GST Disclosure Norms in Tax Audit Report. For detailed understanding of reader, this article has identified and discussed in detail below GST Disclosure Norms in Tax Audit Report.
GST Disclosure Norms in Tax Audit ReportNew disclosure in regard to Expenditure:
- A person who is registered under GST Law
- A person who is not registered under GST law
- Engaged solely in exempted supplies
- Non-GST supplies (like petroleum products)
- Non-supplies(stated in Schedule III to CGST Act)
- A person who is not required to obtain registration as its aggregate turnover is below Rs. 20 lakhs.
The type of information as desired in clause 44 is as under:-Description Column No of Table to clause 44 of Revised Form 3CD
- a) Total amount of expenditure incurred during the year 2
- b) Expenditure in respect of entities registered under GST
- i. Relating to goods or services exempt from GST 3
- ii. Relating to the entities falling under composition scheme 4
- iii. Relating to other registered entities. 5
- iv. Total payment to registered entities 6
- c) Expenditure relating to entities not registered under GST. 7
Discussion about each of the above heads for which information is required to be disclosed
- Under the above head , total expenditure incurred during the year is required to be disclosed.
- Apart from the expenses in Statement of Profit and Loss, the capital expenditure incurred like purchase of fixed assets is also required to be included for reporting the same in the tax audit report.
- The expenses which are incurred not yet paid will also have to be disclosed.
- Conservative Approach:- An expenditure should be disclosed as the heading does not say that 'expenditure on supply' is to be reported only. Rather it states that expenditure is to be disclosed
- Another Approach:-The main objective of the Central Government is to introduce this clause for matching such figures with the GST returns, wherein non-supplies are not required to be disclosed and, thus, there should be no need to disclose expenditure incurred on non-supplies. The Central Government needs to issue clarification in this regard for which it has now got time, as application of clause 44 has been deferred till 31st March, 2019.
Whether GST amount will be included in total expenditure?
Whether depreciation will be included in total expenditure ?Under clause 44, details of expenditure are being asked for with break up between the inward supplies received from registered and unregistered suppliers. As depreciation as an expense is not towards any inward supply, the same will not be included in the total expenditure.
Expenditure in respect of entities registered under GST -
- Relating to exempt goods or services: The expenditure incurred by the tax auditee on goods or services or both which are exempted from GST will be disclosed here. As per Section 2(47) of the CGST Act, 2017 exempt supply means the supply of any goods or services or both which attracts NIL rate of tax or which are wholly exempted from the levy of tax under section 11, or under section 6 of the IGST Act and include non-taxable supplies. It may be noted here that activities / transactions which are not regarded as supplies as per Schedule III of the CGST Act are not required to be disclosed here.
- Supplies from composition suppliers In this column the expenditure incurred on inward goods or services or both received from suppliers who have opted for composition scheme under Section 10 of the CGST Act, 2017 will be mentioned. It may be noted here that details of value of inward supplies under composition scheme, exempt and NIL rated supply are also required to be disclosed in return form GSTR 3B and while disclosing data here it should be ensured as an Auditor that the total of column 5 (exempt supply) and 6 (composition scheme) matches with the figures as disclosed in GSTR 3B filed by the auditee.
- Other registered suppliers Under this heading the amount of expenditure incurred on inward taxable supplies of goods or services or both will be mentioned. The amount of expenditure to be disclosed here would be inclusive of GST. Further, here also it should be ensured as an Auditor that the amount disclosed tallies with the figures as disclosed in GSTR 3B filed by the auditee. However, while matching appropriate adjustment be made for GST as in GST returns the value would be depicted without GST.
- Total payment to registered entities Based upon the prima facie examination of the format in which details of expenditure are to be given, it appears that the total of the amounts stated in the columns 3, 4 and 5 would be stated here. However, this view is not free from doubt in view of fact that the total payment is to be disclosed here, whereas expenditure incurred is required to be mentioned in columns 3, 4 and 5. We all know that there is big difference between incurred which means accrued (even if not paid) and payment.