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Published on:
March 21, 2023
By
Harshini

GST Audit under Central Goods and Services Tax Act, 2017

Under the Central Goods and Services Tax Act, 2017, GST audit is a process of verifying the accuracy and correctness of the returns and the compliance with the provisions of the GST law by a registered taxpayer. GST audit is carried out by a GST Auditor who is appointed by the Commissioner of Central Tax.

The purpose of GST audit is to ensure that the taxpayers have correctly calculated and paid the GST liabilities, have properly maintained the records and accounts, and have complied with the provisions of the GST law. The GST Auditor conducts the audit by verifying the returns and other documents and records maintained by the taxpayer. The audit is done to ensure that the taxpayer has complied with the following:

1. Proper maintenance of books of accounts and records as per the GST law.

2. Accurate calculation and timely payment of GST liabilities.

3. Timely and correct filing of GST returns.

4. Adherence to GST rules and regulations.

5. Correct availing and utilization of Input Tax Credit (ITC).

Once the audit is completed, the GST Auditor prepares an audit report, which is submitted to the Commissioner of Central Tax. If any discrepancies or non-compliances are found during the audit, the taxpayer will be required to take necessary corrective measures and may also be subject to penalties or interest as per the GST law.

It is important for taxpayers to ensure that they comply with the provisions of the GST law and maintain proper records and accounts to avoid any penalties or interest charges that may arise from non-compliance during the GST audit.

Timeline for GST audit

The timeline for GST audit under the Central Goods and Services Tax Act, 2017, is as follows:

1. Appointment of GST Auditor: The Commissioner of Central Tax may appoint a GST Auditor to carry out the audit of the taxpayer. The taxpayer will receive a notice from the GST Auditor informing them of the date and time of the audit.

2. Conducting the audit: The GST Auditor will carry out the audit of the taxpayer's records and accounts, and verify the accuracy and correctness of the returns filed by the taxpayer. The audit may take place at the taxpayer's business premises or the GST Auditor's office.

3. Submission of audit report: The GST Auditor is required to submit the audit report within 3 months from the date of commencement of the audit. If the audit is not completed within the specified time, the GST Auditor must inform the Commissioner of Central Tax and seek an extension.

4. Rectification of errors: If any errors or discrepancies are found during the audit, the taxpayer is required to rectify them by filing a revised return or making the necessary adjustments in the next return, subject to the time limit for such rectification as per the GST law.

5. Notice of findings: The taxpayer will receive a notice of the findings of the audit from the Commissioner of Central Tax. If there are any discrepancies or non-compliance with the GST law, the taxpayer may be required to pay additional taxes, interest, or penalties, and may also face other consequences as per the GST law.

It is important for taxpayers to be prepared for the GST audit and ensure that their records and accounts are accurate and complete. This can help to avoid any penalties or other consequences in case of non-compliance with the GST law.

Documents required for GST audit

The documents required for GST audit under the Central Goods and Services Tax Act, 2017, include:

1. Annual return in Form GSTR-9: The taxpayer is required to furnish the annual return in Form GSTR-9, which provides a summary of all the transactions carried out during the financial year.

2. Reconciliation statement in Form GSTR-9C: The taxpayer is required to prepare a reconciliation statement in Form GSTR-9C, which is certified by a Chartered Accountant or Cost Accountant. This statement reconciles the figures reported in the annual return with the audited financial statements of the taxpayer.

3. Copies of the audited financial statements: The taxpayer is required to furnish copies of the audited financial statements, which include the balance sheet, profit and loss account, and other relevant statements.

4. Details of outward and inward supplies: The taxpayer is required to provide details of all the outward and inward supplies made during the financial year, including details of Input Tax Credit (ITC).

5. Details of tax paid: The taxpayer is required to provide details of all the taxes paid during the financial year, including Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST), and Compensation Cess.

6. Records and accounts maintained by the taxpayer: The taxpayer is required to maintain certain records and accounts as per the GST law, and these records and accounts may be examined during the GST audit. The records and accounts that may be required include invoices, bills of supply, debit notes, credit notes, payment vouchers, and other relevant documents.

It is important for taxpayers to maintain accurate and complete records of their transactions throughout the year, as these records are the basis for the annual return and reconciliation statement, and may also be examined during the GST audit.

FAQs

Here are some additional points to consider regarding GST audit under the Central Goods and Services Tax Act, 2017:

1. Who can conduct GST audit?

The GST audit can be conducted by a GST Auditor who is appointed by the Commissioner of Central Tax.

2. When is a GST audit conducted?

The GST audit is conducted annually after the end of the financial year. The Commissioner of Central Tax may also order a special audit at any time, in case of any suspicion of tax evasion or non-compliance.

3. What are the documents required for GST audit?

The taxpayer is required to furnish the following documents for GST audit:

1. Annual return in Form GSTR-9.

2. Reconciliation statement in Form GSTR-9C, which is certified by a Chartered Accountant or Cost Accountant.

3. Copies of the audited annual accounts.

4. Details of outward and inward supplies, including details of Input Tax Credit (ITC).

5. Details of tax paid, including Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST), and Compensation Cess.

6. Records and accounts maintained by the taxpayer.

4. What is the timeline for GST audit?

The GST audit is required to be completed within three months from the date of commencement of the audit. The taxpayer is required to be provided with the audit findings within 30 days of the completion of the audit.

5. What are the consequences of non-compliance during GST audit?

If any discrepancies or non-compliances are found during the GST audit, the taxpayer will be required to take necessary corrective measures and may also be subject to penalties or interest as per the GST law. Additionally, the Commissioner of Central Tax may initiate further action, including the filing of a demand notice or even prosecution, in case of serious non-compliance.

6. Is GST audit mandatory for all taxpayers?

No, GST audit is not mandatory for all taxpayers. It is only required for those taxpayers whose aggregate turnover exceeds Rs. 2 crores during a financial year. However, the Commissioner of Central Tax may order a special audit at any time, even if the taxpayer's turnover is less than Rs. 2 crores, in case of any suspicion of tax evasion or non-compliance.

7. What is the penalty for non-compliance with GST audit requirements?

If a taxpayer fails to comply with the GST audit requirements, the Commissioner of Central Tax may impose a penalty of up to Rs. 25,000.

8. Can a taxpayer rectify the errors found during the GST audit?

Yes, the taxpayer can rectify the errors found during the GST audit by filing a revised return or making the necessary adjustments in the next return, subject to the time limit for such rectification as per the GST law.

9. Can the taxpayer appeal against the findings of the GST audit?

Yes, the taxpayer can appeal against the findings of the GST audit by filing an appeal before the appropriate appellate authority.

10. What is the role of the GST Auditor during the audit?

The GST Auditor is responsible for verifying the accuracy and correctness of the returns and compliance with the provisions of the GST law by the taxpayer. The GST Auditor is required to examine the records and accounts maintained by the taxpayer and verify the returns filed by the taxpayer. The GST Auditor is also required to prepare an audit report and submit it to the Commissioner of Central Tax.

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