According to Section 35 (5) of the CGST Act, registered taxpayers in India with an aggregate turnover of more than 2 crores in a fiscal year (FY) must have their accounts book audited by an authorised Cost Accountant or a Chartered Accountant. A copy of the GST audit report, financial statements, and reconciliation statement must be submitted by the taxpayer registered under GST using Form GSTR 9C. The concerned taxpayer is required to submit reports to the tax department once per fiscal year.
When must a GST audit be performed?
GST audits are required in the following three situations:
- ● If the turnover exceeds Rs. 2 crores, a CA audit is required.
- ● The Commissioner conducts routine audits.
- ● CA’s Special Audit
GST Audit Objectives Under the Law
The GST audit has the following objectives, according to the audit definition in section 2(13) of the Central Goods and Services Tax (CGST) Act:
- An audit is a thorough examination of returns, records, and other similar documents.
- Returns, records, and other documents must be issued or maintained in accordance with GST or other laws.
- The examination is carried out in order to verify
- Turnover Declared
- Amount Paid in Taxes
- Refund Requested
- Input Tax Credit Obtained
The auditee’s compliance with the laws of the GST Act and its rules is also assessed during the inspection.
The purpose of a GST audit is to ensure that the declared turnover, claimed refunds, input tax credit, and taxes paid are correct. The verification is carried out in accordance with the GST Act. Furthermore, the GST Audit ensures that the intentions are in accordance with GST Rules.
GST Audit Types in India
GST audits are classified into three types.
These audits and their specifications are as follows:
GST Turnover Audit: This type of audit is conducted by a Cost Accountant or Chartered Accountant appointed/hired by the taxpayer. According to the CGST Act, this audit is performed when the taxpayer’s turnover exceeds the limit of 2 crores and they need audits for their records and accounts. The CGST/SGST Commissioner or any other officer accredited by them conducts the normal/general GST audit. It is carried out on the Commissioner’s order, with the taxpayer given 15 days’ notice.
Special GST Audit: A Cost Accountant or a Chartered Accountant accredited by the
Commissioner conducts the Special GST Audit. It is carried out on the order of the Assistant or Deputy Commissioner, with the Commissioner’s prior approval.
GST audit entails a great deal of responsibility for the auditor, who must stay up to date on all changes to the act and gain a thorough understanding of the auditee’s business. While auditing, the auditor must use his expertise and legal knowledge.
When does a special GST audit become necessary?
Special GST audits are required when the authority believes the suspect has incorrectly stated the taxable values of the assets to the authority. It is also taken out when the suspect fails to provide the Tax Department with the correct tax credit for the used input.
What is the deadline for requesting a special GST audit?
The auditors must submit the report within 90 days of the audit. The time limit can be extended for more than 90 days after the suspect or the auditor.
What items are excluded from the annual turnover calculation?
To calculate the accumulated turnover, taxes relating to the SGST, CGST, and IGST acts, the tax amount paid for the reverse charge mechanism, the tax amount paid for the inward supply of services and goods, and the cost of non-taxable goods such as petrol, alcohol, and so on should be excluded.
What factors are considered when calculating annual Turnover?
To calculate annual turnover, the company or business should include the amount earned from selling services or goods over a specified time period.
What is the purpose of the GST Audit?
GST auditing is critical because it is the only way to determine whether the declared turnover, tax amount paid, credit if input tax is availed, and claimed refund are correct or not. It is also an important audit for determining compliance with GST provisions and rules.
Who will request and oversee a special audit?
The Assistant Commissioner will order and conduct an audit under GST in writing with the Commissioner’s permission.
Who is qualified to conduct an audit under GST?
An audit under GST can be conducted by a chartered accountant or a cost accountant. To issue a GST Audit report, the chartered accountant must not be a registered GST practitioner.
What is the GST annual turnover limit?
GST has a yearly turnover of 20 lakhs. If a company’s annual revenue exceeds 20 lakhs or 40 lakhs for good suppliers, it should register for the Goods and Services Tax scheme.