Overview of Audit under GST
An audit is vital just like maintaining of financial statements is. As, preparing of financial statements of a company is necessary, at the same time, the conducting of GST Audit is, which authenticates the company’s record and returns. While the audit is conducted of the company and its records maintained from many years, it makes it obvious to say that the audit shall be conducted at the place of business of the registered person and/or in the office.
Th term “audit” is something that sounds normal and general, however, it is actually complicated and full of heavy compliances. For conducting of the audit, a notice in advance is necessary to be sent to the registered person in not less than fifteen working days, prior to the conduct of audit. Not only this, but in the list of GST Audit Compliance many other compliances are also covered. Continue reading to obtain all information about GST Audit.
Applicability of GST Audit
Every registered person who has a turnover during a financial year exceeding the prescribed limit is then subject to audit. As per Section 35(5) of the CGST Act, the prescribed limit is above Rs. 2 Crore. So, businesses must get their books of accounts audited. Along with it, registered taxpayers need to submit a copy of financial statements & reconciliation statement in GSTR-9C.
GST Audit Section
Generally, the audit means analyzing the companies records, financial statements and other necessary records of the company in order to inspect the real on-going of the company. To see whether the company has paid the taxes according to the provision stated in the law or not.
However, in legal terminology and as per Section (13) of the Central Goods and Services Tax Act 2017, “Audit” means doing an examination of records of the company, returns filed and other documents maintained or furnished by the registered person under the Act. All of this is necessary so as to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, also to access his compliance with the provisions of this Act or the rules made thereunder. Let us now, learn about the types of GST audit conducted.
Types of GST Audit
- Audit by Tax Authorities Section 65(1)
The Commissioner or any officer authorized by him, by way of a general or specific order, may execute an audit of any registered person for such period.
- Special Audit
Section 66 states about the Special Audit. It is an audit in which the department may conduct due to the complexity of the case and considering the interest of revenue.
A special Audit is conducted by the professionals like a Chartered Accountant or Cost Accountant so nominated by the Commissioner may undertake the Audit. Under special audit, an officer not below the rank of an Assistant Commissioner with prior approval of the Commissioner may serve notice for a special audit, having regard to the nature and complexity of the case and the interest of revenue.
Where any officer not below the rank of Assistant Commissioner, finds at the time of scrutiny, inquiry or investigation, any complexity in the case and interest of opinion that:-
- the value has not been correctly declared or;
- the credit availed is not within the normal limits;
then, he may after obtaining prior approval in advance from the commissioner, direct such taxable person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or cost accountant as may be nominated by the Commissioner.
Moreover, if the assistant commissioner after observing the complexity of business and nature is of the opinion that-
- the value has not been correctly declared; or
- Credit availed is not within the normal limits
after commencement and before completion of any scrutiny, enquiry, investigation or any other proceedings under this Act, may direct a registered person to get his books of account audited by an expert. Such direction is to be issued in Form GST ADT-03.
GST Audit Checklist
GST Audit requires some of the necessary documents that help in the completion of GST Audit. The documents are as follows:-
- Purchase and Sales bills
- Electronic Cash ledger
- Credit Cash ledger
- Delivery challan copy
- E-way bills
- TRANS-01 copies
- Job Work Invoices
- Financial statement audited by Chartered accountant
- Debit notes
- Copy of statement of reconciliation
- TRANS-02 copies
- Copy of order/notice issued by department
- Copy of statement of reconciliation
- GSTR-3B, GSTR-2A, GSTR-1
All in all, each and every document that contains information of the company either in financial terms or documentary terms shall be presented in front of the auditor for conducting accurate GST audit.
Audit Completion Period
As per Section 65 (4) sub section (1) of the Central Goods and Services Tax, the audit being a necessary compliance must be completed with a period of three months from the date of commencement of audit.
Where the audit can’t be completed in the above prescribed time, then the Commissioner shall look into it. So, if the Commissioner gets satisfied that audit of such registered person cannot be completed with three months’ time, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.
The reason in writing for a grant of extension must be recorded by the commissioner being it an obligatory thing.
Compliance under GST Audit
To conduct a GST audit, there are some compliances to be adhered to. Here are mentioned the compliances, namely:-
- As per Section 65 (3) of the act, an intimation in the form of notice, is necessary to be given to the registered person in order to inform him or her, in not less than fifteen working days, prior to the conduct of audit. The form applicable for the same is Form GST ADT-01.
- After the audit is successfully conducted, information is required to be provided to the registered person including the findings during the audit in Form GST ADT-02 within thirty days of conclusion of the audit.
What if any discrepancy arises in Special Audit?
Where any issue arises or where the auditor finds something fishy and detects that tax has not been paid, or short paid or erroneously refunded or input tax credit wrongly availed or utilized then, in that case, the proper officer is responsible to initiate action under Section 73 or 74 of the governed act.
