Audit

Audit denotes an examination or inspection of various books of accounts maintained by businesses.

Audit under GST Laws

  • The examination of records, returns & other documents maintained by the registered person;
  • To verify the correctness of turnover declared, taxes paid, refund claimed & input tax credit availed; &
  • To assess his compliance with the provisions of the said Act. Section 2(13)

Sections 65 & 66 of the Chapter XIII of the Central Goods & Services Tax Act, 2017 and Rules 101 and 102 of Chapter XI under Central Goods and Services Tax Rules, 2017 are deals “Audit”.

Types of Audits

There are three types of audit, namely:

1. By Taxable Person – Chartered Accountant or a Cost Accountant

Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant. (Section 35(5))

2. By Department – General Audit by Commissioner

The Commissioner may conduct or undertake audit of any registered person for such period, at such frequency and in such manner as prescribed in CGST Rules, 2017.

A prior Notice – The registered person shall be informed, by way of a notice, in Form GST ADT-01, not less than 15 working days, prior to the conduct of an audit in the manner prescribed.

Time limit for completion of the audit

The audit shall be completed within a period of three months from the date of commencement of the audit.  However, the period of completion of audit can be further extended by a period not exceeding 6 months by the Commissioner for reasons.

Findings of audit

On conclusion of audit, the commissioner or proper officer, as the case may be, within thirty days, inform the registered person, about the findings, his rights and obligations and the reasons for such findings. (Section 6)

3. By Department – Special Audit by Chartered Accountant or a Cost Accountant as nominated by the Deputy or Assistant Commissioner

If at any stage of scrutiny, inquiry or other proceedings before the Commissioner having regard to the nature and complexity of the case and in the interest of revenue is opinion on that

  1. The value has not been correctly declared or
  2. The input tax credit (ITC) availed is not within the normal limits, he may direct such registered person in writing to get his accounts examined and audited by a Chartered Accountant or Cost Accountant.

Time limit for completion of the audit 

The Chartered Accountant or Cost Accountant shall within ninety days, submit a report of such audit duly certified by him to the Commissioner or the proper officer as the case may be.  

The period of completion of audit can be further extended by further period of ninety days. (Section 66)

Threshold for Audit

Every registered taxable person whose turnover during a financial year exceeds the prescribed limit i.e. presently, two crore rupees & above shall get his accounts audited by a Chartered Accountant or a Cost Accountant.

Other Provisions – In Brief  

  • Period of Audit – Financial Year or multiplies thereof.
  • During the course of audit, the Commissioner may require the registered person to –

i. Afford him the facility to verify the books of accounts records and other documents;

ii. Furnish such information as he may require for timely completion of the audit.

  • On conclusion of the audit, the Commissioner shall inform the findings of audit to the registered person as prescribed in CGST Rules, 2017.
  • In case of tax evasion or shortly paid or erroneously refunded, or input tax credit wrongly availed, the Commissioner may initiate appropriate action under the CGST Act, 2017.

 Audit – Relevant GST Forms 

Sl. No. Form Purpose

 

1. GST ADT – 01 To Intimate about general audit by Commissioner
2. GST ADT – 02 To submit findings of the Audit to the Registered Person
3. GST ADT – 03 To issue a direction to conduct a special audit by Chartered Accountant or Cost Accountant
4. GST ADT – 04 To submit findings of the Special Audit to the Registered Person for further proceedings.

Source: CGST Act 2017 & CGST Rules 2017 as amended up to 30.10.2017

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