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 nominated shall submit audit report to tax officer within the period of 90 days. This period may be extended further for 90 days by tax officer on application made by registered person or the chartered accountant. The registered person shall be given an opportunity of being heard in respect findings of special audit. The expenses of the audit of records, including the remuneration of such chartered accountant or cost accountant shall be paid by the Commissioner.
Where the special audit conducted results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the officer may initiate required action.
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.
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.
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.