GST Audit
What is GST Audit?
A GST Audit is the examination of records, returns, and other documents maintained by a registered person under the Goods and Services Tax (GST) law. Its purpose is to verify the correctness of:
• Turnover declared
• Taxes paid
• Refunds claimed
• Input Tax Credit (ITC) availed
• Compliance with GST provisions
Types of GST Audit
| Type of Audit | Conducted By | Applicability |
|---|---|---|
| Turnover-based Audit (Section 35(5)) | Chartered Accountant (CA) or Cost Accountant | [Now removed post Budget 2021] Applicable earlier for taxpayers with turnover > ₹2 crore |
| Departmental Audit (Section 65) | Commissioner or an officer authorized by him | As per order by GST authorities |
| Special Audit (Section 66) | CA/CMA nominated by Commissioner | Ordered by the Assistant Commissioner if deemed necessary due to complex cases |
| Inspection, Search, Seizure and Arrest (Section 67) | GST Officers | In case of suspected tax evasion |
Turnover Calculation for GST Audit Threshold
• Aggregate Turnover: Includes all taxable supplies, exempt supplies, exports, and interstate supplies of persons having the same PAN.
• Includes turnover of all branches, divisions, or business verticals under the same PAN.
Difference Between GSTR-9 and GSTR-9C
| Basis of Comparison | GSTR-9 | GSTR-9C |
|---|---|---|
| Full Form | Annual Return | Reconciliation Statement |
| Purpose | Summary of all outward and inward supplies, ITC, tax paid, and adjustments for a financial year. | Reconciliation of annual returns (GSTR-9) with audited financial statements. Identifies mismatches, if any. |
| Basis of Comparison | GSTR-9 | GSTR-9C |
|---|---|---|
| Who Needs to File | All registered taxpayers under regular scheme (excluding composition scheme, casual taxable persons, input service distributors, non-residents). | Taxpayers whose aggregate turnover exceeds ₹5 crore in a financial year. |
| Filing Type | Mandatory for all applicable taxpayers. | Mandatory only for those with turnover > ₹5 crore. |
| Certification Required? | No. Self-declaration is sufficient. | Yes. Must be self-certified by the taxpayer or their authorized person (CA/CMA certification was mandatory until FY 2019–20). |
| Part of GST Law | Section 44(1) of CGST Act | Section 44(2) of CGST Act |
|---|---|---|
| Documents Used | Data from GSTR-1, GSTR-3B, books of account. | Data from GSTR-9, trial balance, audited financials, ledger-wise turnover/ITC. |
| Penalty for Non-Filing | ₹200 per day (₹100 CGST + ₹100 SGST), subject to maximum of 0.25% of turnover. | ₹50,000 (₹25,000 CGST + ₹25,000 SGST) – if incorrect filing or failure. |
| Formats | Available on GST Portal in offline and online mode. | Can be prepared offline and uploaded via JSON or filed online on GST Portal. |
| Due Date | 31st December of the next financial year (unless extended). | Same as GSTR-9 – 31st December of the next financial year. |
| Auto-Populated Fields | Partially auto-filled from GSTR-1 & GSTR-3B | Not auto-filled – requires manual reconciliation. |
FAQs
1. What is a GST Audit?
A GST audit is a detailed examination of your business’s records, returns, and financial statements by a qualified Chartered Accountant or Cost Accountant to verify compliance with GST laws.
2. Who is required to get a GST Audit done?
Businesses with an aggregate turnover exceeding ₹5 crores in a financial year must get their accounts audited and submit a reconciliation statement (Form GSTR-9C) along with the annual return.
3. What is Form GSTR-9C?
Form GSTR-9C is the reconciliation statement certified by a Chartered Accountant or Cost Accountant, reconciling the turnover, taxes paid, and ITC claimed as per financial statements with the GST returns filed.
4. When is the GST audit report due?
The GST audit report must be filed within 3 months from the due date of filing the annual return (GSTR-9), which typically falls by 31st December of the following financial year.
5. Is GST audit mandatory for composition scheme taxpayers?
Generally, composition scheme taxpayers are exempt from GST audit unless the tax authorities specifically call for an audit.
6. What is a special GST audit?
A special audit is an in-depth audit ordered by the GST Commissioner if there are complex transactions or suspected non-compliance. It is conducted by an independent CA or Cost Accountant.
7. Can GST audits result in additional tax demands?
Yes, if discrepancies are found, tax authorities can demand additional tax payments along with interest and penalties.
8. Can GST audit be done voluntarily if turnover is less than ₹5 crores?
Yes, businesses may opt for voluntary GST audits to ensure compliance and avoid future notices or scrutiny.
9. How long should records be maintained for GST audit?
Records must be maintained for at least 6 years from the due date of filing the annual return for the year to which the records relate.
10. Can GST audit findings be challenged?
Yes, if you disagree with the audit findings, you can appeal or seek rectification through proper legal channels.
11. How frequently are GST audits conducted?
Official GST audits are typically annual, but authorities can conduct audits more frequently if needed, including special audits.
12. Does GST audit cover e-commerce operators and digital service providers?
Yes, all taxable persons including e-commerce operators and digital service providers are subject to GST audit if turnover criteria are met.
13. What is the role of reconciliation in GST audit?
Reconciliation ensures that data in the GST returns matches the financial books, helping identify discrepancies before the audit.
14. Can GST audit lead to investigation?
If serious irregularities are found, the audit may escalate to investigations or scrutiny assessments.
15. What is the scope of the audit under Section 65?
The audit scope includes verification of accounts, returns, ITC claims, tax payments, and other compliance-related aspects.
16. Are foreign companies registered under GST also audited?
Yes, foreign companies with GST registration in India are subject to the same audit requirements.
17. Are there any audit requirements for casual taxable persons?
Casual taxable persons must maintain records and file returns but GST audit is generally not mandatory unless turnover exceeds the threshold.
18. What are the audit implications of reversed Input Tax Credit under Rule 42 and 43?
Auditors check for compliance with ITC reversal on blocked credits, non-payment to suppliers beyond 180 days, and ensure correct reversal entries in books and returns.
19. How does the audit examine anti-profiteering compliance under GST?
Auditors may review whether the benefit of GST rate reduction is passed on to customers as mandated by the anti-profiteering authority.
