GST Audit

Tally Solutions |Updated on: August 24, 2021

What is Audit under GST?

The term ‘audit’ under GST means the examination of records, returns and other documents maintained by a registered taxable person. The purpose is to verify whether the turnover declared, taxes paid, refund claimed and input tax credit availed is correct.

What is the threshold limit for Audit under GST?

As per the applicability provisions specified by the GST Council, every registered taxable person whose turnover during a financial year crosses INR 2 Crore, should get his accounts audited by a chartered accountant or a cost accountant. Thus, he shall electronically file:

• The annual return i.e. Form GSTR-9 along with the reconciliation statement by 31st December of the next Financial Year
  
  
• A copy of the audited annual accounts.
  
  
• A reconciliation statement, reconciling the value of supplies declared in the annual return with the audited annual financial statement.
  
  
• Other particulars as prescribed.

General GST Audit

A Commissioner or any officer authorised by him can undertake general GST audit of any registered taxable person. The following are the key points to be kept in mind, as far as the general GST audit is concerned:

• The tax audit will be conducted at the registered person’s place of business or in his/her office.
  
  
• The person will be informed about the tax audit by a notice at least 15 working days prior to the date of audit.
  
  
• The tax audit will be completed within 3 months from the date of commencement of audit, i.e. audit has to be completed within 90 days.
  
  
• The period of tax audit can be extended by another 6 months if the Commissioner feels that the audit cannot be completed in 3 months. The reasons for the extension have to be recorded in writing.
  
  
• After the tax audit is completed, the tax officer should inform the registered person, within 30 days, about the findings, reasons for the findings and his rights and obligations.
  
  
• If the tax audit results in detection of unpaid tax or short paid tax or wrong refund or input tax credit wrongly availed or utilised, then the tax officer will initiate actions for recovery of the tax.

Special GST Audit

At any stage during a process of scrutiny, enquiry or investigation, if an officer or Assistant Commissioner feels that the value of tax has not been correctly declared or wrong credit has been availed, he can initiate a special GST audit, with prior approval of the Commissioner. The following are the key points to be kept in mind, as far as special GST audit is concerned:

• A special audit can be conducted, even if the taxpayer’s books have already been audited before.
  
  
• Under special audit, the registered person will be directed to get his accounts audited by a Chartered Accountant or Cost Accountant nominated by the Commissioner.
  
  
• The expenses for examination and audit including the auditor’s remuneration will be determined and paid by the Commissioner.
  
  
• The nominated Chartered Accountant or Cost Accountant should submit the GST tax audit report within 90 days. This period can be further extended by the tax officer for 90 days, on an application made by the taxable person or the auditor.
  
  
• Post the findings of the special audit, the taxable person will be given an opportunity of being heard, and provide justifications.
  
  
• If the special audit results in detection of unpaid tax or short paid tax or wrong refund or input tax credit wrongly availed or utilised, then the tax officer will initiate actions for recovery of the tax.

Rectification in return based on results of GST Audit

If any taxable person, after having furnished a return discovers any omission / incorrect details, via the audit results, he can rectify the same, subject to payment of interest. However, no rectification will be allowed after the tax filing is completed for the month of September, or the second quarter following the end of the financial year, or the actual date of tax filing of the relevant annual return - whichever is earlier.