The eleven findings that appear in almost every departmental audit

The list has not changed in five years. Which means it can be closed before the auditor arrives.

The eleven

One. Credit availed in GSTR-3B exceeding GSTR-2B, without a cause wise reconciliation.

Two. Blocked credit under Section 17(5) not reversed — motor vehicles, employee benefits, CSR spend, goods written off, free samples.

Three. Rule 42 and 43 reversals not made, or made on an exempt turnover figure that omits interest income and securities.

Four. Reverse charge on import of services, legal services, GTA, sponsorship, security services and renting of motor vehicles, either not paid or paid without a self invoice.

Five. Cross charge of internally generated services between branches not made at all.

Six. Interest on delayed payment of tax and on wrongly availed credit not paid, or computed on a gross basis.

Seven. Turnover per the financial statements exceeding turnover per the returns, without a reconciliation.

Eight. Other income — scrap sales, rent, notice pay, penalties recovered, insurance claims, foreign exchange gains — not examined for taxability.

Nine. Credit notes issued without satisfying Section 15(3)(b), and discounts excluded without the recipient's reversal.

Ten. E-invoicing and e-way bill non compliance, and mismatch between e-invoice data and GSTR-1.

Eleven. Stock differences, job work stock not reconciled, and Section 143 return periods breached.

Closing them in advance

Build a standing reconciliation pack containing all eleven, prepared annually within three months of the year end, with the working papers and the explanations.

For each item, either correct the position and pay, or write the note explaining why no liability arises. A note prepared before the audit is evidence; the same note prepared during the audit is an argument.

Circulate the pack to the auditors so the statutory audit and the GST position agree.

Where a correction is required, make it in the current period with a contemporaneous note, and pay interest. Voluntary correction removes the penalty and shortens the audit.

What to do on Monday

1. Build the eleven item reconciliation pack within three months of every year end.

2. Write a dated note for each item where no liability arises.

3. Give every line of other income a recorded GST position.

4. Correct and pay in the current period with a note rather than waiting for the auditor.

Questions we are asked on this

Will preparing the pack invite scrutiny?

No. It shortens the audit, because the auditor's questions are answered before they are asked.

Should we disclose a correction?

Yes, with a contemporaneous note and payment of interest. Voluntary correction removes penalty and defeats suppression.

Which finding produces the largest demands?

In our experience the credit gap and blocked credit, followed by reverse charge and cross charge.

Is other income really examined?

Systematically. Every line of other income in the financial statements should have a GST position recorded.

Who should prepare the pack?

The tax function, with the finance controller's sign off on the source data.

In this cluster

• GST audit under Section 65: the clock, your rights and the first reply
• Special audit under Section 66: when an accountant is appointed against you
• ADT-01 to ADT-04: the audit paper trail
• GSTR-9 and GSTR-9C: reconciliation exposure and correction strategy
• Turnover reconciliation between GST, income tax and the financial statements
• E-invoicing non compliance: consequences and cure
• Section 35(6): tax on goods not accounted for
• Audit objections versus anti evasion investigation: two different files
• Building the audit defence file before the audit begins

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.