What is GST Audit? – Why, When & Who Can conduct GST audit ?

What is GST Audit? Annual Audits: Mandatory for registered person whose aggregate turnover during a financial year exceeds 2 Crore.

Audit by Tax Authorities: Commissioner or any officer authorised by him may undertake audit of registered person (Section 65 & Rule 101).

Special Audit: if proper officer is of opinion that value has not been correctly declared or credit availed is not within the normal limits, he may such direct registered person to get his records examined and audited by a chartered accountant or cost accountant nominated by him (Section 66 & Rule 102).

Why GST Audit?

  • To ensure the compliance of law by taxable person
  • Reliance of Tax Administration on Self Assessment
  • Determination of tax liability without intervention of tax official

Who Can conduct GST audit ?

Practicing Chartered accountant or practicing Cost Accountant

What is the Due Date? (GST Audit & Annual Return)

For Financial year 2017-18 Extended due date is 30th June 2018.

What if Not filed on Due Date ?

Late Fees of INR 200/- per day during which failure continues subject to maximum of 0.5% of the turnover in State.

Relevant Provisions on GST Audit

Section 2(13): Definition of Audit

  • Audit means the examination of 
  • records, returns and other documents 
  • maintained or furnished 
  • by the registered person 
  • under this Act or the rules made thereunder 
  • or under any other law for the time being in force 
  • to verify the correctness of
    • turnover declared, 
    • taxes paid, 
    • refund claimed and 
    • input tax credit availed, and to
  • assess his compliance with the provisions of this Act or the rules made thereunder
Section 35(5)Audit applicability
Section 44(1) & 44(2)Annual Return
Rule (80)(3)Form and Manner of Filing
Section 2(6)Definition of aggregate turnover

Gist of the Provisions mentioned above Every registered person Other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person has to file annual return.

Where aggregate turnover during a financial year exceeds 2 crore

  • Registered person has to get his account audited and
  • furnish copy of audited annual accounts and
  • Reconciliation Statement Duly Certified (Form GSTR 9C)

along with the annual Return.

Reconciliation statement reconciles the value of supplies declared in returns furnished for the financial with audited annual financial statement

Aggregate turnover means the aggregate value of

  • all taxable supplies
  • exempt supplies,
  • exports of goods or services or both and
  • inter-State supplies of persons having the same Permanent Account Number,
  • to be computed on all India basis

excluding

  • the value of inward supplies on which tax is payable by a person on reverse charge basis and
  • central tax, State tax, Union territory tax, integrated tax and cess.