Audit under GST: When Might Tax Officers Conduct an Audit?
Audit under GST: When Might Tax Officers Conduct an Audit?
Mar 20, 2024
15 Mins
Introduction:
GST audit is necessary at times to ensure that the correct amount of GST has been paid and that refund claims are legitimate, particularly for certain categories of taxpayers.
The due date for filing GSTR-9 and self-certified GSTR-9C for the fiscal year 2020-21 has been extended until February 28th, 2022.
May 28th, 2021
As per the outcome of the 43rd GST Council meeting, GSTR-9 will remain optional for taxpayers with a turnover of up to Rs.2 crore, while taxpayers with a turnover less than or equal to Rs.5 crore can self-certify GSTR-9C starting from the fiscal year 2020-21.
February 1st, 2021
Union Budget 2021:
The requirement for specific professionals such as CAs and CMAs to conduct GST audits has been removed from the GST law. Section 35 and 44 have been amended accordingly. As per the amendment, taxpayers only need to file GSTR-9 annual returns on a self-certification basis on the GST portal, completely eliminating the need for GSTR-9C reconciliation statements.
However, the government is yet to clarify the financial year and date of applicability of this removal. Please note that GSTR-9C submission for the fiscal year 2019-20 remains unchanged.
Introduction to GST Audit
GST audit is the process of examining the records, returns, and other documents maintained by a taxable person. The purpose is to verify the accuracy of the declared turnover, taxes paid, refund claims, and input tax credit availed, as well as to assess compliance with the provisions of GST.
The GST Audit can take on various forms, as depicted in the flowchart provided below:
Threshold Limit for Audit under GST by CA/CMA
Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit is subject to audit. As per the current notified GST Rules, the turnover limit is above Rs. 2 crore^. Such businesses must have their books of accounts audited by a chartered accountant or a cost accountant. These taxpayers are required to electronically file the following:
- An annual return using Form GSTR 9 by December 31st of the following Financial Year
- The audited copy of the annual accounts
- A certified reconciliation statement in the form of GSTR-9C, reconciling the value of supplies declared in the return with the audited annual financial statement
- Any other particulars as prescribed
^For businesses with an annual turnover of less than Rs.5 crore, the filing of GSTR-9C for the fiscal years 2018-19 and 2019-20 has been waived off.
Rectifications to Returns After GST Audit
If any taxable person discovers any omission or incorrect details after furnishing a GST return (as a result of an audit), they can rectify the mistake subject to payment of interest. However, no rectification will be allowed after the earlier of:
(i) the due date for filing the return for the month of September or the second quarter, as applicable, following the end of the financial year, or
(ii) the actual date of filing the relevant annual return.
For example, if Mr. 'X' finds a mistake in his October 2020 return during the audit, he can rectify it by October 20th, 2021 (the last date for filing the September return) or December 31st, 2021 (the actual date of filing the relevant annual return), whichever comes earlier.
Please note that rectification will not be allowed if the results are from scrutiny or audit by the tax authorities.
Audit by Tax Authorities
The Commissioner of CGST/SGST (or any authorized officer) may conduct an audit of a taxpayer. The frequency and manner of the audit will be prescribed at a later date. The auditee will receive a notice at least 15 days prior to the audit. The audit must be completed within 3 months from the start date, although the Commissioner can extend the audit period for an additional six months with written justification.
Obligations of the Auditee
The taxable person will be required to:
- Provide the necessary facilities to verify the books of account and other required documents.
- Give information and assistance for the timely completion of the audit.
Findings of the Audit
Upon completing the audit, the officer must inform the taxable person within 30 days about:
- The findings
- The reasons behind these findings
- The taxable person's rights and obligations
If the audit reveals unpaid/short paid taxes, wrongful refunds, or incorrect input tax credits, demand and recovery actions will be initiated.
Special Audit under GST
When can a special audit be initiated?
The Assistant Commissioner may initiate a special audit based on the nature and complexity of the case and the revenue's interest. If, during any stage of scrutiny, inquiry, or investigation, it is believed that the value has not been correctly declared or that wrong credits have been claimed, a special audit can be conducted. This special audit can be carried out even if the taxpayer's books have already been audited before.```
Introduction:
GST audit is necessary at times to ensure that the correct amount of GST has been paid and that refund claims are legitimate, particularly for certain categories of taxpayers.
The due date for filing GSTR-9 and self-certified GSTR-9C for the fiscal year 2020-21 has been extended until February 28th, 2022.
May 28th, 2021
As per the outcome of the 43rd GST Council meeting, GSTR-9 will remain optional for taxpayers with a turnover of up to Rs.2 crore, while taxpayers with a turnover less than or equal to Rs.5 crore can self-certify GSTR-9C starting from the fiscal year 2020-21.
February 1st, 2021
Union Budget 2021:
The requirement for specific professionals such as CAs and CMAs to conduct GST audits has been removed from the GST law. Section 35 and 44 have been amended accordingly. As per the amendment, taxpayers only need to file GSTR-9 annual returns on a self-certification basis on the GST portal, completely eliminating the need for GSTR-9C reconciliation statements.
However, the government is yet to clarify the financial year and date of applicability of this removal. Please note that GSTR-9C submission for the fiscal year 2019-20 remains unchanged.
Introduction to GST Audit
GST audit is the process of examining the records, returns, and other documents maintained by a taxable person. The purpose is to verify the accuracy of the declared turnover, taxes paid, refund claims, and input tax credit availed, as well as to assess compliance with the provisions of GST.
The GST Audit can take on various forms, as depicted in the flowchart provided below:
Threshold Limit for Audit under GST by CA/CMA
Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit is subject to audit. As per the current notified GST Rules, the turnover limit is above Rs. 2 crore^. Such businesses must have their books of accounts audited by a chartered accountant or a cost accountant. These taxpayers are required to electronically file the following:
- An annual return using Form GSTR 9 by December 31st of the following Financial Year
- The audited copy of the annual accounts
- A certified reconciliation statement in the form of GSTR-9C, reconciling the value of supplies declared in the return with the audited annual financial statement
- Any other particulars as prescribed
^For businesses with an annual turnover of less than Rs.5 crore, the filing of GSTR-9C for the fiscal years 2018-19 and 2019-20 has been waived off.
Rectifications to Returns After GST Audit
If any taxable person discovers any omission or incorrect details after furnishing a GST return (as a result of an audit), they can rectify the mistake subject to payment of interest. However, no rectification will be allowed after the earlier of:
(i) the due date for filing the return for the month of September or the second quarter, as applicable, following the end of the financial year, or
(ii) the actual date of filing the relevant annual return.
For example, if Mr. 'X' finds a mistake in his October 2020 return during the audit, he can rectify it by October 20th, 2021 (the last date for filing the September return) or December 31st, 2021 (the actual date of filing the relevant annual return), whichever comes earlier.
Please note that rectification will not be allowed if the results are from scrutiny or audit by the tax authorities.
Audit by Tax Authorities
The Commissioner of CGST/SGST (or any authorized officer) may conduct an audit of a taxpayer. The frequency and manner of the audit will be prescribed at a later date. The auditee will receive a notice at least 15 days prior to the audit. The audit must be completed within 3 months from the start date, although the Commissioner can extend the audit period for an additional six months with written justification.
Obligations of the Auditee
The taxable person will be required to:
- Provide the necessary facilities to verify the books of account and other required documents.
- Give information and assistance for the timely completion of the audit.
Findings of the Audit
Upon completing the audit, the officer must inform the taxable person within 30 days about:
- The findings
- The reasons behind these findings
- The taxable person's rights and obligations
If the audit reveals unpaid/short paid taxes, wrongful refunds, or incorrect input tax credits, demand and recovery actions will be initiated.
Special Audit under GST
When can a special audit be initiated?
The Assistant Commissioner may initiate a special audit based on the nature and complexity of the case and the revenue's interest. If, during any stage of scrutiny, inquiry, or investigation, it is believed that the value has not been correctly declared or that wrong credits have been claimed, a special audit can be conducted. This special audit can be carried out even if the taxpayer's books have already been audited before.```
Author
Pluto Team
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