All you need to know about the audit under the GST regime

The objective behind the GST audit is to examine the veracity and accuracy of the expert’s presented taxes paid, turnover, and input tax credit claimed. Earlier, all the businesses’ whole turnover exceeding two crores oblige to submit financial audit reports. With the inception of the financial bill, 2021, that requirement removes, and it is not compulsory to file such an audit.

Defining audit under the GST:

According to section 2(13) of the CGST act, 2017, the audit is a verification and examination of records and other relevant documents presented or maintained by an individual or entity having GST registration in India. It helps verify the integrity of declared turnover, refund claimed, taxes paid, and input tax credit availed. That’s why such audits help evaluate the registered person’s compliance with rules and provisions of the act.
While the compulsory audit is not needed, there are plenty of other audits under the GST.

Are tax authorities allowed to conduct GST audits?

GST regime endows business owners with accountability and responsibility to maintain tax compliance via self-evaluation. Nonetheless, to make sure businesses are compliant, the system has several audit mechanisms in force. The Assistant Commissioner assign to ask a nominated CA or cost accountant to carry out the audit. There are being asked to do that when authorities have a suspicion of misconduct or failure to report the company’s profits or credit in stipulated time. This permits authorities to leverage the assistance of tax experts in deciding the liability of the company.
According to section 65 of the CGST act, 2017, an officer or commissioner by him/her via an order might undertake an audit of a registered individual. Authority’s general or special order would determine the period and the manner of the audit. It empowers officers to conduct an audit at a registered person’s business or workspace. A person will notify via notification at least a fortnight before initiation.
During the audit, business owners should offer all the required facilities to authorities, including access to books of account and other records. It takes around three months. Nonetheless, if needed, the commissioner can extend it up to six months by written reasoning.

registered person:

The registered person should offer authorized officers access to their business place to inspect financial documents. Also, businesses oblige to prepare their financial statement and books of accounts for inspection. During the audit, officials would go through financial records and documents to make sure they abide by the stated guidelines.

They would also verify the genuineness of their income, refunds, exemptions, and deduction claimed, with ITC availed and liabilities paid. If they find any discrepancies, officials would intimate the registered person and submit an audit report within one month of its closure. According to the notice, if the registered person cannot make corrections, the authorities would begin proceedings according to sections 73 and 74.

Few things you need to know about the GST audit:

  • The audit has to do within 90 days from the date of initiation mostly. If the commissioner satisfies that an audit is not possible to do in three months, he/she might give an extension of six months with a written record.
  • The initiation of audit refers to the date on which the registered individual makes available the needed records and other documents or actual institution of audit at the business place, whichever is last.
  • During the audit, an authorized person might need the registered person to offer the required facility to verify and inspect the books of account or other documents as needed. Also, they might need individuals to present information and provide assistance to complete the audit promptly.
  • After the audit, the officer should inform the person of the following details within one month;
  • Individual’s rights and obligations.

  •  If the audit results in a deduction of tax not paid or short paid, erroneously refunded, or ITC wrongly availed.
  • According to section 73 of the CGST act, 2017, it would decide whether the default utilizes for any reason other than fraud, wilful suppression, and misrepresentation of facts.

When does the officer order the GST audit?

During the stage of scrutiny, any officer not below the rank of Assi. Commissioner suspects wrong play; they might take prior approval of the commissioner and ask for an audit. In such scenarios, the office needs to direct the person in writing to get their records audited by CA before filing a GST return online.
The nominated CA or cost accountant would fine an audit report in three months to the Assi. Commissioner with all the defaults. Suppose the appointed accountant or commissioner asks for an extension, the Assi. Commissioner might give an extension of three months for completion.
The registered person would give a chance to present their side of things concerning any material collected during the special audit that might use against them. Also, such audit and examination expenses, including the remuneration of CA, are the commissioner’s responsibility. If such audit results in any discrepancies or defaults, the higher officer would start action under sections 73 and 74.

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