Introduction

The concept of a GST audit in India has undergone a major change in recent years. For FY 2025–26, there is no mandatory GST audit by a chartered accountant. Instead, the focus has shifted to GST annual filing and self-reconciliation.

However, this does not mean compliance requirements have reduced. In fact, scrutiny by the GST department has increased significantly through data analytics and system-driven checks.

The requirement of a GST audit by a CA/CMA was removed w.e.f. 1st August 2021.

What is a GST Audit in India (Current Position)?

Earlier:

• Businesses above prescribed turnover were required to get accounts audited.

Now (post-amendment):

• GST audit by CA/CMA is removed
• Replaced with self-certified reconciliation (GSTR-9C)
• Compliance is now part of GST annual filing

Therefore, what is commonly referred to as a GST audit in India today (in practice) is essentially:

• Annual return filing (GSTR-9)
• Self-reconciliation statement (GSTR-9C)

Everything depends on your aggregate turnover — total sales, including taxable, exempt, and exports, calculated across all your GST numbers under one PAN all over India.

• If your turnover is up to ₹2 crore: You’re usually off the hook for filing
  GSTR-9, the annual return. Small businesses get this breathing space, which is fair.
• Between ₹2 crore and ₹5 crore: You need to file GSTR-9 by 31st December 2026. That’s it — no extra reconciliation statement required.
• Above ₹5 crore: Now you have to file both GSTR-9 and GSTR-9C. The good part? GSTR-9C is self-certified these days. No CA signature needed anymore.

Composition scheme people have their own easier version (GSTR-9A), so their life is simpler.

What Does the Process Look Like in Practice?

Most people today use “GST audit” to mean the annual filing work. Here’s how it actually goes:

You sit down and match your books with all the returns you filed during the year — GSTR-1 for sales, GSTR-3B for payments, GSTR-2B for credits, and your final accounts. GSTR-9 is basically a yearly summary of everything.

If your turnover crossed ₹5 crore, you also prepare GSTR-9C. This one reconciles your GST numbers with the audited profit & loss and balance sheet. Any gaps? You explain them properly.

Both forms need to reach the GST portal by 31 December 2026 for this financial year. If reconciliation shows you underpaid tax anywhere, pay it yourself with interest through DRC-03. It’s always better to fix it before they notice.

Penalties for Non-Compliance

1. Late Filing

• ₹200 per day (max 0.25% turnover)

2. Tax Short Payment

• Interest @ 18%
• Penalty up to 100%

3. Risk Exposure

• Notices under Section 73/74
• Demand orders

A Few Common Questions I Get Asked

Q. Who should actually worry about this for 2025-26?
A. If your all-India turnover goes above ₹2 crore, plan for GSTR-9. Cross ₹5 crore and you’ll need GSTR-9C too (self-certified). Below ₹2 crore, most are exempt from the annual return.

Q. Is GSTR-9C still compulsory above ₹5 crore?
A. Yes. It’s the statement that matches your GST returns with your financial books. You or your authorised person just self-certify it now.

Q. Can officers audit even small businesses?
A. They can, and they do — no turnover limit for departmental audits. They select cases based on data mismatches or risk flags.

Q. How is this different from an income tax audit?
A. Completely separate. GST looks at your sales, purchases, input tax credit, and returns. An income tax audit has its own thresholds and focuses on profit calculation under the Income Tax Act.

Q. What documents are required for a GST departmental audit?
A. During a departmental audit, you must provide:

• Audited Financial Statements (Balance Sheet, P&L).
• Tax invoices, credit/debit notes, and e-way bills.
• Stock register and production records.
• Details of Input Tax Credit (ITC) availed and utilised.

Written by
Sakshi Mangla & Sakshi Jain
Articled Clerk