Audit under GST law is the examination of the records, returns and other documents maintained or submitted by the registered person. The purpose of the audit is to examine the correctness of the turnover declared, taxes paid, refund claimed, and input tax credit availed.
Under GST law, following audits have been prescribed
- Compulsory Audit on turnover basis
- Audit by Commissioner or Authorised Officer
- Special Audit by Assistant Commissioner or Deputy Commissioner
Compulsory Audit on turnover basis
If the aggregate turnover of any registered person is more than Rs. 2 crores in any financial year, he has to get his accounts audited compulsorily from a CA or a CMA.
After the audit, the audited taxpayer has to submit the following documents
- Annual return,
- Audited annual accounts,
- Reconciliation Statement (Form GSTR 9C) - Reconciling the value of supplies declared in return with the audited annual financial statements,
- Other prescribed documents.
Audit by Commissioner or Authorised Officer
Section 65 empowers the Commissioner or any Officer authorised by the commissioner to conduct an audit of a registered person for any one or more financial years.
For this, the Proper Officer has to issue a notice (Form GST ADT-01)at least 15 working days before commencement of the audit. The audit has to be completed within three months. If found necessary, the commissioner can extend the period by maximum six months.
Within 30 days after the completion of the audit, the proper officer will inform the auditee about the findings and its reasons (Form GST ADT-02).If the officer identifies any non-payment, short payment or erroneous refund of tax, or input tax credit wrongly availed or utilised, he will initiate demand and recovery actions.
Duties of the auditee
- To make available books of accounts or other documents as required,
- To provide any additional information sought by the authorised officer
Special Audit by Assistant Commissioner or Deputy Commissioner
During the scrutiny, inquiry or investigation, if the Assistant Commissioner or Deputy Commissioner feels that the taxpayer hasn't declared a correct value or has claimed illegitimate input tax credit, he can order the special audit by issuing a written order to the registered person (Form GST ADT-03). For this, prior approval is required from the Commissioner.
CA or CMA, authorised by the proper officer, will conduct the audit and submit the audit report to the officer within 90 days. If the registered person or CA or CMA requests the Assistant Commissioner to extend the period due to genuine reasons, Assistant Commissioner can extend the period by further 90 days.
Auditee will be given the opportunity of being heard for all the observations noted down by the special auditor. If the auditor finds the short or non-payment of tax or illegitimate refund claim or any material non-compliance, the authorised officer can initiate demand and recovery procedure.
Proper Officer can order the special audit even if the auditee has been audited under any other provision of GST act or any other law. Remuneration of CA or CMA and the expenses of the audit will be determined and paid by the Commissioner.