GST Audit Process and Assessment

GST Audit includes an examination of business returns, records, declarations and documents maintained by the taxpayer to verify the accuracy of turnover declared, taxes paid, refunds processed and input credit claimed throughout the filing period to the GST department.

The basic objective of a GST audit is to verify the abidance of the taxpayer with the stated provisions of GST.

Basic Rules and Threshold limit for GST Audit

As per the CGST Act, 2017 every registered taxpayer whose annual turnover exceeds the prescribed limit (presently-Rs 2 crores) shall have to get his accounts audited by a Chartered Accountant or Cost Accountant.

Also, he shall have to;

– file an annual return using online Form GSTR 9 by 31st Dcecember ( amended due date- 31st March 2019) of the preceding financial year.

– submit an audited copy of accounts to the department electronically.

– submit a reconciliation statement using Form GSTR 9C, for reconciling the value of supplies as declared in the return with the audited financials of the business.

-other particulars and declarations as prescribed.

Audit Provisions and Assessment

Audit by Tax Authorities

Section 65 of the Central Goods and Service Tax (CGST) Act 2017, specifies the provisions about the  GST Audit process as conducted by the tax authorities as:

-Audit of the registered person shall be conducted at the place of office of the officer or at the place of the registered person only.

-Audit shall be undertaken by the Commissioner or any officer as appointed by the Commissioner.

– The Audit period shall end within 3 months of its commencement.

– Complete information about the audit process is it to be provided to the registered taxpayer by way of notice in not less than 15 days, prior to the commencement of the audit.

-The registered person is obliged to provide the following documents /information under the conduct of the audit process to the officer :

* all business account books and other documents as and when required;

* related business information as required and requested by the officer for timely completion of the audit process.

Special Audit Provisions

Section 66 of the CGST Act, 2017 specifies for special audit provisions which say:

– The officer appointed by Commissioner for special audit shall take his prior approval before directing of the special audit to the registered taxpayer.

– If in any case, the proper officer, at the time of investigation/scrutiny is of the view that correct value of transaction or input availed is not within the stated limit, he may direct the registered taxpayer to get his books of accounts audited.

-The audit process shall be conducted by a Chartered Accountant or a Cost Accountant so appointed by the officer.

-The appointed officer is bound to report the Assistant Commissioner- the details of the audit conducted within 90 days period. All expenses made in the audit process and the remuneration affixed for the officer appointed would be borne by the Commissioner.

For Assessment:

-After completion of the audit process, the registered person is to be informed about the findings, rights and appropriate reasons for findings. Such information is to be provided to the registered person within 30 days of audit completion.

-In case no information is reported to the registered person, it can be assumed that nothing exceptional was found in the audit. However, if the officer detects any shortcomings like cases of pending tax dues, input wrongly availed or any other tax evasion possibility he might issue a demand notice under Section 73 or Section 74 of CGST Act,2017 to the registered taxpayer for clarification.

GST Cancellation and Final Return 

The auditor so appointed may call the taxpayer for cancellation or surrender of his GST registration if he receives any discrepancy to the disclosed facts and reported figures, after giving him a suitable opportunity to explain.

Every taxpayer whose GST registration stands cancelled or surrendered has to file a final return in the Form GSTR-10 within 3 months from the date of such orders .The return shall include details about the closing stock holdings, the due GST amount payable and particulars of related records as prescribed..

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