An audit is a verification process. It is used to confirm a taxpayer’s financial records and legal documents. Usually, tax department carries out audits to check the accuracy of GST turnover declarations and tax payments. They’re also used to check the returns filed by the taxpayer. In this way, audit under GST helps to confirm businesses’ compliance ratings.
Threshold for Audit under GST
If a business’ turnover exceeds 1 crore in a fiscal year, the business owner is liable for an audit session. A Chartered Accountant will conduct the audit.
Requirements for Audit under GST
The taxpayer will file the following electronically:
- an annual return using the Form GSTR 9B,
- the audited copy of annual accounts,
- a reconciliation statement,
- Other details as prescribed.
Audit by Tax Authorities
The Commissioner of CGST/SGST (or any officer authorized by him) may conduct audit of a taxpayer. The frequency and manner of audit will be prescribed later.
- The auditee will get a notice at least 15 days before.
- Tax authorities will complete the audit within 3 months from date of commencement.
- The Commissioner can extend the audit period for a further six months. For this purpose. he will give the reasons in writing.
Therefore, the taxable person will provide the necessary facility to verify the relevant documents.
Special Audit under GST
When is a special audit needed?
The Assistant Commissioner can order a special audit if the regular audit reveals inconsistencies in the taxpayer’s records. These inconsistencies could either include inaccurate tax declarations or incorrect credits availed. A Chartered Accountant or Cost Accountant will conduct the special audit process. Here, the Commissioner will nominate the CA.
The authorities can conduct a Special audit even if they have audited the taxpayer’s books before.
Time limit for special audit
The auditor will have to submit the report within 90 days. But, the tax officer can further extend this for 90 days on an application made by the taxable person or the auditor.
Results of the auditing process
At the end of the prescribed audit period, the tax official will declare the findings of the audit. The Assistant Commissioner will get the audit report. The official should declare any inconsistencies between the audited statement and taxpayer’s information. The taxpayer will have a chance to be heard after declaration of the findings.
Provisions related to special audit:
Authorities will convict the taxpayer under Section 73 (non-fraud case) or Section 74 (fraud case), if they are guilty of the following:
- Tax not paid
- Short payment of tax
- Incorrect tax refunds
- Improper availing or utilizing of ITC
Findings of Audit
The officer will inform the taxable person about the following within a period of 30 days:
- the findings,
- their reasons, and
- the taxable person’s rights and obligations
The authorities will start demand and recovery actions if the audit finds:
- Unpaid tax
- Short tax
- Wrong refund
- Wrong input credit availed.