Ledger A/c 26,560
1047440 1047440

43
Total CGST input =800+1920=2,720
Total CGST output =24,000
Total SGST input =800+1920=2,720
Total SGST output =24,000
Total IGST input =48,000
Total IGST output =32,000

Any IGST credit will first be applied to set off IGST and then CGST. So out of total input
IGST of Rs. 48,000, firstly it will be completely setoff against IGST. Then balance Rs.16,000
against CGST.
From the total liability Rs.80,000, only Rs. 26,560 is payable

44
3) Process of Filing Annual Return of a company

Maintaining Book of Accounts

It is important for all companies to maintain Book of Accounts not only to comply with the law
but also to have control over the business. The Companies Act, 2013 makes it mandatory for
all companies to maintain book of accounts in the specified format. Further, in the absence of
book of accounts and effective accounting systems, the Directors may not even know as to
whether the company is incurring losses or profits. Filing regulatory filings suchas service
tax return, VAT return, TDS return, etc., would also be difficult without proper book of
accounts. Therefore, it is imperative that the Company maintain proper Book of Accounts with
the following information:

1. Details of all the monies received and expended by the company and the matter in
respect of which the transaction took place;
2. All sales and purchases of the company;
3. All the assets and liabilities of the company;
4. All other financial or business transactions.

Accounting softwares such as Tally or QuickBooks can help easily maintain book of
accounts for a business.

Preparing Financial Statements of the Company

All companies are required to prepare financial statements of the company based on the Book
of Accounts. Financial statements means any statement to provide information about the
financial position, performance and changes in the financial position of an assesse and includes
balance sheet, profit and loss account and other statements and explanatory notes forming part
thereof.

45
Appointing Auditor for the Company
Every Company must appoint its first Auditor within one month of the registration of the
company. Any person who is a qualified Chartered Accountant in practice, or a firm of
Chartered Accountants can be appointed as the Auditors of the Company. However, the
following persons / entities cannot be appointed as Auditor of a Company:

A body corporate;
An officer or employee of the company (irrespective of if he/she is
a qualified Chartered Accountant);
a person who is a Partner or Director of the company;
A person who is indebted to the company;
A person who is in whole time employment elsewhere;

It is important to remember that the Auditor of the Company must be independent and not
having bias towards the company.

The term of an Auditors appointment would end at the conclusion of the Annual General
Meeting of the Company, the company may re-appoint the same Auditor or may decide to
replace the Auditor.

Auditing the Financial Statement of the Company

Audit plays an important role in the management of the Company. As per Companies Act,
2013 every company should appoint an Auditor to audit the accounts of the company and
present their report on the accounts. The Auditor after being appointed by the Company would
audit the financial statements of the Company and submit his/her report on theaccounts of the
Company to the members. The Auditor is also required to state in his report whether the
accounts of the Company give a true and fair view of the state of affairs of the Company.

If the Auditor is not satisfied with the information / clarification provided in the financial
statements of the Company, or if the Auditor has any reservation in respect of the account or
book of accounts maintained by the Company, then he/she can bring the facts to the attention
of the stakeholders by Qualifying the Audit report.

Conducting Annual General Meeting

An Annual General Meeting is a meeting of the shareholders of a Company held every year.
Companies Act, 2013 mandates that all company except One Person Company hold one
Annual General Meeting every year. No company is exempt from this requirement. The date
of any Annual General Meeting must be within 15 months from the date of immediately
preceding Annual General Meeting. However, for a newly incorporated company, the first
Annual General Meeting must be held within 18 months from the date of incorporation of the
Company.

46
At the Annual General Meeting, the audited financial statements of the Company with the
Auditor’s Report and Directors Report are placed before the members of the Company. The
members of the Company on being satisfied about the financial statements of the Company can
adopt the Annual Accounts of the company after due consideration. The financial statements
of a company are considered final only after it is approved by the Shareholders of the company
in the Meeting.

Private Limited Company Annual Return Filing

Once, the Annual General Meeting is completed and the audited financial statements are
adopted by the Company, it must be filed with the Registrar. The filing of the audited financial
statements of the company in the prescribed format to the Ministry of Corporate Affairs is
called as filing of annual return of a company. The annual return of the company must be filed
within 60 days of the date on which the annual general meeting of the company was held.

47
4) SWOT Analysis of Goods & Service Tax
Strengths of Goods and Service Tax in India

It will dropping out the cascading effects of tax on production and distribution of goods
and services which will competitiveness and consequently, GDP will increase.
It will apply all goods and services except some exempted products.

Tobacco is not exempted from the area of GST. It is treated as Sin goods and come
under the taxation with central excise tax.

