Introduction to GST Audit
Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the compliance with the provisions of GST.
Threshold Limit for Audit under GST by CA/CMA
Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit is subject to audit. As per the current notified GST Rules, the turnover limit is above Rs 2 crore^. Such businesses must get their books of accounts audited by a chartered accountant or a cost accountant. Such taxpayer shall electronically file:
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An annual return using the Form GSTR 9 by 31st December of the next Financial Year
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The audited copy of the annual accounts
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A certified reconciliation statement in the form GSTR-9C, reconciling the value of supplies declared in the return with the audited annual financial statement
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Any other particulars as prescribed
^For businesses with an annual turnover of less than Rs.5 crore, filing of GSTR-9C for FY 2018-19 and FY 2019-20 has been waived off.
Rectifications to Returns After GST Audit
If any taxable person, after furnishing a GST return discovers any omission/incorrect details (from results of audit), he can rectify subject to payment of interest.
However, no rectification will be allowed after the earlier of:
(i) the due date for filing of return for the month of September or second quarter, (as the case may be), following the end of the financial year, or
(ii) the actual date of filing o the relevant annual return.
For example, Mr ‘X’ found during the audit that he has made a mistake in Oct 2020 return. X submitted an annual return for FY 2020-21 on 31st December 2021 along with audited accounts. He can rectify the Oct 2020 mistake within- 20th Oct 2021 (last date for filing September return) or 31st December 2021 ( the actual date of filing of relevant annual return), whichever is earlier, i.e., his last date for rectifying is
20th Oct 2021.
Such rectification will not be allowed where results are from scrutiny or audit by the tax authorities.
Audit by Tax Authorities
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The Commissioner of CGST/SGST (or any officer authorized by him) may conduct an audit of a taxpayer. The frequency and manner of an audit will be prescribed later.
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A notice will be sent to the auditee at least 15 days before.
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The audit will be completed within 3 months from the date of commencement of the audit.
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The Commissioner can extend the audit period for a further six months with reasons recorded in writing.
Obligations of the Auditee
The taxable person will be required to:
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provide the necessary facility to verify the books of account/other documents as required
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to give information and assistance for timely completion of the audit.
Findings of Audit
On conclusion of an audit, the officer will inform the taxable person within 30 days of:
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the findings,
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their reasons, and
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the taxable person’s rights and obligations
If the audit results in the detection of unpaid/short paid tax or wrong refund or wrong input tax credit availed, then demand and recovery actions will be initiated.
Special Audit under GST
When can a special audit be initiated?
The Assistant Commissioner may initiate the special audit, considering the nature and complexity of the case and interest of revenue.
If he is of the opinion during any stage of scrutiny/ inquiry/investigation that the value has not been correctly declared or the wrong credit has been availed then a special audit can be initiated.
A special audit can be conducted even if the taxpayer’s books have already been audited before.
Who will order and conduct a special audit?
The Assistant Commissioner (with the prior approval of the Commissioner) can order for special audit (in writing). The special audit will be carried out by a chartered accountant or a cost accountant nominated by the Commissioner.
What is the time limit to initiate a special audit under GST?
The auditor will have to submit the report within 90 days. This may be further extended by the tax officer for 90 days on an application made by the taxable person or the auditor.
Who will bear the expenses of the special audit?
The expenses for examination and audit including the auditor’s remuneration will be determined and paid by the Commissioner.
How are the findings of the special audit dealt with?
The taxable person will be given an opportunity of being heard in the findings of the special audit. If the audit results in detection of unpaid/short paid tax or wrong refund or input tax credit wrongly availed then demand and recovery actions will be initiated.