Audit has been defined in section 2(13) of the CGST Act, 2017 and it means the examination of records, returns and other documents maintained or furnished by the registered person under the GST Acts or the 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 Acts or the rules made thereunder.
There are three types of audit in GST:
1. GST Annual Audit by CA or CMA on the basis of turnover (u/s 35)
2. GST Audit by Tax Authorities /Department (u/s 65)
3. Special GST Audit (u/s 66) by a chartered accountant or a cost accountant
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Sr. No.
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Section Reference (CGST Act)
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Description of type of Audit
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1.
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Section 35
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This GST audit is to be done on the basis of the turnover of the registered taxable person.
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2.
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Section 65
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Audit by Tax Authorities
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3.
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Section 66
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Special Audit under GST by Chartered Accountant or Cost & Management Accountant
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- Every registered person, whose turnover during the financial year exceeds the prescribed “GST audit turnover limit”, shall get the accounts audited by a Chartered Accountant (CA) or a Cost and Management Accountant (CMA).
- Registered person who is required to get his accounts audited in accordance with section 35(5) shall submit electronically the Annual Return as per section 44 along with a copy of the audited statement of accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year.
- He shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in Form GSTR-9C along with annual return.
- The due/ last date for GST audit is 31st December following the end of such financial year.
Every registered person, for facilitating the audit, shall keep and maintain his accounts to show the correct value in regards to:
- Production or manufacture of goods
- Inward supply of goods or services or both
- Outward supply of goods or services or both
- Stock of goods
- Input tax credit availed
- Output tax payable and paid
- Fixed Assets Register
- Audited Financial Statement
- Annual return in Form GSTR-9
- GSTR-1 & GSTR-3B Reconcilations for all months
- Reconciliation statement, reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement in Form GSTR-9C.
- A notice will be sent by the Department to the auditee at least 15 days before inception.
- The Commissioner of GST (or any officer authorized by him) may conduct an audit of a taxpayer.
- The audit will be completed within 3 months from the date of commencement of the audit.* (can be extended further by 6 months by Commissioner);
- Taxpayer shall furnish information as required by departmental authorities to complete Audit.
- Result of audit to be intimated within 30 days [in Form GST ADT-02] and further action will be taken.
3. Special GST Audit (u/s 66) by a chartered accountant or a cost accountant
During the course of any scrutiny / investigation etc., if the Assistant Commissioner (AC) feels that the Taxable value has not been correctly declared or wrong credit has been availed, then the AC may direct a Special Audit to be carried out by a chartered accountant or a cost accountant nominated by the Commissioner.
- Proceedings must be pending before Asst. Commissioner or any officer above his rank.
- Nature and complexity of the case and interest of revenue to be considered;
- Assistant Commissioner Opinion : Either correct value not declared and / or ITC claimed not within normal limits;
- Prior approval of the Commissioner of CGST / SGST is required;
- Direct registered person to get his records and books of a/c audited [in Form GST ADT-03];
- Audit to be done by a CA / CWA nominated by the Commissioner of CGST / SGST;
- Audit Report to be submitted within 90 days (can be extended by further 90 days);
- Opportunity of hearing given to registered person and further action taken by proper officer;
- Expenses of audit including remuneration to be determined and paid by the Commissioner.
So, what is Aggregate Turnover?
Aggregate Turnover is defined under Section 2(6) of CGST act as “ the aggregate value of all taxable supplies, excluding the value of inward supplies on which tax is payable by a person on reverse charge basis, exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number, to be computed on an all-India basis but excludes Central tax, State tax, Union territory tax, Integrated tax and cess”.
All the forms are available in the notification on CBIC website. This can be downloaded.
The government via Notification No. 39/2018 of Central Tax has released an Annual Return format after consulting with ICAI. The format is given below for your reference:
Further, the government via notification No. 49/2018 of Central Tax has released GST Audit Reconciliation format. The format is given below for your reference:
The GST Audit needs to be given in Part B. The CA or CMA needs to disclose their report in the format as disclose below:
We have provided you the pdf format for your perusal and are in the course of providing you the excel/ word format in some time. In case of queries, you can post your comments in the below section.