GST Health Check & Risk Assessment

It is a structured review of your GST returns, books, and underlying transactions — conducted by PNPC, not the GST department — to find mismatches, wrongly claimed credit, missed reverse-charge liability, and classification errors before they turn into a departmental notice. Think of it as a proactive audit you commission yourself, on your own timeline, so that any issue found can be corrected voluntarily and on more favourable terms than if the department finds it first.

No, and this distinction matters. The earlier mandatory CA/CMA-certified GST Audit under Section 35(5) for businesses above ₹2 crore turnover was removed by the Finance Act 2021 — annual reconciliation is now a self-certified GSTR-9C filed by the taxpayer above the applicable turnover threshold, without mandatory third-party certification. A PNPC Health Check is a separate, voluntary engagement that goes deeper than the minimum needed for GSTR-9C self-certification — it is designed to find and fix problems, not just to produce the statutory reconciliation number.

Annually is the standard recommendation for most businesses above roughly ₹5 crore turnover, timed to precede the GSTR-9/9C filing season. Businesses below that threshold, with simpler operations and fewer transactions, can often do a lighter review every 18–24 months. Certain events should always trigger an out-of-cycle health check regardless of the last review date: a departmental notice of any kind, a planned fundraise or M&A transaction, a major change in accounting software or GST filing personnel, or a significant business expansion into new states or product lines.

GSTR-2A is a dynamic, real-time statement that updates continuously as suppliers file their returns. GSTR-2B is a static, monthly-generated statement that locks the ITC position as of a specific cut-off date each month and is the statement actually used to determine eligible ITC under Rule 36(4) and Section 16(2)(aa). A health check reconciles GSTR-3B ITC claims against GSTR-2B specifically — not GSTR-2A — because GSTR-2B is the legally relevant reference point for ITC eligibility.

Since the insertion of Section 16(2)(aa) and Rule 36(4), a registered person can generally avail input tax credit only to the extent it is reflected in their GSTR-2B — credit claimed beyond what GSTR-2B shows is at risk of being treated as ineligible, inviting interest and potential reversal. In our health check, every mismatch is traced to its cause: sometimes it is the vendor's fault (they have not filed their GSTR-1 or filed it late), and sometimes it is an internal timing or data-entry issue on the recipient's side.

The rate rationalisation effective 22 September 2025 moved the GST rate structure from the earlier four slabs (5%/12%/18%/28%) to a simplified three-tier structure (5%/18%/40%), with the 40% rate reserved for a narrow list of de-merit and luxury goods. It applies prospectively from the effective date — it does not retrospectively change tax already correctly charged and paid under the earlier rate structure for supplies made before that date. However, contracts, standing invoice templates, or ERP rate masters not updated after the effective date are a real and common source of stale-rate invoicing going forward, which is exactly what the health check's classification review is designed to catch.

Section 17(5) of the CGST Act lists specific categories of input tax credit that cannot be claimed even though GST was validly paid on the purchase — including motor vehicles (with narrow exceptions for further supply, transport of passengers, or driving training), food and beverages, health services, and club/gym memberships unless they are statutorily obligatory for the employer or used for making a further taxable outward supply of the same category, works contract services for construction of immovable property (with an exception for plant and machinery), and goods lost, stolen, destroyed, or given away as gifts or free samples. These categories are commonly and often innocently misclaimed because the underlying purchase is a genuine, GST-paid business expense — it just happens to fall in a category the law specifically blocks.

Yes — this is one of the most valuable times to run a targeted health check, even though ideally it would have happened before the notice. An ASMT-10 notice under Section 61 identifies specific discrepancies the department has already found through automated return-matching; PNPC can rapidly reconcile the flagged period, prepare a defensible reply within the statutory response window, and simultaneously check whether the same root cause exists in other periods not yet flagged by the department — so you are not responding to one notice only to receive a second one for an adjacent period.

Form DRC-03 is the mechanism for making a voluntary payment of tax, interest, or penalty on the GST portal — used when a taxpayer identifies a shortfall or error and wants to correct it before the department raises a formal demand. If a health check identifies, for example, under-paid reverse-charge tax or an ineligible ITC claim, PNPC computes the correct tax and applicable interest under Section 50, and files DRC-03 to regularise the position voluntarily.

Most engagements cover the past 2–3 financial years, which balances practical relevance against the increasing difficulty of reconstructing very old records. The statutory limitation period for a Section 73 (non-fraud) demand and a Section 74 (fraud/suppression) demand differ, and both extend beyond a single year — so a health check that only looks at the most recent filing period can miss exposure sitting in an earlier, still-open year.

