GST Audit : Meaning and Type
Meaning of Audit under GST Act
‘Audit’ has been defined specifically under GST Act.
As per Section 2(13) of the CGST Act 2017, ”audit means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder.”
“Audit” is Different from “Assessment ” under GST
As per Section 2(11) of the CGST Act 2017, “assessment means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.”
Thus assessment if for determination of tax liability while audit is an examination of records, information, and data, etc., to ensure compliance under GST Act
[ Also Refer Following Video on GST Audit]
Types of Audits in GST
There are following types of GST Audit as per GST Act of India
Self-Assessment in GST
Every registered taxable person shall self assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39 of CGST Act- section 59 of CGST Act.
Audit by Chartered Accountant or Cost Accountant
The relevant para of Section 35(5) of CGST Act :
“Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.”
The relevant paras of Section 44 of CGST Act 2017:
(1): “Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year”
(2): “Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.”
Relevant portion of Rule 80(3) of CGST Rules 2017
“Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”
As per Section 2(6) of CGST Act 2017 : –
“aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess”
Note : Government has not notified the Form of Annual Return, Audit Report and Reconciliation Statement, etc., even though the due date of furnishing audit report of financial year 2017-18 is on or before 31st December 2018 from the end of the same year
Audit by GST Department
Audit by Tax Authorities
Relevant Portion of Section 65(1) of CGST Act 2017
Special Audit
Relevant Portion of Section 66(1) of CGST Act 2017
If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner.