GST Audit an overview

GST is a trust based taxation regime wherein the Registered dealer is required to self- assess his returns and determine tax liability.

Audit has been defined in section 2(13) of the CGST Act, 2017 and  it  means the examination of records, returns and other documents maintained or furnished by the registered person under the GST Acts or the rules made there under or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of the GST Acts or the rules made thereunder.

Types of GST Audit:

GST Audit by taxable Person

GST Audit shall be conducted by a Chartered Ac­countant (CA) or a Cost Accountant if the turnover of the taxable person crosses the threshold limit. 

GST Audit by Tax Authorities /Department (u/s 65) 

• A notice will be sent to the auditee at least 15 days before.
• The Commissioner of GST (or any officer authorized by him) may conduct an audit of a taxpayer.
• The audit will be completed within 3 months from the date of commencement of the audit.** (can be extended further by 6 months by Commissioner);
• Registered person to provide the required information and facility;
• Result of audit to be intimated within 30 days [Form GST ADT-02] and further action will be taken.

**commencement of audit’ means

1. the date on which the records/accounts called for by the audit authorities are made available to them, or
2. the actual institution of audit at the place of business of the
   

Special GST Audit (u/s 66) by a chartered accountant or a cost accountant

During the course of any scru­tiny / investigation etc., if the Assistant Com­missioner (AC) feels that the Taxable value has not been correctly declared or wrong credit has been availed, then the AC may direct a Special Audit to be carried out by a chartered accountant or a cost accountant nominated by the Commissioner.

• Proceedings must be pending before Asst. Commissioner or any officer above his rank;
• Nature and complexity of the case and interest of revenue to be considered;
• Opinion : Correct value not declared and / or ITC claimed not within normal limits;
• Prior approval of the Commissioner of CGST / SGST;
• Direct registered person to get his records and books of a/c audited [Form GST ADT-03];
• Audit to be done by CA / CWA nominated by the Commissioner of CGST / SGST;
• Audit Report to be submitted within 90 days (can be extended by further 90 days);
• Opportunity of hearing given to registered person and further action taken by proper officer;
• Expenses of audit including remuneration to be determined and paid by the Commissioner.

Annual GST Audit

♠ According to Section 35(5) of the CGST Act:

• Every registered person whose turnover during a financial year exceeds the prescribed limit (presently one crore rupees) shall get his accounts audited by
  • a Chartered Accountant or
  • a Cost Accountant
• and shall submit a copy of the audited annual accounts
• along with a reconciliation statement (reconciling the value of supplies declared in return with audited annual financial statements)

♠ Contents of the audit report and other particulars to be prescribed

♠ Audited Report and Audited Annual Accounts to be submitted along with annual return on or before 31^st December following the end of financial year.

Threshold limit for GST Audit:

Every registered person whose aggregate turnover ** during a financial year exceeds INR 2 crore shall get his accounts audited.

**ag­gregate turnover includes value of all exempt supplies and exports under the same PAN, on all India basis.

Documents required for GST audit

• Audited Financials
• Annual return in Form GSTR-9
• All GST 1 & 3B Reconcilations
• Reconciliation statement, reconciling the value of supplies declared in the return fur­nished for the year with the audited annual financial statement in Form GSTR-9C.