Checklist for Scrutiny of Books for Tax Audit Purpose By CA Sakshi Singhal


Step 1: Check and Verify the opening Balances of each ledger as per previous year signed Balance-sheet

  1. Is there any difference in Opening Balance                                   Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Name of Ledger

Amount as per Last year Balance Sheet (in )

Amount as per Books of Accounts (in )

Difference (in )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     c.Whether the difference has been rectified?                      Yes /No

Step 2: Check whether the assessee is carrying on any profession or business?

  1. If assessee is carrying on Profession, whether his Gross receipts exceed 50 Lakhs? Yes /No

  2. If assessee is carrying on Business, whether both payments and receipts exceeds 5% in cash only                       Yes /No

  3. If answer of (b) above is affirmative, check whether his turnover exceeds 1Crore Yes /No

  4. If answer of (b) above is nugatory, whether his turnover exceeds 5Crore Yes /No

  5. On the basis on all above points, whether assessee is required to have Tax Audit under section 44AB of Income Tax Act, 1961  Yes /No

Step 3: Check, in case of company, whether there is any change in shareholding pattern as compare to last year from MCA SH-4 (if filed)                        

  1. Whether there is any change in shareholding pattern as compare to last year  Yes /No

  2. If answer of (a) above is affirmative, the provide the following details:

S.No.

Name of Shareholders

New Shareholding pattern

 

 

No. of Shares held

% of shareholding

 

 

 

 

 

 

 

 

 

 

 

 


Step 4
:
Check whether the assessee is registered under GST?

  1. Whether assessee is registered under GST                             Yes /No

  2. If answer of (a) above is affirmative, then provide the following Details:

S.No.

State

GSTIN

 

 

 

 

 

 

 

 

 

 

 

 


Step 5
: Reconcile Outward Supply (Sales/Gross Receipts) from GSTR-1, GSTR-3B and Books of Accounts

  1. Is there any difference in Between GSTR- 1, GSTR-3B and Books of accounts          Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Month

Difference Between

Reason of Difference

Amount Involved (in )

How the same has been rectified

 

 

 

 

TV

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     c.Whether the difference has been rectified?                     Yes /No

Step 6: Reconcile ITC claimed as per GSTR-3B and Books of Accounts

  1. Is there any difference in ITC as per GSTR-3B and Books of accounts          Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Month

Difference Between

Reason of Difference

Amount Involved (in )

How the same has been rectified

 

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


      c. Whether the difference has been rectified?                      Yes /No

Step 7: Reconcile ITC claimed as per GSTR-2B and Books of Accounts

  1. Is there any difference in ITC as per GSTR-2B and Books of accounts          Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Month

Difference Between

Reason of Difference

Amount Involved (in )

How the same has been rectified

 

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


      c. Whether the difference has been rectified?                      Yes /No

Step 8: Reconcile ITC claimed under RCM as per GSTR-3B and Books of Accounts

  1. Is there any difference in ITC under RCM as per GSTR-3B and Books of accounts  Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Month

Difference Between

Reason of Difference

Amount Involved (in )

How the same has been rectified

 

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     c. Whether the difference has been rectified?                     Yes /No

Step 9: Cross –Verify the GST Credit Ledger or GST Liability Ledger Balances as per GST Portal and Books of Accounts

  1. Is there any difference in GST Credit Ledger or GST Liability Ledger as per GST Portal and Books of Accounts                                                                                           Yes /No

  2. If there is any difference, as stated in (a) above, kindly fill the details:

S.No.

Month

Difference Between

Reason of Difference

Amount Involved (in )

How the same has been rectified

 

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     c. Whether the difference has been rectified?                     Yes /No

Step 10: Check whether there is any expense on which GST should be charged on RCM

  1. Whether there is any expense on which GST should be Charges on RCM         Yes /No

  2. If answer of (a) above is affirmative, then provide the details as follow:

S.No.

Month

Nature of Expense

Amount (in Rs.)

Reason for not charging the same

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     c. Whether the same has been rectified and how?         Yes /No

Step 11: Check whether there is any expenses on which ITC is not allowed but claimed in books

  1. Whether there is any expenses on which ITC is not allowed but claimed in books        Yes /No

  2. If answer of (a) above is affirmative, then provide the details as follow:

S.No.

Month

Nature of Expense

Amount (in Rs.)

Reason for the same

 

 

 

IGST

CGST

SGST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


    c. Whether the same has been rectified and how?         Yes /No

Step 12: Check whether there is any expense in books of accounts on which TDS should be deducted but not deducted or deducted but at the rate lower than the specified

a. Whether there is any expenses on which should be deducted but not deducted        Yes /No

b. If answer of (a) above is affirmative, then provide the details as follow:

S.No.

