Why and how would you reconcile revenue in the books with GST returns during an audit?
What the interviewer wants to hear
- Revenue in books should broadly agree to outward supplies in GSTR-1 and GSTR-3B
- Identifies reconciling items such as exempt supplies, advances, credit notes and timing
- Unexplained differences suggest unrecorded or fictitious sales
- Also checks GST liability and input credit balances
- Considers tax exposure and disclosure
Model answer
GST returns are an independent record of what the company reported as supplies to the government, so comparing them with revenue in the books is a useful check on completeness and occurrence. I would get the GSTR-1 and GSTR-3B data for the year and reconcile the taxable value with revenue in the general ledger, month by month. Expected reconciling items include non-GST income like interest, exempt or non-taxable supplies, unbilled revenue under Ind AS, advances on which GST was paid before revenue was recognised, credit notes and cancelled invoices. After those, any unexplained difference needs follow-up: books higher than returns could mean under-reported GST, while returns higher than books could mean unrecorded sales. I would also reconcile the GST payable and input tax credit balances with the electronic ledgers, and consider whether any exposure needs a provision or disclosure.
Can you answer it under time pressure?
Take a timed medium round and get scored on every answer.
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