GST Audit

Applicability of Audit under GST

If the aggregate turnover during FY exceeds Rs. 2 Cr from sale of goods or services every registered person must get its accounts audited . Whereas Calculation of turnover is based on PAN i.e. all sale of goods/ services shall be taken for computing the limit of Rs. 2 Cr.

For all registered taxpayers GST audit limit is same, i.e. no separate limit is specified for special category states or UTIs

Exception- in case Central Government/ State Government/ Legislative Assembly provision for GST audit will not be applicable, they are subject to audit by CAG or any Statutory Auditor appointed for auditing the accounts of Legislative Assembly.

Requirement of GST Audit-

GST Audit is required for the following reasons-

  1. It is the self-assessment tax regime so GST audit is required for ensuring that tax payer has correctly assessed his liability.
  2. It involves examination and evaluation of records, GST returns and other related documents.
  3. To obtain reasonable assurance and ensure that financial statements are free from any material misstatements.

Documents to be furnished under GST Audit-

  1. Annual Return
  2. Copy of Audited Annual Accounts
  3. Copy of reconciliation Statement

Types of GST Audit-

Under section 35 (5) of GST law, three types of GST audit is being specified-

Sr. No. Name of Audit Prescribed Authority Condition
1. Based on Turnover Chartered Accountant/Cost Accountant Turnover Exceeds Rs 2 Cr.
2. General Audit GST Commissioner or any other officer authorized by him On order passed by Commissioner, giving prior notice of 15 days.
3. Special Audit Chartered Accountant/Cost Accountant nominated by Commissioner On order passed by Deputy/Assistant Commissioner with prior permission of Commissioner.

 Calculation of Aggregate Turnover under GST

Following sale shall be included,for computing the aggregate turnover-

  1. Value of all inter-state taxable supply
  2. Value of all intra- sate taxable supply
  3. Value of all exempt supplies
  4. Value of all export supplies
  5. Job work supplies on principal to principal basis
  6. Zero rated supplies
  7. Any supply to agent/ job work on behalf of principal

Following shall be excluded,for computing the aggregate turnover –

  1. Taxable supply on which reverse charge is applicable
  2. All taxes and cess paid under GST
  3. Goods supplied and received back from job work

Tenure of Retention of Accounts under GST
From the due date of furnishing annual returns,every registered person must retain books of accounts for the period of 72 months

Provisions if failed to maintain the accounts

  • If the registered person fails to maintain books of accounts as per the GST act then the Officer will determine the tax payable on non-accounted goods/ services in the same manner as if it has been supplied by such person.
  • Provisions of Section 73 and 74 are applied for determining the tax amount.

Qualification of Auditor for GST Audit

As per Section 35 of GST Audit, audit can be performed by a Chartered Accountant or a Cost Accountant. But there are exceptions in the provisions-

  1. An Internal Auditor not allowed to be appointed as a GST Auditor
  2. GST practitioner cannot perform GST Audit

 Audit in case of multiple Branches-

– While computing the limit of Rs. 2 Cr., turnover of all the branches of an organization is be considered and if the cumulative turnover exceeds the limit of Rs. 2 Cr then every branch will be liable for GST audit irrespective of the fact that their individual turnover does not exceed the specified limit.

– Organization can appoint either the single auditor for all branches or separate auditor for each branch.

Accounts to be reviewed under GST Audit-

  1. Purchase Register
  2. Sale Register
  3. Stock Register
  4. GST Expenses
  5. Statement congaing Input Tax Credit availed and utilized
  6. Output Tax Challan
  7. Statement of E-way Bill generated during the period
  8. Any changes made under GST during the period

Forms to be filled under GST Return

GSTR 9 For Filling Annual Return
GSTR 9C For Certified Reconciliation Statement

Due Date of GST Audit and Penalty for Late filing of GSTR 9C
As per the GST Act, due date of audit and annual return is specified as 31st December of subsequent financial year and in case of failure in complying with the same then as per act no specific penalty is prescribed. So it will be covered under the head of general penalty of Rs. 25000.

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