GST Audit- Applicability, Types, Due Date, Penalty

Article explains Applicability of Audit under GST, Requirement of GST Audit, Furnishing of Documents under GST Audit, Types of GST Audit, Calculation of Turnover for F.Y. 17-18, Calculation of Aggregate Turnover under GST , Tenure of Retention of Accounts under GST , Auditor Qualification for GST Audit, Audit in case of multiple Branches, Accounts to be reviewed under GST Audit, Forms to be filled under GST Return and Due Date of GST Audit and Penalty for Late filing of GSTR 9.

Applicability of Audit under GST

Every registered person must get its accounts audited if the aggregate turnover during FY exceeds Rs. 2 Cr from sale of goods or services. Calculation of turnover shall be PAN based i.e. all sale of goods/ services shall be taken for computing the limit of Rs. 2 Cr.

GST audit limit is same for all registered taxpayers, i.e. no separate limit is specified for special category states or UTIs

Exception- Provision for GST audit will not be applicable in case Central Government/ State Government/ Legislative Assembly in case they are subject to audit by CAG or any Statutory Auditor appointed for auditing the accounts of Legislative Assembly.

Requirement of GST Audit-

GST Audit is required for the following reasons-

1. GST is the self-assessment tax regime so GST audit is required for ensuring that tax payer has correctly assessed hi liability.

2. It involves examination and evaluation of records, GST returns and other related documents.

3. To obtain reasonable assurance and ensure that financial statements are free from any material misstatements.

Furnishing of Documents under GST Audit-

1. Annual Return

2. Copy of Audited Annual Accounts

3. Copy of reconciliation Statement

Types of GST Audit-

Under section 35 (5) of GST law, three types of GST audit is being specified-

Calculation of Turnover for F.Y. 17-18

Government through its press release dated 3^rd July, 2019, clarified that for computing the turnover for F.Y. 2017-18, period should be taken from 1^st July 2017 to 31^st March 2018, i.e. the First Quarter shall be excluded.

Calculation of Aggregate Turnover under GST

For computing the aggregate turnover, following sale shall be included-

1. Value of all inter-state taxable supply

2. Value of all intra- sate taxable supply

3. Value of all exempt supplies

4. Value of all export supplies

5. Job work supplies on principal to principal basis

6. Zero rated supplies

7. Any supply to agent/ job work on behalf of principal

For computing the aggregate turnover, following sale shall be excluded-

1. Taxable supply on which reverse charge is applicable

2. All taxes and cess paid under GST

3. Goods supplied and received back from job work

Tenure of Retention of Accounts under GST

Every registered person must retain books of accounts for the period of 72 months from the due date of furnishing annual returns.

Provision in case of Failure to maintain the accounts

• In case the registered person fails to maintain books of accounts as required under the GST act then the Officer will determine the tax payable on non-accounted goods/ services in the same manner as if it has been supplied by such person.
• Provisions of Section 73 and 74 shall will applied for determining the tax amount.

Auditor Qualification for GST Audit

As per Section 35 of GST Audit, audit can be performed by a Chartered Accountant or a Cost Accountant. But there are exceptions in the provisions-

1. An Internal Auditor cannot be also appointed as a GST Auditor

2. GST practitioner is also not allowed to perform GST Audit

Audit in case of multiple Branches-

– While computing the limit of Rs. 2 Cr., turnover of all the branches of an organization is be considered and if the cumulative turnover exceeds the limit of Rs. 2 Cr then every branch will be liable for GST audit irrespective of the fact that their individual turnover does not exceed the specified limit.

– Organization can appoint either the single auditor for all branches or separate auditor for each branch.

Accounts to be reviewed under GST Audit-

1. Purchase Register

2. Sale Register

3. Stock Register

4. GST Expenses

5. Statement congaing Input Tax Credit availed and utilized

6. Output Tax Challan

7. Statement of E-way Bill generated during the period

8. Any changes made under GST during the period

Forms to be filled under GST Return

Due Date of GST Audit and Penalty for Late filing of GSTR 9C

As per the GST Act, due date of audit and annual return is specified as 31^st December of subsequent fiscal year and in case of failure in complying with the same then as per act no specific penalty is prescribed. So it will be covered under the head of general penalty of Rs. 25000.