Nature of Expense

Amount of Expense (in Rs.)

Amount of TDS (in Rs.)

Reason for the same

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


c. Whether the same has been rectified and how?          Yes /No

d. Whether there is any expense on which TDS should be deducted at rate lower than the specified       Yes /No

e. If answer of (d) above is affirmative, then provide the details as follow:

S.No.

Nature of Expense

Section

Amount of Expense    (in Rs.)

Amount of TDS deducted (in Rs.)

Amount of TDS should be deducted (in Rs.)

Amount of Difference     (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


f. Whether the same has been rectified and how?         Yes /No

Step 13: Check payment made towards TDS as reflected in Books of accounts against TDS Challans.

a. Is there, any payment towards TDS as reflected in books of accounts against which no challan has been found?                                                                                                    Yes /No

b. Is there, any payment in which interest has been paid along with TDS amount as per the challan but the same has not been bifurcated while booking the entry of the same

c. If answer of (b) above is affirmative, kindly fill the detail:

S.No.

Month

Amount of TDS (in Rs.)

Amount of Interest (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


d. Verify whether the TDS due for the payment for the month has been paid as per the due date.

e. If answer of (d) above is negatory, whether the Interest has been paid along with related challan                                                                                                                                            Yes /No

f. Check whether assessee has filed TDS returns with in due dates            Yes /No

g. If answer of (f) above is negatory, whether the Interest has been paid along with related challan                                                                                                                                            Yes /No

h. If assessee had paid or liable to be paid Interest for late payment of TDS or late filing of returns, kindly provide the detail:

S.No.

TAN

Amount of Interest should be charged (in Rs.)

Amount of Interest Paid  (in Rs.)

Date of Payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Step 14
: Whether assessee is liable to collect TCS?

  1. Whether assessee’s total turnover in previous financial year exceeds 10 crore              Yes /No

  2. If answer of (a) above is affirmative, then whether in current financial year, at any time after 01st October, 2020, sale of goods to a buyer exceeds 50 lakhs   Yes /No

  3. If answer of (b) above is affirmative, then whether assessee has collected TCS on (Total Sales Value-50 Lacs)                                                                                                                       Yes /No                                                         

  4. If answer of (c) above is affirmative, then whether payment of TCS and filing of TCS retun made within due dates as prescribed                                                                                    Yes /No                                                                                                                                                  

  5. If answer of (d) above is negatory, whether Interest has been paid along with respective challan Yes /No

Step 15: Whether assessee is liable to deduct ESIC and EPF

f. Whether provisions for ESIC and EPF are applicable to assessee?        Yes /No

g. Is answer of (a) above is affirmative, whether same has been deposited with in the due dates to the department                              Yes /No

h. If answer of (b) above is negatory, then provide the details:

S.No.

Nature of Fund

Employer Contribution/Employee Contribution

Amount of Contribution (in Rs.)

Due Date of Payment

Actual Date of Payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Step 16
: Check whether expenses has been charged in proper heads they belongs to. If No, then provide the details:

S.No.

Name of Ledger

Nature of expense

Head of expense to which it relates

Head of expense in which it should charged

Amount involved (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Step 17
:
Whether assessee has obtained loan from Banks or NBFCs or from any other person

a. Whether assessee has obtained any loan from Banks or NBFCs?          Yes /No

b. If answer of (a) above is Yes, then obtain Loan statement of each financial support and verify the balances outstanding in books of accounts and the respective loan statement and If there is any difference then fill the required column:

S.No.

Name of Ledger

Balance as per Loan Statement (in Rs.)

Balance as per Books of accounts (in Rs.)

Amount of Difference  (in Rs.)

Reason of Difference

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


c. Whether the same has been rectified?                  Yes /No

d. Whether assessee has obtained loan or accepted any deposit from any other person   Yes /No

e. Is answer of (d) above is Yes, whether the same has been obtained by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account                                                                Yes /No

f. If answer of (e) above is negatory, then whether the loan accepted/account balance as on the date of acceptance/loan accepted and balance on date of acceptance exceeds ?20,000 Yes /No

g. If answer of (f) above is Yes, the fill the following details (Section 269SS)

S.No.

Name of Lender/Depositor

Address of Lender/Depositor

PAN of Lender/Depositor

Amount of Loan/Deposit taken or accepted during the Year (in Rs.)

Maximum Amount Outstanding during the year (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


h. Whether assessee had paid loan or deposit by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account         Yes /No

i. If answer of (h) above is negatory, then whether the loan/deposit paid together with Interest or account balance as on the date of payment/loan payable and balance on date of payment exceeds ?20,000                                                                                                                             Yes /No

k. If answer of (i) above is Yes, the fill the following details (Section 269T)

S.No.

