A GST notice does not arrive without warning — it arrives because a gap already exists in your books, your returns, or your ITC claims. A structured, proactive review of your GST position costs a fraction of what a demand, penalty, or litigation will cost. We find the gaps before the department does.
Prevention Costs a Fraction of What Litigation Will.
Every Section 65 audit, every Show Cause Notice under Section 73 or 74, every wrongly denied ITC demand — begins with a gap that already existed in the taxpayer's books at the time of filing. That gap was either unknown to the taxpayer, or known but unaddressed. In either case, the consequence is the same: a demand, interest under Section 50, a penalty ranging from 10% to 100% of tax, and months of litigation. A GST Health Check finds these gaps before the department does — and turns a future liability into a corrected compliance position.
WITHOUT A HEALTH CHECK
Reactive — After the Notice
Department identifies ITC irregularity during audit
Section 65 audit proceedings initiated
SCN under Section 73 or 74 — demand + penalty
Litigation across multiple hearings and appeals
Interest at 18% p.a. on the entire demand period
Management time, reputational exposure, cash block
100% penalty if Section 74 invoked for fraud
₹X demand + ₹X penalty + interest
Total exposure can be 3–4× the original tax gap
V S
WITH A HEALTH CHECK
Proactive — Before the Notice
Gaps identified internally — before any audit or notice
Voluntary rectification in GSTR-3B amendments
Ineligible ITC reversed proactively — no penalty applies
Written compliance position — defensible in any audit
No SCN, no penalty, no litigation cost
Health Check fee only
Typically 5–10% of the demand it prevents
Voluntary Compliance Before a Notice — No Penalty Applies
Under Section 73 of the CGST Act, where a taxpayer voluntarily pays short-paid tax with interest before the issuance of a Show Cause Notice, no penalty is leviable. The Health Check creates the opportunity for exactly this outcome — identify the liability, compute the interest, pay voluntarily, and close the exposure permanently. This is a privilege that disappears the moment a notice is received. Once an SCN arrives, the minimum penalty under Section 73 is 10% of tax — and under Section 74, it is 100%.
WHO SHOULD UNDERTAKE THIS
Businesses That Should Not Wait for a Notice to Find Out Their Position
Manufacturers with Large ITC Claims
High ITC turnover businesses — particularly in sectors with blocked credit risks under Section 17(5) — are the most frequent audit targets.
Trigger: ITC > ₹25L per year
Exporters Filing Refund Claims
Every refund claim is a declaration to the department. Inconsistencies between refund applications, GSTR returns, and books invite scrutiny of all periods — not just the refund period.
Trigger: Refund claims above ₹10L
Businesses with Complex Transactions
Related party transactions, cross-border services, mixed supplies, job work arrangements, and holding-subsidiary transactions all carry elevated GST classification and valuation risk.
Trigger: Any cross-entity supply arrangement
Businesses with GSTR Mismatches
Companies that have variance between GSTR-1 and GSTR-3B, between GSTR-9 and books, or between ITC claimed and GSTR-2B figures are already flagged in the department's risk profiling system.
Trigger: Any unexplained return variance
Companies Importing Services
Businesses paying foreign vendors — software licences, management fees, consulting, cloud services — who have not discharged RCM under Section 5(3) of the IGST Act on every payment.
Trigger: Any foreign vendor payment
Businesses Approaching GSTR-9 Filing
The annual return and reconciliation statement in GSTR-9 and GSTR-9C are the department's primary audit triggers. A Health Check before filing prevents errors that invite scrutiny for the entire financial year.
Trigger: Pre-GSTR-9 / GSTR-9C filing
AUDIT EXPOSURE MATRIX
GST Risk Areas We Examine — and the Department's Focus on Each
The following risk areas are systematically reviewed in every Health Check mandate. The department's audit focus rating indicates how frequently each area generates demands in Section 65 audits and Section 73/74 SCNs across India.
GST RISK AREA
NATURE OF RISK
DEPT FOCUS
COMMON FINDING
ITC on Blocked Credits — Sec 17(5)
Food, beverages, travel, construction, personal use
Proportionate ITC reversal mandatory for exempt supply inputs
MEDIUM
ITC reversal computation demand for all periods
Job Work — ITC & Goods Movement
Goods sent for job work without challans or beyond time limit
Section 19 — goods not returned within 1 year treated as supply
MEDIUM
GST on deemed supply of job work goods
E-Way Bill Non-Compliance
Missing or incorrect e-way bills for goods in transit
Penalty and seizure under Section 129 / 130
MEDIUM
Penalty at 100% of tax or ₹10,000 — whichever higher
Credit Note / Debit Note Compliance
Credit notes not reported in GSTR-1 or not matched by recipient
ITC reversal not done by recipient on credit notes received
MODERATE
Excess ITC demand on unmatched credit notes
GSTR-9 / GSTR-9C Reconciliation Errors
Annual return variances from books — unexplained differences
Primary audit trigger — department uses GSTR-9C as audit starting point
HIGH
Targeted Section 65 audit initiated on high-variance filers
REVIEW SCOPE
What We Review in a GST Health Check
01
Returns Reconciliation & GSTR Review
Complete reconciliation of all GST returns filed during the review period — identifying variances that the department's GSTN analytics system will have already flagged.