Natural gas, Aviation Turbine Fuel (ATF), High Speed Diesel (HSD), Crude oil, Petrol
products are exempted till the GSTC (Goods and Service Tax Council) discloses date
of their formation.

Alcohol, real estate, custom duty and electricity are exempted from GST.
(Proposed article, 366 (12A).

GST would be dual taxation system. It would be charged intra-State by Central and
State governments. It would be called CGST (Central Goods and Service Tax) and
SGST (State Goods and Service Tax).

Weaknesses of GST System in India

The doorstep goal is very ground level for traders and service providers. It will raise
appropriation of government ways and means which are costlier than government’s
revenue.

GST is a subsume of various States and Central taxes like excise duty, cess, service tax,
countervailing duty etc., but many more are left which should be included like
electricity, alcohol etc.

GST for States and Central (SGST, CGST) seems to be different, further it can
be diversified on the basis of location, geographical structure etc.

The tax rate is depends upon availability of fund in States. The States has power
to increase the rate according to their need.

This system is very fond of technology, but India is a developing country where
people are not habitual of technology.

48
Opportunities of GST in India

The rates of tax are set at ground level which will help States and Unions to collect
more revenue.

It will reduce the transaction costs and wastages of scare resources because at a one
registration people can do transactions from States and Unions. So, it will connect the
whole nation from a single click.

In indirect tax structure multiple taxes were charged from taxpayers. But GST
will eliminate the taxes on chain of transactions.

GST is also known as “One Point Single Taxation System”. This is a helping hand for
businessman’s, they can come to agreement on price modalities, supply chain etc.,
without thinking too much about taxes imposed on them at later stages.

GST will reduce average tax burden of consumers. They will be certain about their
taxes which will reduce evasion of taxes.

Threats of GST in India

Inter-States supply of goods and services are considered as import and IGST will
be applied (1%) in addition to custom duties.

The Central government promised for compensation to loss making States for aperiod
of 5 years. The compensation will be as: 100% for first 3 years, 75 % for 4th year and
50% for 5th year. So, it is possible that all States does not implement it in effective
manner to get compensation.

GST is not friendly with banking sector. Because the cost of goods become cheaper
after GST and it will promote export. Presently, 14% service tax is being levied on
baking transactions. GST will make these transactions more costly. Over and above,
in most of countries banking sector is excluded from GST.

GSTC (Goods and Service Tax Council) will set the benchmark for resolving the
dispute on recommendations of GSTC. It means GSTC will lay down the criteria for
GSTC itself. It is against the principle of natural justice.

GST is not a guarantee in itself that it would not be influenced by political parties and
politicians will not use it as a win-loss game.

49
SUGGESTIONS & RECOMMENDATIONS

50
 SUGGESTIONS & RECOMMENDATIONS

To provide literacy and awareness about the GST

Effective spending on efficient Tax administration staff

Well maintenance and frequent follow ups of GSTN (Goods and Service Tax
Network) portal for better relationship with various stakeholders.

In order to avoid the unnecessary loss of revenue to the state government, the central
government may think about the considerable percentage of GST which will be helpful
for all stakeholders of GST.

Consent from all states and suggestions from every state for betterment of GST and
the source of Tax revenue.

The government should take care about the RNR which should not affect the
tax revenue to any government either central or state.

The loss of Tax revenue should be managed and compensated properly

through proper diversification of funds without burden to anyone.

The Central and the State government should be in proper understanding and
cooperative with each other for the successful implementation of GST.

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CONCLUSION

52
 CONCLUSION

GST is the most logical steps towards the comprehensive indirect tax reform in our
country. Since independence. GST is implanted on all supply of goods and provision of services
as well combination thereof. All sectors of economy whether the industry, business including
Govt. departments and service sector shall have to bear impact of GST. All sectionsof economy
viz., big, medium, small scale units, intermediaries, importers, exporters, traders, professionals
and consumers shall be directly affected by GST.

One of the biggest taxation reforms in India – the Goods and Service Tax (GST) - is
all set to integrate State economies and boost overall growth. GST will create a single, unified
Indian market to make the economy stronger. Experts say that GST is likely to improve tax
collections and Boost India’s economic development by breaking tax barriers between States
and integrating India through a uniform tax rate. Under GST, the taxation burden will be
divided equitably between manufacturing and services, through a lower tax rate by increasing
the tax base and minimizing exemptions.

53
REFERENCE

54
 REFERENCE

http://en.wikipedia.org
http://goodsandservicetax.com
https://cleartax.in/gst
https://www.investopedia.com
https://www.mygov.in/
https://www.cbec.gov.in
Professional Guide on Indian GST by Dr. Joffy George
GST KNOWLEDGE For Your Better Business, by CA Suresh Prabhak Prabhu.
Goods and Services Tax in India by Ravi Pratap Singh..

55