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There are few types of GST audit prescribed in GST Law. Is it applicable to you? Read this article thoroughly to know all aspects of GST audit.
What is GST Audit?
The term audit is defined in section 2(13) of CGST Act, 2017.
It is defined as examination of records, returns and other documents which are maintained or produced by registered person, to verify its correctness and to assess its compliance with the provisions of this Act.
What is the scope of GST audit?
As per above definition only registered persons audit can be conducted.
Only those books of accounts can be checked which are kept as per GST Law or rule or any other law for the time being in force.
Examination is done:
To verify
- Turnover declared
- Taxes paid
- Refund Claimed
- Input tax credit taken
To assess
- The compliance of GST laws and its rules
What are the Types of GST audit?
There are three types of GST audit:
|
Section of CGST Act |
Audit Type |
Done by |
|
35(5) |
Audit based on turnover |
CA or Cost Accountant |
|
65 |
Audit by Tax Authorities |
Commissioner of CGST/SGST or any officer authorized |
|
66 |
Special Audit directed by person not below the rank of asst. commissioner with prior approval of commissioner of CGST/SGST. |
CA or Cost Accountant |
Audit based on turnover
(Sec 35(5) of the CGST Act)
If the aggregate turnover of a person registered under GST exceeds Rs. 2 Crore* in a financial year (5 Crore in FY 18-19) then such person needs to get his accounts audited. This can be done by CA or a Cost Accountant.
The entity also needs to submit the proper officer the audited annual accounts and a reconciliation statement in FORM 9C u/s 44(2)
( *if turnover of business entity is less than Rs. 5 Crore in financial year 2018-2019 then filing of form GSTR-9C is not required). This was amended by notification no. Notification No. 16/2020 – Central Tax.
Aggregate turnover would include value of all taxable supplies, export supplies & exempt supplies.
Turnover of all branches are to be considered for GST audit applicability.
Aggregate turnover would be calculated by excluding below items:
- Any supply liable to reverse charge.
- All the taxes that are included in gst act such as CGST, SGST, IGST, Compensation cess.
- All activities that does not form part of supply of goods & services as per schedule III of CGST act.
Audit by Tax Authorities
(Section 65)
As per this section CGST/SGST Commissioner or any authorized officer, can conduct GST audit of any registered person.
15 working days notice need to be given to the registered person in Form GST AST-01.
Time limit to complete the audit is 3 months which starts from the date of commencement (The time period can be extended further for six months).
Rule 101 prescribes the below audit process need to followed by the officer.
- Verification of the documents furnished, turnover declared, exemptions and deductions claimed, the rate of tax applied, input tax credit taken and refund. [R.101(3)]
- Recording observations in audit notes. [R. 101(3)]
- Communicate about the discrepancies noticed during audit to registered person [R.101(4)]
- Getting reply from Registered Person for discrepancies [R. 101(4)]
- Finalization of findings after getting reply [R. 101(4)]
- Communicating the final report/conclusion.
Result of the audit to be intimated within 30 days (Form GST ADT-02)
Special audit
(Section 66)
As per this section audit can be directed by an officer not below the rank of Asst. Commissioner before whom any proceeding is pending.
Nature and complexity of the case and interest of revenue is to be taken into account before directing audit.
Prior approval of commissioner of CSGT is also required.
Such direction for the audit needs to be communicated in Form ADT-03 in writing.
Such Special audited to be performed by CA or Cost Accountant nominated by the commissioner.
If accounts are already audited, then also such accounts needs to be audited again under this section.
Within 90 days on conclusion of audit, its finding needs to be informed in From ADT-04.
The expenses of the audit shall be decided and born by the commissioner.
|
Notification No. /Update |
Details |
|
Notification No. 77/2020 – Central Tax |
Amend Notification No. 47/2019 – Central Tax and include FY 19-20 also. |
|
Notification No. 16/2020 – Central Tax |
Amendment in rule 80, audit limit extended to Rs. 5Cr for FY 18-19. |
|
Notification No. 47/2019 – Central Tax |
Make annual return(44 (1)) optional for F.Y. 2017-18 and 2018-19 whose aggregate turnover is less than Rs 2 crores. |
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