May 5, 2023

Special Audit in GST- All You Want to Know

Introduction to Special Audit in GST

Under GST, a taxpayer is required to self-assess and pay taxes on the supplies made. However, in some cases, there may be discrepancies or doubts in the returns or records filed by a taxpayer. In such cases, the tax authorities may order a Special Audit.

Principles of audit by the department in GST regime:

The principles of audit by the department in the GST regime are as follows:

1. Objectivity: The audit should be conducted in an objective and impartial manner, without any bias or prejudice towards the taxpayer.

2. Transparency: The taxpayer should be provided with all the information related to the audit process and its findings. The taxpayer should also be given an opportunity to provide their response to the findings.

3. Timeliness: The audit process should be conducted in a timely manner, without any undue delay. The taxpayer should be informed of the audit process and its findings within a reasonable time frame.

4. Confidentiality: The audit process and its findings should be kept confidential, and should not be disclosed to any unauthorized person or entity.

5. Compliance: The audit process should ensure that the taxpayer has complied with all the provisions of the GST law, and any non-compliance should be identified and addressed.

6. Communication: The audit process should involve effective communication between the tax department and the taxpayer, to ensure that there is a clear understanding of the audit process and its findings.

7. Professionalism: The audit should be conducted by qualified and trained professionals, who have the necessary expertise and knowledge to conduct a thorough and effective audit.

Rights and Benefit to the taxpayer in audit:

Taxpayers have certain rights and benefits during an audit conducted by the department in the GST regime. Some of these include:

1. Advance intimation: The taxpayer should be informed at least 15 days before the audit is conducted, in writing, specifying the place and time of the audit.

2. Assistance during audit: The taxpayer can provide assistance during the audit and cooperate with the auditor in the discharge of his duties.

3. Confidentiality of information: The taxpayer's confidential and sensitive information should be kept confidential by the auditor.

4. Provisional attachment of property: The auditor should not recommend provisional attachment of the taxpayer's property during the audit proceedings.

5. Provisional assessment: If the taxpayer is unable to produce the required documents during the audit, he can request for a provisional assessment of the tax liability.

6. Rectification of errors: If any errors or discrepancies are found during the audit, the taxpayer should be given an opportunity to rectify them and pay the correct amount of tax.

7. Fair and reasonable opportunity: The taxpayer has the right to be heard and should be given a fair and reasonable opportunity to present his case before any adverse action is taken against him.

8. Mutual agreement procedure: If the taxpayer is not satisfied with the outcome of the audit, he can request a mutual agreement procedure to resolve the dispute.

These rights and benefits help ensure that the audit process is fair and transparent, and that taxpayers are not subjected to undue harassment or inconvenience.


A Special Audit is a powerful tool that the tax authorities have at their disposal to ensure compliance with the provisions of the GST law. Taxpayers should maintain proper records and file their returns accurately and on time to avoid the possibility of being subjected to a Special Audit.


What is a Special Audit under GST?

Special Audit is an audit of the records and books of account of a registered taxpayer conducted by a Chartered Accountant or a Cost Accountant nominated by the Commissioner. The main purpose of a Special Audit is to verify the correctness of the returns filed by the taxpayer, the taxes paid by them and to determine whether they have complied with the provisions of the GST law.

When can a Special Audit be ordered?

The tax authorities may order a Special Audit in the following circumstances:

1. If the taxpayer’s records are incomplete or not kept in a proper manner.

2. If the taxpayer has not maintained records or returns as required under the GST law.

3. If the taxpayer has claimed excessive Input Tax Credit (ITC) or has availed ITC on the basis of fake or invalid invoices.

4. If the taxpayer has not paid the correct amount of tax or has not paid tax at all.

5. If the taxpayer has not filed their returns on time or has filed incorrect or incomplete returns.

6. If the taxpayer is unable to explain any discrepancy or mismatch in their returns.

Who can order a Special Audit?

A Special Audit can be ordered by the Commissioner of Central Tax or the Commissioner of State Tax, on their own or on the recommendation of an officer not below the rank of Deputy/Assistant Commissioner.

What is the procedure for a Special Audit?

If a Special Audit is to be ordered, the taxpayer will be informed of the same in writing, and a copy of the order will also be sent to the nominated Chartered Accountant or Cost Accountant. The audit will be conducted in the presence of the taxpayer or their authorized representative. The Chartered Accountant or Cost Accountant will submit a report within 90 days, or within an extension period of up to 90 days, detailing the findings of the audit.

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