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GST Audit Checklist – 7 Essential Checkpoints For a Perfect GST Audit Tool

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GST was introduced in the nation to ease the taxpayers’ efforts and bring uniformity in the taxation structure of India.

Businesses with multiple registrations still struggle to be 100% compliant with all the GST rules as the rules are dynamic and frequently revised.

Hence, the head-quarter of the business setup or the key decision-makers like the CFOs, Tax Managers, CAs, Audit experts, etc., must have a mechanism that allows taking an overview of the entire business setup and the compliance requirements.

In this short article, we will introduce you to 7 essential features that you should look at while finding such a GST audit tool that allows you to look into minute details and identify the errors in the GST compliance requirements.

What is a GST Audit Tool? Does your business need one?


Let us take an example:

A food processing business, ‘Jethalal Snacks’, has Ten sub-units/depots located in multiple states of India.

Headquarters – Mumbai, Maharashtra;

Five sub-units – Jodhpur, Rajasthan;

Three sub-units– Pune, Maharashtra; Two sub-units- Indore, Madhya Pradesh

All the 10 sub-units (plus the head-quarter office) are registered under GST.

Now, every sub-unit of this business files its GST returns individually.

So, when the decision-makers need an overview of all the return filing patterns of all the sub-units, do they have an option to do so?

  1. They go through each return filed by all the ten sub-units manually. Then, identify the errors, make action plans to rectify these errors, identify potential threats, etc.

Well, this may sound easy but doing all this manually is a Herculean task!

It is also evident that hardly any of the decision-makers of the business so much spare time to look into every tiny detail of the GST returns.

Do we have an alternative for this?

Yes, the GST Audit tool!

How will a GST Audit tool make a difference?

  • Provide you with a consolidated summary of all the returns filed by all the sub-units in just a single report! In addition, the management team need not visit every previously filed GST return as this will be completely automated.
  • Identify potential threats to your company like:
  • Open exposure to fines and interest on unpaid liabilities.
  • Identify the ineligible ITC claimed as this can be a serious reason to attract GST departmental audit.
  • In addition, it helps you identify the gap between the cash accumulated and the ITC accumulated.
  • Input Tax Credit under GST can be well utilized to pay the outward GST liabilities, and paying outward liabilities in cash can be minimized.
  • A GST audit tool like GSTHero’s Third Eye will help businesses generate a comprehensive report that factors in all the returns filed in the financial year and shows red flags wherever the tool finds any anomaly or inconsistency with the data.
  • This tool shall give businesses total internal financial control so that better decisions can be made in future.

GST Audit Tool – 7 checkpoints


We submit to you seven essential qualifications of a good & user-friendly GST audit tool:

  • Automated software that thinks like a GST expert

The GST audit software should follow a similar thought process as that of a GST expert.

It should scrutinize each and every GST return transaction closely yet rapidly.

When this task is to be done manually, it is almost impossible to do it with 100% precision, and it consumes a lot of time of the management.

Hence, a GST audit tool should bridge this gap by processing the data effectively and giving a very authentic and faster result in few minutes!

  • The data to be used should be authentic

The data fetched by this GST audit tool must be authentic so that a flawless and unbiased GST audit report is generated.

When the GST audit tool is provided by Government-authorized GST Suvidha Provider (GSP) like GSTHero, it is sure that the GST data used by this tool will be directly fetched from the GSTN server.

The data from the already filed GST returns should be surveyed, and based on it, the GST audit tool should return the results showing the financial health of the company.

  • Report NOT to be generated on the sampling basis!

When the data to be processed is in bulk, the tools may likely deploy the sampling technique on the data to give you an aggregated result.

This result can vary from the actual result that we may get if each and every transaction entry is taken into account.

Hence, businesses must remember that the GST audit tool they choose should process every GST return transaction and give them a detailed and comprehensive report.

If the GST audit tool works on a sampling basis, it is probable that some errors in the filing or some red flags are missed and are not shown to the businesses.

This slight ignorance can cause considerable losses to the business.

So make sure, not just sampling!

  • Warns the business about the potential threats

A GST audit tool must generate a comprehensive audit report that allows a Bird’s Eye View of the data from all the sub-units.

However, this is not enough.

The GST audit tool must also run a ‘Predictive Analysis’ that generates a dedicated dashboard or a section solely dedicated to the threats that may harm your business in the future if specific corrective actions are not taken in time.

For example:

If you have a pending GST liability of Rs. 50,000 for a given FY.

This penalty attracts interest ranging from 18% to 24%.

So on any given day, your business faces an unrealized loss of about 18% in the best case.

Hence, the GST audit tool should be capable enough to perform such calculations and predict the future losses that the business may face.

Also like: e-Invoicing Under GST : 7 Positive Impacts on Small & Medium Businesses

  • The tool should have minimal human interference

The GST audit tool should be well equipped with the automation techniques that allow the tool to perform rigorous scrutiny, ITC reconciliation, GST return reconciliation, report generation, predictive analysis, etc., all by itself.

Is this too much to ask from a GST Audit tool?

Of course not!

Hence, the businesses must be wise while choosing a good GST audit tool that will require minimal human interference and churns out the report in just a few minutes!

  • Easy integration with your existing ERP or the GST filing software

The GST audit tool should quickly adapt to your existing ERP system to make the reconciliation task more manageable.

Your records from the books of account and the internal records will be reconciled with the actual GST returns filed to identify any differences between the two.

Therefore, businesses must choose a GST audit tool that has no integration issues with their existing ERP.

  • Strong technical support from the service provider

Businesses must enquire about the after-sale service for the GST audit tool.

There is a reasonable probability that your accounting team or the senior management can have many doubts initially while using the GST audit tool.

Hence, the service provider must provide you with complete technical support to address all your queries and resolve on-demand errors.

Businesses must beforehand confirm the terms of the technical support to avoid further problems in the professional relations.

GSTHero Third Eye provides solid technical support on-call and e-mail to address the issues & errors of the customers while using the super GST audit tool GSTHero ThirdEye.

In a nutshell

This short article has discussed seven crucial features that you should look into a good GST audit tool to run an internal GST audit of your business.

Internal GST audit is essential and saves businesses a lot of revenue that goes into paying fines and interests.

The most significant difference that the GST audit tool makes is that it prepares a business for the GST departmental audit with all the scrutinized document trails.

The businesses searching for a good GST Audit tool for their business can consider GSTHero ThirdEye.

Stay updated; stay ahead!

Until the next time….

GST Hero

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