Audit under GST law signifies examination of books and accounts of the registered taxable person to vouch for the correctness of information furnished, input tax credit availed, refund claimed and tax liability discharged.

Every taxable person registered under GST, whose turnover during the financial year exceeds 2 crore rupees, is required get his accounts audited by a CA (Chartered Accountant) or a CMA (Cost and Management Accountant). The taxable person who is required to get his accounts audited as per be provisions contained under section 35(5) shall furnish the 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.

Things to Know About GST Audit

Every taxable person registered under GST shall maintain his accounts to show the correct value in regards to:

  • Manufacture or production of goods
  • Outward supply of goods/services or both
  • Inward supply of goods/services or both
  • Input tax credit (ITC) availed
  • Stock of goods
  • Output tax payable and paid

Audit by the Tax Authorities:

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.

Time limit for completion of the GST audit

The audit under the GST needs to be completed within three months from the date of commencing the audit. However, such period can be extended for a further period of 6 months by the Commissioner.

GST Audit Procedure of conducting the Audit

The authorised officer and officials accompanying him shall conduct the audit of the books and accounts of the registered person, they will verify all the requisite documents i.e. shall verify the books maintained by the registered person and the return and statements furnished under the act. The proper officer and his team shall verify the correctness of the turnover, the rate of tax applied on the supply of goods or services or both, exemptions and deductions claimed, refund claimed, the input tax credit availed and utilized and record the findings in the audit notes.

During the course of GST audit, the proper officer may require the auditee,—

  • To give the information required by the tax authorities which may require for the conduct of the audit, and
  • To provide the facility for the verification of accounts/records requisitioned or available by the tax authorities, and
  • To provide assistance for the timely completion of the audit.

The authorized officer may inform the person whose records are audited any discrepancies noticed if any, and the said registered person may file his reply and the proper officer shall finalise the findings of the audit after considering the reply furnished.

 Finalisation of Audit

  • The proper officer shall finalise the observation of the audit after considering the reply of the registered person to audit findings brought to his notice during the course of the audit.
  • The authorized officer within 30 days from the conclusion of the audit shall inform the registered person, of the observations, the reasons for such findings and his rights and obligations.

If the audit results in any detection of any sum unpaid/short paid or wrongly refunded or wrongly an ailment of input tax credit, then demand and recovery actions will be initiated.

Read about the special audit under GST framework

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Company: Taxguru / Sandeep Kanoi & Associates
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