What Is GST Audit?
As per section 35(5) of the CGST act, every registered taxpayer whose turnover is more than Rs 2 Crores in a particular financial year needs to get their books of accounts audited from a practicing chartered accountant or cost accountant. Registered taxpayer needs to submit copy of audited financial statements &
reconciliation statement in form GSTR 9C. It is required by the tax department once in a financial year.
Persons Liable For GST Audit
Persons who are registered taxpayers and whose turnover exceeds GST limit of Rs 2 Crores in a particular
financial year are liable for GST audit. It is mandatory for such persons to get their accounts audited from a
practicing chartered accountant or a cost accountant. GST turnover limit of Rs 2 Crores is same across all
states & UT’s for registered taxpayers.
Aggregate turnover of a registered taxpayer includes –
2 Inter-state supplies
3 Stock transfers
4 Exempt supplies
How To Prepare For Audit Under GST?
You need to take care of the following points while preparing for audit under GST –
The main objective of the auditor in GST audit is to ensure that business is complying with all E-way bill
provisions and effective measures are suggested to avoid legal complications.
The auditors will check your monthly and quarterly returns. You must have data as well as supporting
documents available with you.
In case of claiming extra input tax credit (ITC), you need to pay 24% interest on the excess tax amount.
In such cases, the auditor will reconcile the returns of your organization.
The auditor also suggests you to make amendments in case any data gaps you are having at the time
The auditor also checks if any ITC reversal has been made for non-payment within 180 days.
There are some rules specified by GST department in relation to invoice format too. Invoice format is used for entering invoice details. In case while auditing, auditor find your business format to be different, he or
she might ask you to change it as per GST rules. The difference between invoice date & payment date should not exceed 180 days.
The Payment amount should match with the invoice amount including GST. In case your payment
amount is less than what invoice is showing in the total (including GST), your input tax credit will be
reversed to the extent of short payment. The other point you need to take care of is evaluation of E-way bills
and its match with the invoices. Auditors evaluate e-way bills and match it with the invoices to identify the amount mismatches (if any). Any mismatch between e-way bill and invoice can only cancelled within 24 hours of generation. It cannot be edited or deleted. You can also be fined by the auditor in case you move your goods without issuing E-way bill or your goods can be withheld till you pay the tax amount or penalty.
When Special Audit Is Required?
A special audit may be required in the following circumstances –
Special audit can also be conducted in case the taxpayer books of accounts are already been audited
Who Will Order For Special Audit?
Assistant commissioner can order for special audit in writing by taking prior approval from the
Who Will Carry Special Audit?
Special audit is carried out by a Chartered Accountant/Cost Accountant nominated by the commissioner.
What Is The Time Limit For Special Audit?
Auditor doing special audit needs to submit the report within 90 days. It may be extended further by the tax
officer for 90 days on the application request made by the taxable person or by the auditor.
Who Will Pay The Cost Of Special Audit?
The expenses incurred by the auditor during the audit process are borne by the commissioner. It also
includes remuneration given to the auditor.
Findings Of Special Audit
Findings of special audit mean the positive/negative results obtained by the auditor after analyzing the
records of the taxpayer. Taxpayer will also provide an opportunity of being heard by the auditor in findings
of the special audit.
What Are The Documents Required For GST Audit?
The documents required for GST audit are as follows –
Credit ledger copies
Electronic cash ledger copies
Refund documents (If applied for)
E-way bill generated copies
ITC-02 copies (If applicable)
TRANS-01 copies (if applicable)
TRANS-02 copies (if applicable)
Copies of debit notes
Copies of credit notes
Copy of statement of reconciliation
HSN wise summary
Job work invoices
Delivery challans copy
RCM challan copy
RFD-01 (if generated or applied for refund)
GSTR 3B, GSTR 1 & GSTR-2A for all months
Copy of any other order/notice issued by department
Financial statements audited by chartered accountant or cost accountant
Copies of reconciliation for GSTR-3B & GSTR-2A, GSTR-3B & GSTR-2A, GSTR-3B & GSTR-1
GST Audit Checklist
Mandatory GST audit checklist which should be strictly followed is as follows –
Checking of GSTR 3B in relation to GSTR 1
which includes –
1 Interest & penalties in GST
2 Amendment in GSTR
Checking and verifying of invoice details
Input tax credit reversal for non-payment within 180 days.
Evaluation of e-way bills & its matching with invoices.
Cross-checking of pending stock lying with job workers.
Penalty For Not Submitting GST Audit Report
There is no specific provision created to penalize a taxpayer on non-submission of GST report. Hence, a
general penalty of Rs 25,000 will be applied on the taxpayer.
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