Ultimate Guide to GST & GST Audits | Expert Insights & Tips
Written by gkkedia Dt. February 18th, 2020
GST is introduced by Finance Minister of India on 1st july 2017 . It is called one nation one tax . It is a two tier system . Under GST structure both central and state govt levied a tax respectively.it leads to removal of cascading effect. Tax paid on inputs and services is taken as credit while making payment of GST on outward supplies.
Further to know that whether the taxpayer has correctly self-assessed his tax liability a robust audit mechanism is must. Various measures are taken by government for implementation of GST and audit is one of them.
GST audit is similar as audit. It involves examination of records, returns, and other documents maintained by a GST registered person it also ensures correctness of turnover declared, taxes paid, and refund claimed, input tax credit availed.
Types of GST audit
|Turnover based audit
|Chartered accountant or cost accountant appointed by the taxpayer u/s 35(5) CGST Act, 2017
|If the aggregate turnover of registered person during a financial year exceeds two crore rupees specified in 80(3) of CGST Rules, 2017.
|Normal audit/general audit
|Commissioner or any other officer authorized by him. In terms of Section 65 of the CGST Act, 2017 read with Section 20(xiv) of the IGST Act, 2017 and Section 21(xv) of UTGST Act, 2017.
|On order of commissioner by giving 15 days prior notice
|A chartered accountant or cost accountant in terms of Section 66 of CGST Act, 2017 read with Rule 102 of CGST Rules, 2017.
|On order of deputy/assistant commissioner with prior approval of commissioner
Turnover-based audit under section 35(5) of cost act
If the annual turnover of a registered taxpayer is more than rest. 2 crores in a financial year, he is required to get his accounts audited by a chartered accountant or cost accountant every year.
Aggregate turnover is calculated as follows:
Aggregate turnover = value of all taxable (inter-state and intra-state) supplies + exempt supplies + export supplies of all goods and services
The total turnover calculation must be pan-based, which means that once the turnover under the plan is more than rest. 2 crores all business entities registered under GST for that pan will be liable for GST audit for a financial year.
Items included while calculating turnover:
- All taxable (inter-state and intra-state) supplies other than supplies on which reverse charge is applicable. (Example- if a supplier of Amazon supplies goods to a customer then Amazon is liable to pay tax under reverse charge if the person supplies goods is not liable for registration., ola , uber, urban clap, etc.)
- All exempt supplies included zero rated supplies for example- petrol , diesel , natural gas ,etc
- Supplies of goods through agents.
- Supplies made by person having establishment in one state and other establishment of another state ( deemed as distinct persons) example- Mr. a having head office in Delhi supplies goods to his branch located in Maharashtra is included in turnover as both establishment is deemed is distinct persons.)
- All taxes other than cgst , sgst , igst is also included while compute limit of turnover. (Ex- municipal tax, entertainment tax paid on sale of movie tickets.
Qualification of GST auditor & eligibility
Only a chartered accountant or a cost accountant can perform a gst audit u/s 35 of CGST Act, 2017
Points to be noted:
- An internal auditor can’t be appointed as a GST auditor.
- Gst practitioner is not allowed to perform gst auditor.
Forms for annual return and GST audit:
|Type of taxpayer:
|Form to be filed
|Whether or not applicable to gst audit:
|A regular taxpayer filing gstr 1 and gstr 3b
|A taxpayer under composition scheme
|Applicable for gst audit:
|Taxpayers whose turnover exceeds Rs. 2
crores in Preceding Financial Year.
Submission of GST audit report & annual return:
The finalized GSTR-9C can be certified by the same ca who conducted the GST audit.
The following must be reported and certified by the GST auditor or the certifier:
- Whether or not all the requisite accounts or records are maintained.
- Whether or not the financial statements are prepared as per the books of accounts maintained at the principal place of business or additional place of business of the taxpayer.
- Certify the accuracy of information in GSTR-9C.
- To list down the audit observations or reservations or comments, if any.
Documents to be furnished by the taxpayer:
- Audited financial statements (which is pan-based)
- Annual return in form GSTR-9 (for every gstin)
- Certified reconciliation statement in form GSTR-9C, reflecting reconciled values of supplies and tax amounts declared in GSTR-9 compared to audited financials in part-a, along with the audit report in part-b.
Due dates for submission of GST audit report:
- GSTR-9 and GSTR-9C are due on or before 31st December* of the subsequent fiscal year.
- Special note: *GSTR-9 filing for businesses with turnover up to rs 2 crore made optional for FY 2017-18 and FY 2018-19.
Penalty for not submitting GST audit report:
There is no specific provision. Hence, it is subject to a general penalty of Rs.25, 000 In terms of section 125 of CGST act 2017.
FORMS ISSUED UNDER GST AUDIT
- FORM ADT 1: The audit will be conducted at the place of business of the registered person. Intimation of audit is to be issued to the registered person at least 15 working days in advance in accordance with rule 101(2) in form ADT -01 And the audit is to be completed within 3 months from the date of commencement of audit which may be extended by the commissioner, where required, by further period not exceeding 6 months.
- FORM ADT -2: On audit completion information is provided to the registered person including the findings in form ADT -02 within thirty days
- FORM ADT-03: After commencement of audit and before completion of any scrutiny, enquiry, investigation or any other proceedings under the Act, may direct a registered person to get his books of accounts audited by an expert. Such direction is to be issued in accordance with the provision of Rule 102 (1) FORM GST ADT-03.
- FORM ADT-04: The Chartered Accountant or the Cost Accountant so appointed shall submit the audit report, mentioning the specified particulars therein, within a period of 90 days, to the Assistant Commissioner in accordance with provision of Rule 102(2) FORM GST ADT-04.