Name of Lender/Depositor

Address of Lender/Depositor

PAN of Lender/Depositor

Amount of repayment (in Rs.)

Maximum Amount Outstanding during the year (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                            

In case where assessee is a Company, Check DPT-3 (if filed) to verify the balances

Step 18: Check whether there are creditors who are outstanding for more than 180 days from the date of transaction

a. Whether there are creditors outstanding for more than 180 days            Yes /No

b. If answer of (a) above is affirmative, then reverse the proportionate ITC so availed and provide the following details:

S.No.

Name of Creditors

Amount Outstanding  (in Rs.)

Proportionate IGST (in Rs.)

Proportionate CGST (in Rs.)

Proportionate SGST (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


c. Check whether in previous year any ITC has been reversed due to non-payment to creditors. If yes, then check whether in current year the payment has been made to that creditor and f the payment has been made, whether the ITC claimed in books or not.

d. Obtain Balance confirmation from the creditors outstanding from more than 1 year.

e. Prepare list of Creditors having debit balances

f. Prepare list of creditors with negligible amount that can be write off from the books   

Step 19: Whether previous year provisions has been paid or reversed? If not then reverse previous year provisions

Step 20: Check whether current year provisions for Expenses like electricity, salary, Telephone, Internet, Legal and Profession, ROC, Audit Fees has been created or not.

Step 21: Check whether Provision for Income Tax for the current financial year has been created or not in the books of accounts

Step 22: Check whether there are creditors who are outstanding for more than 180 days from the date of transaction

Step 23: Check whether assessee has purchased fixed assets during the period?

a. Whether assessee has purchased fixed assets during the period?       Yes /No

b. If answer of (a) above is affirmative, then obtain all purchase bills and provide the following details:

S.No.

Name Assets

Date of Purchase

Amount Involved (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


c. Check from the fixed asset bill whether it should be capitalise or should transfer to repair and maintenanc

d. Check whether any fixed asset is purchased in cash for more than 10,000 and if yes, then check whether depreciation has been claimed or not and if depreciation has been claimed then provide the following details:

S.No.

Name Assets

Date of Purchase

Amount of Fixed Assets  (in Rs.)

Amount of Depreciation (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


e. Check whether depreciation on fixed assets has been charged in books of accounts as per companies Act (for companies) or as per Income tax act (in all other cases)

Step 24: Check whether assessee has balance in closing stock from goods imported Into India?

  1. Check whether assessee has balance in closing stock from goods imported Into India Yes /No

  2. If answer of (a) above is affirmative, then whether proportionate expenses related to import has been added in closing stock. If not, then same should be computed and included in the valuation of closing stock

Step 25: Check whether there are debtors standing in books of accounts?

  1. Check whether there are debtors outstanding in its books of accounts                           Yes /No

  2. If answer of (a) above is affirmative, then prepare a list of debtors having negligible balances which can be write off from the books of accounts

  3. Prepare a list of debtors having outstanding closing balance is in credit

  4. Check whether debtors having credit balances has been either paid or adjusted against transaction within 365 days from the day when the balance become credit in nature

  5. If not, the same should be treated as deposit and check whether the same is declared as deposit in books of account and DPT-3 as well

  6. Check whether any sum from outstanding debtors/from advances given has been received in excess on ?2,00,000 otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account 84[or through such other electronic mode as may be prescribed Yes/No

  7. If answer of (f) above is Yes, then provide the details as follow (Section 269ST):

S.No.

Name of Payer

Address of Payer

PAN of Payer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


h. Obtain balance confirmation from debtors outstanding from long period

Step 26: Check whether there is any difference in TDS Receivable, Advance Tax Paid as reflected in Form 26AS and as reflected in Books of accounts. If yes, then provide the following details:

S.No.

Name of Party

Section

Income as per 26AS (in Rs.)

Amount of TDS as per 26AS (in Rs.)

Amount of TDS as per books of accounts (in Rs.)

Amount of Difference (in Rs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Step 27
: In case of Cash and Cash Equivalents, check and verify the following:

  1. Verify the Bank Balance as reflecting in books of accounts with Bank statement and if there is any difference, obtain the bank reconciliation statement.

  2. Verify whether Balance of Cash as on the last day of the year in negative or not

  3. Verify whether there is any payment made in cash in excess on ?10,000 during the year

Step 28: Provide following details for GP/NP ratio:

Particulars

Current Financial Year

Previous Financial Year

(a)     Turnover (Rs.)

 

 

(b)     Gross Profit (Rs.)

 

 

(c)      GP Ratio (b/a) (in %)

 

 

(d)     Net Profit (Rs.)

 

 

(e)     NP Ratio (d/a) (in %)

 

 

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