Where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9
Check points for the Chartered Accountant
(i) Verify registration particulars with the Registration Certificate.
(ii) Do not take responsibility for filing the respective statutory form prescribed as the same is the responsibility of Management. Auditor’s responsibility is to issue the above certificate and attest the information in in Appendix A of the certificate.
(iii) Check the books and records and other relevant documents and registers relating to quantity and value of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and capital goods on the date immediately preceding the date from which he becomes liable to pay tax u/s 9 of the CGST /SGST Acts, 2017. Eligibility of such credits also needs to be checked under Section 16 and Section 17 of the CGST / SGST Acts, 2017.
(iv) Check the basis of ‘derived’ data of equivalent units of inputs contained in semi-finished and finished goods in stock.
(v) Statement of bills of entry / tax invoices attributed by Management to be the goods in stock that are not be older than 1 year on the day on which the Applicant is liable to pay tax (Section 18(2) of the CGST / SGST Acts, 2017) may be collected from the Management and subjected to audit verification tests. The tax invoice must be the one containing the prescribed particulars (Section 16(2) of the CGST / SGST Acts, 2017 to be read with Rule 46 of the CGST / SGST Rules, 2017).
(vi) Ensure that the input tax credit on capital goods has been reduced by five percentage points per quarter of a year or part thereof, from the date of invoice.
(vii) Ensure that a declaration is obtained from the Applicant for the listing of stock and capital goods including quantity
(viii) Obtain a list of existing capital assets with the purchase dates (for a period of 5 years). Cross check the listing with the fixed asset register/ledger maintained by the Applicant.
(ix) Check if there is a depreciation claimed on the input tax credit portion of capital goods under income tax act, the income tax WDV should be reduced to the extent of credit taken during the transition.
(x) Ensure that the debit notes / credit notes, if any, are recorded / accounted against the vendor invoice which are forming part of the closing inventory.
(xi) Ensure compliance with Rule 40(1)(e) of the CGST / SGST Rules, 2017 regarding verification of the credits claimed with the details furnished by the supplier in Form GSTR-1 or Form GSTR-4 or GSTR-2A, as applicable.
(xii) This certificate is required to be issued only if the aggregate value of the claim on account of SGST / CGST / UTGST and IGST exceeds rupees two lakhs (Rule 40 (1)(d) of the CGST / SGST Rules, 2017)
(xiii) This certificate is to be suitably modified wherever applicable. The names of the registered persons, dates, addresses etc. are only illustrative and needs to be modified in each case. Any resemblance to any person / place is purely unintentional.
(xiv) This certificate is to be issued in respect of a person who ceases to pay tax u/s 10 of the CGST / SGST Acts, 2017 and is liable to pay tax u/s 9 of the CGST / SGST Acts, 2017.
(xv) Ensure that the certificate issued is in accordance with the Guidance note on Reports and Certificates for special purpose issued by the ICAI.
(xvi) Ensure that a letter of representation is taken from the management for the details and information provided by them.