GST audits are necessary at times to maintain a check and examine whether the correct GST is being paid and refund claimed, especially for certain categories of taxpayers. In this article, we will learn what is a GST audit and the various types of GST audits.
Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the compliance with the provisions of GST.
GST audits can be of different types as listed below:
Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit of Rs.2 crore was subjected to a statutory audit under Section 35(5) of the Central Goods and Services Tax (CGST) Act*. Such businesses were to get their books of accounts audited by a chartered accountant or a cost accountant.
*However, in Finance Act 2021, Section 35(5) of the CGST Act was amended to remove the statutory audit requirement under Section 35(5). This was further notified in CGST Notification No. 29/2021–Central Tax dated 30th July 2021 and came into effect from 1st August 2021. The audit requirement was instead replaced by a self-certified Form GSTR-9C statement. This must be filed on the GST portal or through a facilitation centre by taxpayers whose turnover exceeds Rs.5 crore in a financial year, along with other documents such as a copy of the Audited Accounts and Annual Return in form GSTR-9.
The taxable person will be required to:
On conclusion of an audit, the officer will inform the taxable person within 30 days of:
The above will need to be communicated to the taxpayer in in FORM GST ADT-02. If the audit results in the detection of unpaid/short paid tax or wrong refund or wrong input tax credit availed, then demand and recovery action will be initiated.
On conclusion of the special audit, the taxpayer will be informed of the findings of the special audit in FORM GST ADT-04. Further, they will be given an opportunity of being heard. If the audit results in detection of unpaid/short paid tax or wrong refund or input tax credit wrongly availed then demand and recovery actions will be initiated.
For further understanding, read our articles on GST audit:
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