AUDIT UNDER GOODS & SERVICES TAX ACT 2017
The objective of audit of taxpayers is to measure the level of compliance of the taxpayer in the light of the provisions of the CGST Act, 2017 and the rules made there under.
> Section 2(13) of CGST Act, 2017 defines ‘Audit’ as “the examination of records, returns and other documents maintained or furnished by the registered person under this Act or Rules made there-under or under any other law for the time being in force to verify, inter alia, the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or rules made thereunder”.
> OBJECTIVES OF GST AUDIT: –
- Audit is examination of records, return and other documents.
- Those records, returns and documents might have been maintained or furnished under GST law or any other law.
- To verify the correctness of: –
2. Taxes paid.
4. Input tax credit availed
- To assess auditee’s compliance with the provisions of GST Act and Rules.
> TYPES OF GST AUDIT: –
1. Mandatory GST Audit (Section 35(5) Audit by professionals) valid up to 01/08/2021.
2. Departmental GST Audit (Section 65 Audit by Tax Authorities)
3. Special Audit (Section 66 Audit by Tax Authorities)
> Mandatory GST AUDIT by professionals (U/s 35(5) of CGST Act 2017 read with rule 80 of CGST Rule 20177.)
- This GST Audit is applicable till 01/08/2021 (Notification no. 29/2021 Central Tax Dated 30/07/2021)
- If the annual turnover of a registered taxpayer is more than Rs.5 crore in a financial year, he is required to get his accounts audit every year.
- Business with an annual turnover of More than Rs 5 crore, filing of GSTR-9C.
- Registered person is required to furnish electronically through the common portal along with annual return (GST-9).
i. Audited annual accounts.
ii. A reconciliation statement, duly certified, in prescribed FORM GSTR-9C.
- Aggregate turnover= value of all taxable (interstate and intra state supplies) + exempt supplies + export supplies of all goods and services.
- The total turnover calculation must be PAN-based, which means that once the turnover under the PAN is more than Rs 5 crore, filing of GSTR-9C.
> Departmental GST Audit by tax Authorities (U/s 65 of CGST Act 2017 read with rule 101 of CGST Rule 2017)
- The place of business of registered person or in tax office.
- The commissioner or any officer authorized (CA/CMA) by him.
- The registered person shall be informed by way of a notice 15 working days prior to the conduct of audit in FORM GST ADT-01.
- The audit by tax authorities shall be completed within a period of 3 months from the date of commencement of the audit, and such period is further extendable for a period of 6 months by commissioner for the reasons to be recorded in writing.
- The proper officer shall, within 30 days, inform the registered person, whose records are audit, about.
- The findings,
- His rights and obligations and
- The reasons for such findings in FORM GST ADT-02.
> Special Audit by Tax Authorities (U/s 66 of CGST Act 2017 read with rule 102 of CGST rule 2017)
- During the scrutiny, inquiry, investigation or any other proceedings of a registered person, the Assistant Commissioner, or any officer senior to him, having regard to the nature and complexity of the case and the interest of revenue, might be of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits.
- In such cases, with the prior approval of the Commissioner, the Assistant Commissioner, or any officer senior to him can direct the registered person in FORM GST ADT-03 to get his records including books of account examined and audited by a specified chartered accountant or a cost accountant. The chartered accountant or a cost accountant will be nominated by the Commissioner.
- The provisions of special audit shall have effect even if the accounts of the registered person have been audited under any other provisions of the GST Act or any other law for the time being in force.
- The CA/CMA has to submit a report of the audit within 90 days. The assistant commissioner can also extend the period over 90 days for the application person for any sufficient reason.
- In this procedure results in
- Determination of Taxable Turnover
- Detection of tax not paid or Short paid
- ITC wrongly availed or utilized
- On conclusion of the special audit, the registered person shall be informed of the findings of the special audit in FORM GST ADT-04.
- Where the special audit results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the process of demand and recovery will be initiated against the registered person.
- The taxable person will be given an opportunity of being heard in the findings of special audit. If the result in detection of unpaid/ wrong refund etc. The recovery will start against the registered person after this auditing.
> Who will bear the expenses of the special audit?
The expenses of the examination and audit of records, including the remuneration of such chartered accountant or cost accountant, shall be determined, and paid by the Commissioner.
> Special audit provides a lawful and legal way for the GST officers to take the assistance of a chartered accountant or cost accountant to determine tax liabilities in complex cases. The professional expertise of a chartered accountant or cost accountant will be of great significance in ensuring that the interest of revenue is always safeguarded.
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