An audit is a term that is generally used for official inspection and verification of documents by an Independent body, usually for financial accounts. Under GST, wherein a taxpayer is required to self-assess their tax liability, is often susceptible to errors, further leading to unnecessary departmental interventions/litigations. An audit under such circumstances can save you the hassle.
Section 2(13) of CGST Act defines “Audit” as an examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder 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 this Act or the rules made thereunder;
Primarily, there are 3 types of audit as mandated by the GST law as given below:
As per Section 35(5) of GST Audit rules, a registered taxpayer with an aggregate turnover exceeding Rs. 2crores in a financial year is required to get his account books and returns audited by a professional chartered accountant. A certified copy of these audited accounts and a reconciliation statement needs to be submitted in form GSTR 9C via the common portal or through the Facilitation Centres as notified by the Commissioner
GST Audit Checklist
The authorised CA will be required to verify the below-given details during the audit
- GSTR 3B in relation to GSTR 1 & GSTR 2A
- particulars of invoice
- ITC reversal for Non-payment
- Matching EWB with the invoice
- Stock pending with Job workers
- Annual turnover as per audited financial statements
- Reconciliation of ITC declared in the Annual Return (GSTR9) against the expenses booked in the audited Annual Financial Statement or books of account.
Departmental Audit/Audit by Tax Authorities:
In order to ensure a proper calculation and discharge of tax liability, the tax authorities have been authorised to conduct an audit of the records maintained by the taxpayer. As per section 65 and Rule 101(3) of GST Audit Rules, the commissioner or an officer authorised by him can conduct an audit and verify the details of the ‘records’ and the ‘books of account’ of the registered person, along with the assistance of the team of officers and officials accompanying him.
- The audit shall be conducted at the place of business of the registered person or their registered office
- An intimation of the audit shall be provided at least 15 days in advance in Form GST ADT-01
- The audit is to be completed within 3 months from the date of commencement.
P.S: If in case GST officers are in need of more time, the Commissioner can extend the periodicity of the audit, by a further period not exceeding 6 months.
Furthermore, upon the conclusion of the audit, the authorised officer shall inform the finding, rights and obligations and the reasons of the given findings to the registered person, within a period of 30 days in FORM GST ADT-02. If the registered taxpayer is found at fault, such as wrongly availed/utilized ITC, the authorised officer can proceed as per the procedure laid down under section 73 or Section 74.
As per section 66 and Rule 102 of GST Audit Rules, an authorised officer (not below the rank of Assistant Commissioner)at any stage of scrutiny, enquiry or investigation may avail the services of a CA or CMA by considering the nature & complexity of the business and if the authorised officer is of the opinion that:
- Value has not been correctly declared; or
- Credit availed is not within the normal limits.
The authorised officer shall issue the direction for the audit in Form GST ADT-03, wherein the registered dealer shall be required to get his records including his books of accounts to be examined and audited by the specified professional CA or CMA within a period of ninety days from the day of passing such an order.
- The expense of such special GST audit and examinations is paid by the commissioner.
- The period required to audit the account can be provided with an extension of additional ninety days.
- Upon conclusion of the special GST audit, the findings shall be communicated the auditee in Form GST ADT-04.
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