As per Section 2(13) of CGST Act 2017 “Audit” means
(a) the examination of records, returns and other documents maintained or furnished by the registered person under this act or rules
(b) to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed
(c) to assess the compliance with provisions of this Act or the rules made thereunder
GST Audit is required under the following three circumstances :
(a) Audit by Chartered Accountant or Cost Accountant – Rule 80 and Section 35(5)
(b) Audit by Tax Authorities – Section 65
(c) Special Audit – Section 66
Audit by Chartered Accountant or Cost Accountant
As per Section 35(5) of CGST Act 2017, Every registered person whose turnover during a financial year exceeds the prescribed limit [Rs 2 Crore by Rule 80(3) of CGST Rules 2017] shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 of CGST Act 2017 and such other documents in such form and manner as may be prescribed.
As per Section 44(2) of the CGST Act 2017, Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under section 44(1) of CGST Act 2017 along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
AS per Rule 80(3) of CGST Rules 2017, Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C.
Audit by Tax Authorities
AS per Section 65 (1) of the CGST Act 2017, The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed.
The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.
The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.
The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit. Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.
On conclusion of audit, the proper officer shall, within thirty days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings.
Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74 of CGST Act 2017.
AS per Section 66 (1) of the CGST Act 2017, If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner.
The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified. The Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days.
The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final.
Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74 of CGST Act 2017.