Things to know about GST Audit:
You would have been hearing a lot about GST audit these days as the timeline to get this done is nearing day by day. Let us first understand the things to know about GST Audit and the types of GST audit.
There arethree types of auditas prescribed under GST.
Audit which is to be initiated by Registered Dealer
The first type of audit is where your turnover exceeds Rs. 2 Crore. This audit isto be done by a chartered accountant or a cost accountant; and it is mandatory
Audits which may be initiated by GST Tax Authorities
- Audit may be done of any registered dealer by the commissioner or any officer authorised by him in terms of Section 65 and 66 of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017
- The department may conduct a special audit due to the complexity of the case and considering the interest of revenue. The CA/CMA will be appointed to do the audit. Such type of audit is Special Audit and is conducted under the Section 66 of CGST Act, 2017 read with Rule 102 of CGST Rules, 2017.
Lets learn about above audits one by one:
Audit initiated by Registered Dealer
According to Section 35(5) of the CGST Act, every registered taxable person whose turnover during a financial year exceeds Rs 2 crore shall get his accounts audited by a chartered accountant or a cost accountant. He shall electronically file:
- An annualreturn in the Form GSTR 9B by 31st December of the next Financial Year,
- Audited Report and Audited Annual Accounts to be submitted along with annual return,
- a reconciliation statement, reconciling the value of supplies declared in the return with the audited annual financial statement,
- and other particulars as prescribed.
Here turnover includes value of all exempt supplies and exports under the same PAN, on all India basis
You would be thinking about the applicable limit for FY17-18 as GST was implemented from 01st July 2017 i.e. 9 months only. The most sought question hereis that whether the above-mentioned annual turnover limit of Rs. 2 crores for audit purposes shall apply proportionately in the given case for a period of nine months or whether the foregoing limit shall apply as it is for a period of nine months A suitable and immediate clarification from the Government is required in this regard.
Audits which may be initiated by GST Tax Authorities
Audit by Department under section 65 of the CGST/SGST Act
GST is a trust-based tax mechanism where assessee calculates and submits their tax liability themselves. Hence it is important for GST authorities to ensure the correctness of data being uploaded to their portals. In this regard, GST empowers commissioners appointed under the GST regime to conduct audits and ensure fair collection of taxes. Lets understand this in detail:
- The commissioner or any officer authorized by him by way of a general or specific order may undertake an audit of any registered person for such period at such frequency and in such manner as may be prescribed.
- The officers referred to in sub-section (1) may conduct an audit at the place of business of the registered person or in their office.
- The registered person shall be informed by way of a notice not less than fifteen working (15) days prior to the conduct of an audit in such manner as may be prescribed.
- The audit shall be completed within a period of three months from the date of commencement of the audit. (Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may extend the period by a further period not exceeding six (6) months.)
- Audit of a registered person shall be conducted for a period of a financial year or multiples thereof. Thus, Audit cannot be conducted for a part of the Financial Year in normal circumstances.
- The registered person shall be informed by way of notice in FORM GST ADT-01 at least 15 days prior to the conduct of an audit.
- On conclusion of an audit, the proper officer shall inform the registered person within 30 days about the findings of his rights and obligations and the reasons for such findings in FORM GST ADT-02.
Special GST Audit -Section 66 of the CGST/SGST Act
If during an assessment, investigation or any other proceedings before him, any officer above or equal to the rank of Assistant Commissioner, is of the opinion that the value is not declared correctly or the credit availed is not within the normal limits, he may direct such registered person to get his records. including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner. Prior approval of the Commissioner is mandatory in this case.
The officer shall direct the registered person to get his records audited by the chartered accountant or cost accountant specified in the direction Rule 102(1) of CGST and SGST Rules, 2017, in form GST ADT-03
The Chartered Accountant or Cost Accountant nominated by the Commissioner shall furnish the Audit Report to the Assistant Commissioner within a period of 90 days from the date of his nomination. However, the aforesaid period of 90 days may be extended by the Assistant Commissioner on his own motion, or on an application made by the registered person or the CA/ Cost Accountant nominated by the Commissioner, for sufficient reason.
Provisions of this Special Audit have Overriding Effect on all other Audit provisions of the CGST Act/SGST Act and/or of any other Act.
The expenses of examination and audit of records of the Registered Person by the Special Auditor [including the remuneration of the Special Auditor] shall be determined and paid by the Commissioner.
On conclusion of the special audit, the registered person shall be informed of the findings of a special audit in form GST ADT-04.
Hope this gives you a good idea of the type of GST audits. Get started on your preparation immediately and get back to us for any further clarification you may require.
You may also refer:
- Key 15 Suggestions on simplifying GST for SME / MSME Sector
- FAQs on Payment of GST on Voluntary Basis
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