Audit is just 5 letters words but its impact is far beyond these numbers. Every coin has two sides one GST is based on self assessment u/s 59, but if this provision is not controlled by any other provision then, this will lead to manipulation of accounts and records , so other side of coin is definitely details checking of accounts which is called Audit (defined u/s 2(13) of CGST Act, 2017). It is an important tool in the tax administration to ensure compliance of law and prevent revenue leakage.
1. Types of audit:
> Audit, when turnover exceed (section 35(5) read with CGST rule 8 0(3))
> Audit by tax authorities ( section 65)
> Special audit (section 66)
2. Every registered person whose turnover during a financial year exceeds Rs 2 crore shall get his accounts audited by a chartered accountant or a cost accountant Accounts and other records and shall submit a copy of the audited annual accounts, the reconciliation statement and such other documents in such form and manner as may be prescribed in FORM GSTR 9C electronically on common portal.
3. Audit by tax authorities(section 65):
> Section 65 authorizes conduct of audit by PO or the commissioner , under order or specific order issued by the commissioner,
> Such order must be specific to the auditee and the tax period selected for audit The period of audit shall be financial year or multiple thereof,
> Audit will be conducted at the place of business of registered person or office of tax authorities,
> The registered person shall be informed , by way of notice, not less than 15 working days in form GST ADT 01,
> Audit shall be completed within a period of 3 months from commencement of audit (extension maximum 6 months by commissioner),
E.g. A notice for audit was served to M/s PQR Ltd, on 20th Feb, 2018. Required information was given by M/s PQR Ltd on 25th May,2018. The audit officer visit place of registered person on 26th June,2018.
So last date for completion of audit will be 3 months from 25th May, 2018, i.e. 24th August, 2018 or within an extended period of 6 months i.e. 24th Feb, 2019.
> During audit registered person will provide facility to verify the books of accounts or other documents , information required,
> On conclusion of audit PO shall within 30 days inform the registered person in form GST ADT 02,
> PO shall take action accordingly, specifically when tax is not paid or less paid.
4. Special Audit (section 66):
> If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer ( not below AC), having regard to nature and complexity of case, is of opinion that the value has not been correctly declared,
> Directs such taxable person (after prior approval of commissioner) in writing to get his records audited by CA or Cost Accountant in form GST ADT 03,
> The CA or Cost Accountant will submit such audit report in form GST ADT 04 within 90 days (maximum extension of further 90 days by AC),
> This audit is conducted irrespective of any other audit done under any other laws,
> The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit.
> Expenses (including remuneration of auditor) of audit shall be determined and borne by commissioner
> PO shall take action according to findings of special audit, specifically when tax is not paid or less paid.
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