Section- 2(13) of the CGST Act defines Audit as the examination of records, returns and other documents maintained or furnished by the registered person under the Act / 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 Act or the rules made thereunder.
*No audit is required for businesses with turnover less than INR 2 crore.
Types of GST Audit
There are 3 types of GST audits:
- Audit to be conducted by a Chartered Accountant or a Cost Accountant: Every taxpayer with revenue exceeding the prescribed limit of INR 2 crore during a financial year shall get his accounts audited by a Chartered Accountant or a Cost Accountant. Such taxpayers whose audit is conducted by a Chartered or Cost Accountant shall submit:
- An annual return by filling the form GSTR 9B along with the reconciliation statement by 31st December of the next financial year;
- The audited copy of the annual accounts;
- A reconciliation statement, reconciling the value of supplies declared in the return with the audited annual financial statement; and
- Other particulars as prescribed.
- Audit to be conducted by the tax authorities: As per Section 65 of the CGST / SGST Act, the Commissioner or any officer of CGST or SGST or UTGST authorized by him by a general or specific order, may conduct audit of any registered / enlisted individual. Intimation of the audit is provided to the taxpayer at least 15 days in advance in Form GST ADT-01 and the audit is to be completed within 3 months from the date of commencement of the audit. In rare cases, the GST Commissioner has the powers to extend the period by another 6 months, if required.
- Special Audits: If at any stage of investigation or any other proceedings, tax authority is of the opinion that the value has not been correctly declared or credit availed is not within the normal limits, department may order special audit under the mandate of Section 66, by its nominated Chartered Accountant or Cost Accountant.
The Chartered Accountant or Cost Accountant so named will submit review answer to impose officer inside the time of 90 days. This period might be broadened promote for 90 days by duty officer on application made by enrolled individual or the sanctioned bookkeeper. The enrolled individual will be given a chance of being heard in regard discoveries of exceptional review. The costs of the review of records, including the compensation of such contracted bookkeeper or cost bookkeeper will be paid by the Commissioner.
Where the extraordinary review directed outcomes in recognition of assessment not paid or short paid or mistakenly discounted, or input charge credit wrongly benefited or used, the officer may start required activity.
Obligations of the Auditee
Auditees shall have following obligations during the course of audit:
- The taxable person will be required to provide the necessary facility to verify the books of account / other documents as required.
- The auditee needs to furnish the required information and render assistance for timely completion of the audit.
Findings of the Audit
On conclusion of an audit, the officer shall inform the taxable person within 30 days of:
- Findings of audit;
- Their reasons; and
- The taxable person’s rights and obligations.
If you are facing challenges in compliance with GST or require any assistance in GST audits, you may reach us. For any questions regarding this, please click here.