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Published on:
February 20, 2023
By
Paramita

What is the Time Limit for GST Audit under Section 65?

GST audit is a process that is conducted to ensure that businesses comply with GST rules and regulations. The aim of this article is to provide clarity on the time limit for GST audits under Section 65.

Section 65 of the GST Act specifies the provisions for the audit of a registered person. According to the Section, the Commissioner or any officer authorized by him can conduct an audit of a registered person. The audit can be conducted at any time during the financial year or within two years from the date of filing of the annual return for the financial year to which the audit relates.

"The period of audit to be conducted under sub-section (1) of section 65 shall be a financial year 1 [or part thereof] or multiples thereof". This implies that the audit scope may extend to cover a full fiscal year, a segment of it, or multiple consecutive financial years as deemed appropriate. (Refer to Link). Therefore, if the annual return is filed after the due date, the two-year time limit for conducting an audit will still be calculated from the date of filing of the annual return and not from the end of the financial year.

It is also important to note that the time limit for conducting an audit can be extended by the Commissioner for a period of six months. However, the Commissioner can only extend the time limit if he is satisfied that there is a reasonable cause for the delay.

If the Commissioner or the authorized officer is of the opinion that the records or other documents that are required for the audit are not being maintained or are not being produced, he can issue a notice to the registered person to produce the documents within fifteen working days.

Once the audit is completed, the Commissioner or the authorized officer will issue a report to the registered person. The report will contain the findings of the audit, any discrepancies that were noticed, and the amount of tax and interest that is payable, if any.

In conclusion, the time limit for conducting a GST audit under Section 65 may extend to cover a full fiscal year, a segment of it, or multiple consecutive financial years as deemed appropriate. This time limit can be extended provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months. It is important for businesses to maintain proper records and produce them when required to avoid any penalty or interest due to non-compliance.

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Updated on:
January 14, 2024