ICAI asks Govt to reinstate Audit and Certification provisions of GST Annual Returns

ICAI asks Govt to reinstate Audit and Certification provisions of GST Annual Returns The Institute of Chartered Accountants of India (ICAI) has recommended the government to reinstate audit and certification facilities for GST annual filings. Compliance would be disrupted if audit and certification provisions were removed, according to the Institute of Chartered Accountants of India. ICAI Stated GST Audit by a Chartered Accountant ensures maker checker concept thereby detecting inconsistencies, lapses, errors and ambiguities, if any, in complying with the provisions of GST law. Thus, audit helps in plugging revenue leakages and ensures that the Government gets its dues well within time. As auditors, Chartered Accountants use their competencies to ensure that a taxpayer claims legitimate input tax credit, reports all taxable supplies made by him with correct value, determines correct nature of tax, applies the appropriate rate of tax and timely discharges his tax liabilities. ICAI Further Said, the Government also benefits from audit in as much as it gets the structured data from reconciliation statement prepared and certified by Chartered Accountants. A reconciliation statement certified by a Chartered Accountant helps the officers in completing the departmental scrutiny and audit within the prescribed time limit. ICAI Mentioned that the income-tax law also mandates audit by Chartered Accountant beyond a specified threshold turnover limit. The success of tax audit (Form 3CD) by a Chartered Accountant under the income-tax law, which is in addition to the statutory audit prescribed under the Companies Act, especially needs a mention here as it has been facilitating the Department in selecting limited scrutiny cases, processing cases under section 143(3) and plugging revenue leakages. "Removing the audit will result in widespread disruption of compliance, resulting in demand notices, and taxpayers will be burdened with tax, interest, and penalties that could have been avoided if there had been an audit system in place to identify time lapses." Litigation would also rise as a result of errors that would go uncorrected until the departmental audit was completed, according to the ICAI. The ICAI suggested that the amendments to the Central GST Act made through the Finance Act last year be repealed, and that the requirement of having annual accounts audited and reconciliation statements certified by a chartered accountant be reinstated in law, because a GST audit by a chartered accountant ensures taxpayer compliance and aids in the plugging of revenue leakages. Accounting and GST law treat revenue in various ways. While financial accounts are created using a 'accrual system', GST is paid using a method based on 'time of supply'. Depending on the type of the company, financial statements are prepared differently on the basis of appropriate standards. "It is therefore critical that the reconciliation statement be certified by a chartered accountant who is knowledgeable in both accounting and GST legislation," the ICAI stated.