GSTR-1 vs GSTR-3B output reconciliation
GSTR-2B vs ITC availed in GSTR-3B
GSTR-9 / GSTR-9C vs books of accounts
Inward supply reconciliation — all vendors
Amendment history — Table 9A corrections reviewed
02
ITC Eligibility Deep Audit
Invoice-level review of Input Tax Credit availed — eligibility, blocking provisions under Section 17(5), vendor payment compliance, and GSTR-2B correlation.
Section 17(5) blocked credit identification
Section 16(2)(b) — 180-day payment verification
Section 16(2)(aa) — GSTR-2B match for each ITC claim
Capital goods ITC — proportionate claim verification
Rule 42/43 reversal — if mixed supplies exist
03
Output Liability & Classification Review
Review of outward supply classification — HSN codes, applicable rates, valuation methodology, and exemption claims — to identify misclassification and rate application errors.
HSN classification — current notification verification
Rate applicability — goods and services individually
Valuation under Section 15 — related party supplies
Exempt supply classification — correct or contestable?
Composite vs mixed supply determination
04
RCM & Cross-Border Compliance
Complete review of Reverse Charge Mechanism obligations — both under the notified list and on imported services — and identification of all periods where RCM was not discharged.
GTA services — RCM applicability and discharge
Legal and advocate services — RCM verification
Imported services — all foreign vendor payments
Security services — RCM compliance check
Self-invoice compliance for RCM supplies
05
Documentation & Records Review
Assessment of the adequacy and correctness of source documents, invoice formats, e-way bills, delivery challans, and records that will be examined in any Section 65 audit.
Tax invoice format compliance — Rule 46 requirements
E-way bill coverage — all notified supply movements
Job work challans — Section 143 compliance
Export documentation — FIRA, LUT, shipping bills
Stock register and delivery challan maintenance
06
Refund Eligibility & Opportunity Review
Beyond identifying risks, the Health Check also identifies missed refund opportunities — unclaimed ITC refunds, unutilised export refund entitlements, and inverted duty structure positions not yet claimed.
Export of services — refund eligibility check
IGST refund on goods exports — pending claims
Inverted duty ITC — Section 54(3) opportunity
Limitation period mapping — 2-year window
Prior year missed refund claims — recovery potential
WHAT YOU RECEIVE
Deliverables from Every GST Health Check Engagement
WRITTEN REPORT — DELIVERED WITHIN AGREED TIMELINE
The GST Health Check Report
Executive Risk Summary
A concise, management-ready summary of all GST risk areas identified — rated by severity — with the total estimated financial exposure across each category.
Finding-wise Detailed Analysis
For each risk identified — the specific statutory provision, the nature of the exposure, the quantum of estimated liability, and the recommended corrective action with legal basis.
GSTR Reconciliation Workings
Structured period-wise reconciliation of GSTR-1, GSTR-3B, GSTR-2B, and GSTR-9 — with all variances identified, categorised, and explained.
ITC Eligibility Assessment Table
A line-item eligibility assessment of significant ITC availed — with each item classified as eligible, blocked under Section 17(5), conditionally eligible, or at risk.
Voluntary Compliance Action Plan
A prioritised, timeline-bound action plan for voluntary rectification — specifying which errors to correct in amended returns, what to reverse, what RCM to discharge, and in which sequence.
Refund Opportunity Summary
Identification of all unclaimed refund entitlements within the limitation period — with a recommended filing sequence and estimated recoverable amount.
SERVICE TIERS
Three Review Levels — Calibrated to Your Business Size
Ideal for: Large businesses, pre-acquisition due diligence, businesses facing regulatory scrutiny, ₹50Cr+ turnover
Up to three financial years
All Tier 02 scope — in full
Transaction-level ITC review — 100% coverage
Valuation review — related party & group transactions
Place of supply analysis — cross-border & multi-state
E-way bill and movement compliance audit
Job work and stock transfer compliance
Pre-GSTR-9C simulation and finalisation
Department's risk profiling self-assessment
Voluntary payment strategy and implementation
M&A / due diligence GST liability mapping
OUR PROCESS
How a GST Health Check Is Conducted
01
Scope Discussion
Understanding your business — sectors, transaction types, ITC profile, cross-border activity, and any prior notices or audit history.