Yes, materially. Each GSTIN is treated as a distinct person under GST law, which means intercompany or inter-branch transactions between your own GSTINs — stock transfers, common service costs, and shared employee costs — are themselves taxable supplies under Schedule I and must be valued and cross-charged correctly, typically through an Input Service Distributor (ISD) registration or direct cross-charge invoicing. Multi-state businesses are the single most common source of cross-charge valuation errors we find, because the transaction never touches an external customer and is easy to overlook internally.

Yes — GST exposure is a standard line item in financial and tax due diligence for any funding round or M&A transaction, and undisclosed GST risk discovered during diligence routinely triggers valuation adjustments, escrow holdbacks, or deal delays while the issue is investigated and quantified. Running a health check ahead of the process lets you fix correctable issues, and gives you (and your CA) a clear, documented answer to any GST question the counterparty's diligence team raises, rather than an uncomfortable scramble mid-transaction.

Pricing depends primarily on transaction volume, the number of GSTINs involved, and the number of financial years under review — a single-GSTIN business with straightforward B2B transactions costs meaningfully less to review than a multi-state business with e-commerce sales, RCM exposure, and multiple product categories. PNPC scopes and quotes each engagement individually after the initial scoping call rather than applying a flat rate, since the actual reconciliation effort varies enormously by transaction volume and data quality.

Not necessarily your primary login credentials — we typically work from exported reports (GSTR-1, GSTR-3B, GSTR-2B, e-way bill and e-invoice reports) that you or your existing accounting team download and share, along with your books of account. Where useful and with your explicit authorisation, we can also be added as an authorised representative on specific matters, but full portal credential sharing is not a prerequisite for the health check itself.

No. PNPC's health check is a client-engaged advisory exercise, not a statutory audit with a reporting obligation to the tax authorities. Findings are reported only to you, the client, along with our recommended remediation approach. What you choose to do with those findings — voluntary correction, process fix, or (in genuinely ambiguous cases) obtaining a formal opinion or advance ruling — is your decision, though we strongly recommend acting on material findings given the compounding cost of interest and the harsher treatment of issues discovered by the department rather than disclosed voluntarily.

Often more so. Outsourced return filing, especially when priced on a per-return or retainer basis rather than a reconciliation-outcome basis, can create an incentive to file on time rather than file correctly reconciled — the return goes in, the deadline is met, but the underlying books-to-return tie-out is not always performed with the same rigour. A health check provides an independent, second-party verification of exactly what has been filed on your behalf, which is valuable oversight regardless of how competent your existing preparer is.

GSTR-1 is the detailed, invoice-level statement of outward supplies filed monthly or quarterly (under QRMP), reporting each sale transaction individually. GSTR-3B is a summary self-assessment return, filed monthly, on which the actual tax payment is made — it aggregates outward liability, inward ITC, and net tax payable. Because they are prepared and filed as separate processes (sometimes even by different team members or systems), the total values in GSTR-1 and GSTR-3B for the same period frequently diverge — this GSTR-1 vs GSTR-3B mismatch is one of the most common automated triggers for an ASMT-10 scrutiny notice.

Yes, for businesses above the applicable e-invoicing turnover threshold (which the CBIC has progressively lowered over successive notifications since e-invoicing was introduced). We verify that Invoice Reference Numbers (IRNs) are being generated for all applicable B2B invoices, that IRN-registered values tie out against GSTR-1 outward supply data, and that no invoices requiring e-invoicing were issued without the required IRN — since an invoice without a valid IRN, where mandatory, is not treated as a valid tax invoice for ITC purposes at the recipient's end.

This happens more often than most businesses expect — commonly from applying a higher rate than applicable, not claiming eligible ITC out of caution, or double-counting a supply across GSTR-1 and a manual correction. Excess tax paid can potentially be claimed as a refund under Section 54 of the CGST Act, subject to the applicable limitation period (generally two years from the relevant date) and the unjust enrichment test, or adjusted against future liability in specific circumstances. A health check surfaces these opportunities just as rigorously as it surfaces under-payment risk.

Credit and debit notes must be linked to the original invoice, reported in GSTR-1 within the statutory timeline, and correspondingly adjust the ITC available to the recipient. A common finding is a credit note issued in the accounting system (reducing revenue in the books) that was never reported in GSTR-1 — creating a mismatch between books revenue and GST-declared outward supply value, and potentially leaving the recipient claiming ITC on a value that has already been reduced.

Indirectly, yes. While a GST Health Check report is not a certified financial statement, banks and NBFCs increasingly review GST return data (turnover trends, ITC patterns) as part of working capital and term loan assessments, since GSTR-3B turnover is an independent, government-verified data point that is harder to manipulate than internally prepared financials alone. A clean, reconciled GST filing history — which is exactly what a health check helps establish and maintain — supports a stronger credit profile and reduces friction during a bank's own verification process.

