GST is designed for a better and efficient collection of taxes, simple compliance, reduction of corruption, easy countrywide movement of goods and a lot more.

The provisions contained under the GST Law facilitate easy compliance for self-assessment and payment of taxes. It also provides a detail explanation in relation to the notices, the demand and recovery provisions (cases where a registered taxable person has not paid/short paid the taxes and/or has failed to file required returns).

 “Audit” is defined (under section 2(13) of the CGST Act, 2017 ) as an examination of returns, records and any other documents maintained by the registered taxable person to vouch for the correctness of the declared turnover taxes paid, input tax credit availed and refund claimed, and to assess the compliance of the registered taxable person with the provisions of the GST Acts.

Types of Audit under GST

There are three types of audit prescribed under CGST Act, 2017

Section of Law Description of the type of audit
1 Section 35 of the CGST Act This GST audit is to be done on the basis of the turnover of the registered taxable person.
2 Section 65 of the CGST Act Audit by Tax Authorities
3 Section 66 of CGST Act Special Audit under GST by Chartered Accountant or Cost & Management Accountant

An audit by Registered Dealer

Every registered taxable person under GST, whose turnover during the financial year exceeds the prescribed limit i.e. 2 crore rupees, is required get his accounts audited by a CA (Chartered Accountant) or a CMA (Cost and Management Accountant). The registered taxable person who is required to get his accounts audited shall file his Annual Return electronically along with a copy  of an audited statement and the reconciliation statement, reconciling the value of supplies stated in the return furnished for the financial year with the audited annual financial statement, a copy of certified audited annual accounts in Form GSTR-9C with annual return.

GST audit by Tax Authorities

General Audit:

The Commissioner or any officer authorized by him may conduct an audit of a registered person under the GST law. However, the manner and the of the audit will be prescribed later.

  • A 15 days notice is required to conduct an audit
  • The completion of the audit shall be within 3 months from the date of commencement of the audit.
  • The Commissioner of CGST/SGST can extend the above time limit by a further six months.

Special Audit under GST:

A Special GST Audit can be initiated by the Assistant Commissioner of CGST/SGST, after considering the nature and complexity involved in the case and interest of revenue.  During any stage of scrutiny/ inquiry/investigation, if the assistant commissioner is of the opinion that the value of the taxable supplies declared by the registered person is incorrect or the input tax credit has been wrongly availed then special audit can be initiated.

GST Audit requires the verification of the certain things mentioned below

  • The correctness of turnover declared;
  • Refund claimed and;
  • Taxes paid;
  • Input Tax Credit (ITC) availed and utilised.

Conclusion:

Under the GST law, the provisions related to audit are simple but need some more clarity on various aspects, which are likely to come in due course and we also look forward to some relaxation for small taxpayers.

Read more about GST Audit Process in detail

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