DAY 1
02
Data & Document Collection
Secure digital collection of GST returns, ITC ledgers, purchase registers, sales data, vendor payment records, and RCM working for the review period.
DAY 2–4
03
Risk Review — Structured Analysis
Systematic review across all 10+ risk parameters — reconciliation, ITC eligibility, RCM, classification, documentation, and refund opportunity.
DAY 4–12
04
Draft Report & Internal Review
Draft findings report prepared and internally reviewed by a senior specialist before delivery. Every finding is verified against the applicable provision and source document.
DAY 12–15
05
Report Delivery & Walkthrough
Written report delivered with a structured walkthrough call — each finding explained, priority actions discussed, and voluntary compliance sequencing advised.
DAY 15–18
06
Implementation Support
Optional post-report support — GSTR amendments, ITC reversals, voluntary payment computation, RCM discharge, and refund application filing where opportunities exist.
OPTIONAL
FREQUENTLY ASKED
Questions About the GST Health Check
If the Health Check finds a liability, are we obligated to disclose it to the department?
No. The findings of the Health Check are confidential and there is no legal obligation to proactively disclose a liability to the department — provided the liability is not already the subject of a pending audit, SCN, or department inquiry. The recommended course of action for most identified liabilities is voluntary payment of tax and interest through GSTR-3B amendment — which does not require any formal disclosure and does not attract penalty under Section 73 of the CGST Act. Voluntary payment before any notice is issued is the cleanest and most cost-effective resolution of a compliance gap. Vertax Partners structures the voluntary compliance strategy for each finding identified in the review.
We have already received a GST audit notice — is a Health Check still relevant?
Yes — and in fact it becomes more urgent. When an audit notice under Section 65 is received, the business needs to understand its complete exposure before the auditing officer does. A rapid pre-audit review allows us to identify every potential finding the officer is likely to raise, assess the total quantum at stake, decide which positions are defensible and which warrant voluntary payment, and structure the audit response strategically. Pre-audit internal review is one of the most powerful tools in GST litigation management — it removes the element of surprise from the audit entirely. Vertax Partners offers an expedited Rapid Review specifically for businesses that have received audit notices and need a fast-turnaround exposure assessment.
How is a GST Health Check different from the statutory GSTR-9C certification by our auditor?
GSTR-9C is a statutory reconciliation statement certified by a chartered accountant — it reconciles the annual return with audited accounts and flags quantified differences. However, it is inherently backward-looking, disclosure-oriented, and does not provide a risk assessment or legal opinion on whether the differences constitute a liability. The Health Check goes significantly further — it assesses ITC eligibility at the invoice level, identifies RCM non-compliance, reviews HSN classification, maps documentation gaps, and provides a legal opinion on each exposure with a specific recommended action. The Health Check is a proactive risk management exercise — the GSTR-9C is a compliance statement. They serve fundamentally different purposes.
How frequently should a business undertake a GST Health Check?
For most businesses, an annual review — ideally conducted before GSTR-9 and GSTR-9C filing — is the minimum recommended frequency. For businesses with complex transactions, significant ITC volumes, ongoing export refund claims, or any prior audit history, a half-yearly review is advisable. For businesses undergoing M&A transactions, ownership changes, or significant expansion into new business lines or geographies, a transaction-specific review is essential before the transaction is completed. Vertax Partners offers retainer-based quarterly and half-yearly review arrangements for clients who require ongoing compliance monitoring.
Get a Free Scope Discussion
Tell us about your business and we will recommend the right level of review — and give you a preliminary sense of your risk profile at no charge.
Under Section 73 of the CGST Act, voluntary payment of short-paid tax with interest — before an SCN is issued — attracts no penalty. This privilege exists only before a notice. A Health Check creates the opportunity to use it.
What We Review
GSTR-1 / 3B / 2B / 9 / 9C reconciliation
Section 17(5) — blocked credit screening
Section 16(2)(b) — 180-day payment check
Section 16(2)(aa) — GSTR-2B correlation
RCM — domestic and imported services
HSN and rate classification review
Rule 42 / 43 — exempt supply reversals
E-way bill and movement compliance
Documentation — invoice format, challans
Refund opportunity identification
Best Time to Do a Health Check
Before filing GSTR-9 / GSTR-9C
Before filing refund applications
After receiving an audit notice
Before M&A or ownership change
Annually — as a standard practice
IF ISSUES ARE FOUND
Services We Provide After a Health Check Identifies Issues