Findings outside the department's current assessment limitation window for demand purposes still matter for two reasons: first, certain limitation periods can be extended in fraud or suppression scenarios, and second, an unresolved historical issue can indicate an ongoing process flaw that is still actively generating new-period exposure even if the oldest instances are now time-barred. PNPC flags historical findings with context on their current enforceability, while prioritising the fix for the underlying process so the issue stops recurring going forward.

The GSTR-9C self-certification requirement applies only above a specified turnover threshold, but GST compliance risk — reconciliation mismatches, RCM under-payment, blocked credit claims — exists at any turnover level once a business is registered. A smaller business will typically need a lighter-touch, less frequent review than a large one, but 'below the GSTR-9C threshold' is not the same as 'no compliance risk exists.'

Yes. Many clients move from a one-time health check into an ongoing monthly or quarterly GST return-filing retainer once the initial reconciliation is complete and process fixes are agreed — this way, the disciplined reconciliation approach used in the health check becomes the standing monthly practice rather than a one-time exercise that drifts back out of sync over time.

For UAE-headquartered groups with an Indian subsidiary, branch, or liaison office, GST compliance in India still needs to be reviewed with full context of the group's cross-border cost allocations, import of services from the UAE entity (which can trigger RCM liability on the Indian side), and any intercompany transactions between the UAE and Indian entities. PNPC's presence in both Chennai/Bangalore/Hyderabad and Dubai means the Indian GST health check is conducted with visibility into the UAE-side transactions driving it, rather than reviewing the Indian entity in isolation.

By frequency, it is GSTR-2B vs GSTR-3B ITC mismatches driven by vendor non-compliance — i.e., credit claimed by the business that is not actually reflected in GSTR-2B because the vendor has not filed, or filed late. By value, the largest individual findings tend to come from RCM under-payment on import of services or GTA payments, and from Section 17(5) blocked-credit claims on vehicle or employee-benefit related expenses.

The data collection phase requires meaningful time from your accounts team to extract and share registers, returns, and reports, but the analytical and reconciliation work itself is performed by PNPC independently. We schedule data requests in batches and provide a clear checklist upfront (rather than ad hoc follow-up requests trickling in over weeks) specifically to minimise the back-and-forth burden on your internal team.

Yes. While a full health check across all reconciliation areas gives the most complete risk picture, a targeted review — for example, focused only on RCM compliance ahead of a specific concern, or only on ITC eligibility ahead of a large capital purchase — is a reasonable and often cost-effective scope when the business has a specific, bounded concern rather than a general need for full assurance.

Rule 86B restricts the use of the Electronic Credit Ledger to discharge output tax liability to a maximum of 99% of the tax liability for a tax period, for taxpayers whose taxable value of supply (other than exempt and zero-rated supply) exceeds ₹50 lakh in a month — meaning at least 1% of the liability must be paid in cash, subject to specified exceptions (such as having paid more than ₹1 lakh income tax in each of the preceding two years, or receiving a refund of unutilised ITC above a specified amount). This rule is aimed at curbing fake invoicing and is specifically checked where the business's monthly taxable supply crosses the ₹50 lakh threshold and the exceptions may not clearly apply.

The reconciliation approach differs meaningfully for a Composition taxpayer, since they file a simplified quarterly statement (CMP-08) and an annual return (GSTR-4) rather than GSTR-1/3B, cannot claim input tax credit at all, and cannot charge GST separately on invoices. The health check for a Composition Scheme business instead focuses on eligibility verification (confirming the turnover and supply-mix conditions for remaining in the scheme continue to be met), correct tax computation at the applicable composition rate, and identification of any inadvertent regular-scheme-style invoicing (charging GST separately, which a composition dealer is not permitted to do) that could jeopardise the scheme eligibility.

Yes. Where a business sells through an e-commerce operator such as Amazon, Flipkart, or a similar marketplace, the operator is required to collect TCS under Section 52 on the net value of taxable supplies and deposit it against the seller's GSTIN. The health check reconciles the TCS credit reflected in the seller's Electronic Cash Ledger against the operator's TCS statements and the seller's own sales records through that platform, since discrepancies here directly affect the seller's available cash-ledger balance and net tax payable.

The engagement concludes with the risk register and findings report, a discussion of the remediation plan for each material item, and — where the client opts for it — hands-on support executing that remediation (DRC-03 filings, return amendments, or process changes with the accounting team). PNPC also recommends a follow-up review, typically at the next annual cycle, specifically to verify that agreed process fixes were actually implemented and are working, not just agreed to on paper.