Here in this article, we will discuss about the applicability of GST Audit for the Financial Year 2020-21 with the help of relevant provisions of CGST Act, 2017, Finance Act, 2021 and Press Release of 43rd GST Council Meeting held on 28th May, 2021.
GST Audit Provisions under CGST Act, 2017:
35 (5) 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 and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.
44 (2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
Provisions related to GST Audit in Finance Act 2021:
In section 35 of the Central Goods and Services Tax Act, sub-section (5) shall be omitted.
(Amendment of section 35.)
For section 44 of the Central Goods and Services Tax Act, the following section shall be substituted, namely––(Substitution of new section for section 44.)
“44. Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section:
Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”
Further, as per section 1 (2) (b) – sections 108 to 123 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Current Status: Government not yet notified Section 110 and 111 of Finance Act 2021.
Provisions related to GST Audit as per 43rd GST Council Meeting held on 28th May, 2021:
4. Simplification of Annual Return for Financial Year 2020-21:
i. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.
ii. The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore;
iii. The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore