GST audit is the process of verifying records, returns, and other associated documentation kept by GST-registered persons. The purpose of a GST audit is to verify the accuracy of the declared turnover, taxes paid, claimed refunds, and input tax credit (ITC), while also ensuring that all GST compliance requirements are met accurately. It requires that taxpayers analyze their GST tax burden, complete the required returns, and pay taxes in accordance with the GST audit checklist. The GST Act establishes a robust audit system to verify proper and accurate filing as well as taxpayer tax liability.
Section 35 of the CGST Act states that every registered person under GST whose aggregate turnover exceeds Rs. 5 (five) crore in a fiscal year is subject to GST audit. If the registered person’s turnover surpasses INR 5 crore in a fiscal year, then the registered person must file GSTR-9C along with a reconciliation statement duly certified in Form GSTR-9C. The turnover limit for mandatory GSTR 9 filing is Rs.2 crore, while the turnover limit for GSTR 9C is Rs.5 crore. The Central Board of Indirect Taxes and Customs (CBIC) has granted an exemption to GST-registered taxpayers with annual aggregate revenue of up to Rs.2 crore from the requirement of filing Form GSTR-9.
GSTR-9- GTR 9 is an annual return that GST-registered taxpayers must file each year. It contains information about outgoing and inward supplies made/received throughout the relevant fiscal year under various tax heads, such as CGST, SGST, IGST, and HSN codes. It is a compilation of all monthly/quarterly returns (GSTR-1, GSTR-2A/2B, GSTR-3B) filed in that year. Due date for filling GSTR-9 is 31st December of the next financial year.
GSTR-9C – GSTR-9C is a reconciliation statement that needs to be filed on an annual basis by taxpayers whose total turnover during a fiscal year surpasses five crore rupees. It must provide a self-certified copy of the audited annual accounts and a reconciliation statement in form GSTR-9C. Due date of filling GSTR- 9-Cs 31st December of the next financial year.
Aggregate turnover=Value of all taxable supplies (inter and intra state) + exempt supplies + export supplies of all goods & services.
The total turnover should be calculated based on the PAN meaning that once the turnover under a particular PAN exceeds Rs. 2 crore, all the business entities registered under GST using that PAN will be required to undergo a GST audit for the fiscal year.
According to the GST Act, the due date for audit and annual return is the 31st December of the following fiscal year, and no specific penalty is defined in the event of non-compliance. As a result, it will be covered under the general penalty of Rs. 25000.
This audit is conducted by tax authorities under Section 65 of CGST Act. The commissioner or any officer authorized by him may undertake an audit of the taxpayer after giving at least 15 days’ notice. This audit must be completed within three months of its start date. In case the audit identifies unpaid or underpaid taxes, incorrect refund claims, or erroneous input tax credit (ITC) claims, appropriate action will be taken for demand and recovery.
According to the GST Audit rules, a registered taxpayer with an aggregate turnover surpassing Rs. 2 crores in a financial year must have their accounting records and returns audited. Additionally, they are obligated to electronically file GSTR 9, GSTR 9C, and provide an audited copy of their annual accounts.
During any stage of inspection, inquiry, or investigation, the assistant commissioner (with prior direction of the commissioner) may order that a registered person’s books and records be reviewed and audited by a Chartered Accountant or Cost Accountant nominated by the commissioner under Section 66 of CGST Act Within 90 days, the auditor (CA or CMA) must provide a report. If the audit identifies unpaid/short-paid tax or incorrect refund/ITC claims, demand and collection action will be pursued. Audit expenses, including auditor salary, will be determined and paid by the commissioner.
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