Basics for Goods and Service Tax (GST) Audit

Before knowing about GST Audit let us first understand what is Audit.

Audit means a detailed checking of any information provided in document.

Therefore, GST Audit can be defined as a “Detailed verification of the information provided to the government by the persons registered under GST.”

Is GST Audit compulsory for all? If not then who is eligible for GST Audit?

No, it’s not compulsory for every registered person. All those registered person whose turnover has crossed Rs 2 crore during a financial year needs to get their accounts audited.

Can a GST Practitioner do GST Audit?

No, as per the GST law, GST Audit can only be performed by a Chartered Accountant (CA) or Certified Management Accountant (CMA) in practice or who is employed in the firm which is doing audit or by GST Tax Authorities themselves.

Neither a GST practitioner nor an internal auditor of the company whose audit is to be performed is eligible to perform GST Audit.

A registered person liable for GST audit will be notified atleast 15 days before the conduct of audit by the concerned officer.

Types of GST Audit

Audit of GST is classified into two categories. They are discussed below

  1. General Audit:-It is to be conducted whenever a registered person turnover crosses the limit of Rs 2 crore during a financial year.
  2. Special Audit: – It is conducted for a special purpose after commissioner appoints either CA or CMA for getting clarification.

For example:

A person whose turnover might not have crossed Rs 2 crore during the financial year but has claimed the Input Tax Credit Rs 1 crore. As ITC amount is quite huge amount then, government may ask for the audit to get confirmed about the truthfulness of amount. This is called Special Audit.

GST Quiz- Test your Knowledge

Documents required for GST Audit

One will require following documents for audit:-

  1. Details of inward & outward supply– Here inward supply means the bill of those goods or service which you have brought for the business purpose from someone whereas outward supply means bill of those or service which you provide to another person.
  2. Invoice An invoice which is popularly known as bill is made as per the specific rules stated.
  3. Inventory details – This can be understood as a statement which shows the movement of goods throughout the year. That is how many goods were there in the beginning and how many are left in the end of financial year.
  4. Details of ITC claimed – This means that those tax paid by a business man on purchase of goods or services are claimed back to reduce the liability of tax to be paid by him at the time of sale. Note- ITC Can be claimed to the extent GST was paid based on certain conditions.
  5. Copy of GST & Amended returns – This means the details of GST returned filed and copy of those returns in which any changes were made (amendments).
  6. Rate of GST charged- This means the rate charged by the business man is as per the rate mentioned by the government for that goods or service.
  7. E-way bill – Document issued for the movement of the goods.
  8. Reconciliation of purchase and supply of goods or services- In simpler terms, it means matching data and records filed by the supplier with recipients data and records.
  9. A copy of audited statement (with changed values, if any) should be furnished in the required return in correct manner and in appropriate form or not.

When can you say that the special audit has commenced ?

It’s necessary to know when an audit can be said as commenced because it has to be completed within a time (It’s discussed later).

Therefore, later of the following will be considered as “Date of Audit Commencement)”

  1. The date on which the records / accounts called by an authorities are made available to them, or
  2. The actual institution of audit at the place of business of the tax payer.

What are the GST Penalties and prosecution?

Time Limit For Completion Of Special Audit

A special audit has to be completed within 3 months from the date of commencement but can be extended till 6 months if permitted by the Commissioner.

How special audit is to be conducted?

In an audit, auditor has to verify and cross examine all the required documents and check the additional documents if any required within a time frame.

He may inform the registered person about the discrepancy if found and file his reply. He also has to submit all his findings of audit after the due consideration of reply is furnished.

For a good audit an auditor should have a knowledge related to laws of GST and audit.

Effect of GST in supply chain of business

Finalisation of audit

At last, officer within 30 days shall inform the registered person about the findings, rights and obligations and reason for such findings.

If any discrepancy in payment of tax such as short payment, over claiming of ITC is found then an action against the person can be taken as per law.

For any question visit us at forum

The author of above article is Sneha Bhalotia, ICAI. 

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.  It is prepared based on understanding of provisions as stood applicable as on date.
Also, and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.
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