Goods and Service Tax ‘GST’ is a trust-based taxation regime wherein a taxpayer have to self-assess his tax liability, tax payment, and returns. Thus, to ensure the correctness of assessment by the assessee GST audit is compulsory. GST audit involves an examination of records, returns, and other documents maintained by the assessee.
To ascertain that self-assessed GST returns are in line with the GST Act, the Government of India introduced GST Audit. As per this, if the turnover of an assessee during a financial year exceeds 2 Crore, the taxpayer has to get his account audited by a Chartered Accountant or Cost Accountant. The said limit was same for all registered taxpayers regardless of the nature of their business.
In Budget 2021-22, the Government of India took an unexpected move of discontinuance of GST Audit. As per the Government, Discontinuance of GST Audit by professionals would lessen the compliance and monetary burden on the assessee.
At first instance, the assessee might think that this is an amazing relief provide by the Government. But, actually, the said relief for the assessee is interim only, as other audit under the GST Act like audit by department officials and special audit are still intact.
The Government explained that’s the said move is toward ease of doing business in India especially for new start-ups. With the Discontinuance of the GST audit the Government also creating an aura of emotional belief among the assessee, that they believe in the Indian Taxpayer’s honesty to file the returns with actual data and tax payment. After the said move, the assessee might be relaxed that they don’t need to go through this audit procedure and no need to answers many questions raised by professionals.
Although, this is not going to happen for longer years. Actually, Because of the GST audit, there is a maker and checker concept that helps the assessee in the identification of any flaws in their return like less payment of tax or wrong utilization of input credit, etc. After the removal of the GST audit, there is no cross-check concept, consequently, the problem would be identified by the department officials directly. Identification of flaws in the GST documents prepared by the assessee would result in hefty penalties under the GST Act, irrespective of the intention of the assessee.
So, initially, at first instance, it appears that the Government provided compliance and monetary relief to the taxpayers by removal of GST Audit. Though, after having a look over the stringent provision under the GST Act, it is always advisable for the assessee to go through with GST audit as internal procedure to avoid future penalties.
Accordingly, if after Budget you already in plans to avoid GST audit, then also highly recommended from our side to at least wait for a few years to understand the consequences of said move.
Author Bio
I agree that GST Audit is necessary . but is it being done the way it is expected to ? a Big no. Once a GST audit is done by the independent professional, there should be no further audit from the dept. Dept should ask only query based on the analytics. will they do that ? a Big no. dept is still using the formats they prepared for the excise and ST audits.