Goods service Tax is a tax levied across the entire country which came into force on 1st July 2017. GST is a self-assessment-based tax and being in its early stages, an outsized number of businessmen face hurdles to keep the compliances under control with the law in effect. Audit under GST may be a tool to stay these compliances under check and make sure the accuracy of the records maintained and also the returns submitted by the taxable person.
In this article, we’ll discuss the powerful audit mechanism in place under the GST law.

 Meaning of Audit
Audit, under GST, is defined as a process to verify the correctness of turnover declared, taxes paid, and refund claimed, input tax credit availed, and a process to assess the compliance with the provisions of the GST Act. An audit is completed by examining the records, returns, and other documents maintained by the taxable person (person subject to audit).

This process is undertaken by the taxable person himself 

Types of Audit

The types of audit conducted under GST can be classified under the following categories:

  • Audit by the taxable person
  • General Audit by tax authorities
  • Special Audit by tax authorities

 Audit by the taxable person

  • The taxable person is required to get an audit of his accounts by a Chartered Accountant or a Cost Accountant if his turnover during the financial year exceeds Rs. 2 Crore.
  • The following documents are required to be submitted up to 31st December of the next financial year:
    • Audited copy of Annual Accounts
    • Annual Return in form GSTR 9
    • Certified Reconciliation Statement in form GSTR 9C
    • Other documents prescribed[1].

* Failure to file an annual return shall attract a late fee of Rs. 200                     per day during the amount of failure, subject to a maximum of 0.25% of the said financial year’s turnover.

* This audit isn’t required to be conducted by any department of the Central Govt./State Govt./Local Authority whose books are to be audited by Comptroller and Auditor General of India or an auditor appointed for auditing the accounts of local authorities.

 General Audit by Tax Authorities

 * This audit is conducted at the discretion of the commissioner. It can either be conducted by the commissioner or anyone authorized by him.
* It shall be completed within 3 months from the date of commencement of the audit. The commissioner may extend this point period by further 6 months for reasons recorded in writing.

* The subsequent process is prescribed for the conduct of this audit:
* The taxable person shall be issued a 15 days’ notice before the beginning of the audit.
* The taxable person shall be sure to provide the required facility for verification of records and furnish information required by the officer conducting the audit.
* Within 30 days of completion of the audit, the taxable person shall be told of the findings of an audit together with reasons. He shall even be informed of his rights and obligations.
* just in case of any default or non-compliance is found during the proceedings, recovery actions shall be initiated against the taxable person.

 Special Audit by Tax Authorities

* A special audit is conducted where a direction is issued to the taxable person by any officer not below the rank of Assistant Commissioner, after taking the prior approval of Commissioner.
* The direction are often issued if the Assistant commissioner forms an opinion during an investigation that value isn’t correctly declared or Input diminution not availed within normal limits.
* Where the direction is issued, the audit shall be conducted by a controller or a price Accountant nominated by the Commissioner.
* The cut-off date for completion of the audit is 90 days which may be further extended by 90 days on an application made to him by taxable person/C.A/C.W.A.
* The determination of expenses of examination and audit together with the auditor’s remuneration shall be made by the Commissioner.
* The taxable person shall be an inexpensive opportunity of being heard if any findings of the special audit are to be used against the taxable person in any proceedings under this Act.
* just in case of any default or non-compliance of the Act, recovery actions shall be initiated against the taxable person.

Esarwa is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how Esarwa can help you with GST compliance automation, contact us through

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