The records, returns, and other related documents must be allocated or maintained under GST or more laws.
- The probe of GST audit is for the verification of the following objectives
- Declared Turnover
- Paid Amount of Taxes
- Claimed Refund
- Availed Input Tax Credit
- The appraisal or verification is also used to evaluate the compliance of the auditee with the laws of the GST Act and other laws.
The major objective of the audit under GST law is to make sure that the declared turnover, claimed refunds, input tax credit, and paid taxes are accurate and correct.
Turnover-Based GST Audit Under Section 35(5)
Any taxpayer whose turnover is over Rs. 2 crores or more in a financial year (F.Y.). they must get their accounts audited as per section 35(5) of Central Goods and Services Tax (CGT). The GST Audit should only be executed by a chartered accountant or a cost accountant. Financial Year in India is generally referred to as the annual year starting from 1st April and ending on 31st March of the next year. We have mentioned the formula to compute the gross turnover of an enterprise-
The value of the taxable (intrastate and interstate) supplies + Goods and Services export supplies + Exempt supplies = Aggregate Turnover
Objects to enclose for Aggregate Calculation of Annual Turnover
- All the taxable items like supplies, excluding the ones that have a reverse charge applicable to them. These taxable supplies fall under interstate and intra-sate.
- Supplies between separate verticals of the enterprise.
- Received/supplied goods on a principal basis to the job worker.
- Values of the whole zero-rated/export supplies.
- Supplies of agents/job workers on account of principal.
- All the exempted supplies (agricultural-related supplies and eatables food items.
- The taxes, excluding those covered under GST, include parlor tax paid after receiving the service.
Items to Ban for gross Calculation of Annual Turnover
- Interstate supplies for which the tax amount is paid in reverse charge.
- All cess and taxes (SGST, IGST, CGST, or compensation cess) that have been charged under the GSTs.
- Goods received or supplied to a job worker.
- All the activities do not fall undersupplies of goods/services.
Person Accountable for Audit Under GST
The registered taxpayers of India and the business owners whose turnover is more than Rs. 2 crores in an (F.Y.) financial year will be required for a GST audit. The eligible person must get their GST audited by a cost accountant or a chartered accountant. The limit of GST turnover is the same across all the borders of India.
The gross turnover Sectors For GST audits are-
- Transfer of Stocks
- Exempt Supplies
- Inter-state Supplies
GST Audit by Tax Authorities
- The taxpayer must get his/her accounts audit completed by a commissioner of SGST/CGST/authorized personnel by the commissioner.
- A taxpayer must be informed about the GST audit notice 15 days before conducting the procedure.
- The audit will be discontinued 3 months from the initial date the tax authorities formed it.
- The SGST/CGST Commissioner can extend the audit under the GST period for up to 6 months with relevant reason proof in written form to the authority.
There are certain obligations too for the tax authority in conducting a GST Audit. These obligations comprise (the execution of an audit to cross-verify the correctness and accuracy of turnover), claimed return, input tax credit, and taxes paid in compliance with GST laws. When execution is done, the auditor needs to submit the report with relevant details about their results, obligations, rights of the taxpayer, and reasons for their conclusions.
Along with the obligations of the auditor, the auditee (taxpayer) has also certain obligations, which are the following-
- Auditee must fully support the auditor in the completion of the GST audit process on time.
- The auditee must furnish all the relevant and correct information to the auditor to demonstrate account books and other required documents.
GST Audit Limit by CA or CMA
As per the budget introduced on 1st February 2021, it is said that the GST Audits can not be audited by CA and CMA anymore. This new change can be so helpful and a relief to the auditees. if the others are audited by special audits and departments are accurate. The limit of the GST audit is Rs. 2 crores presently. Any registered taxpayer whose aggregate turnover is more than Rs. 2 crores must have his/her document of accounts audited for submission before the deadline.
What are the required Documents for the Taxpayers?
There are certain documents that are essential to furnishing in front of the auditee for the GST audit. Those documents are discussed below-
- Audited Financial Statements (PAN-based)
- Certified reconciliation statement made in GSTR 9C Form. The certificate should conform to the supplies’ value and the tax and the declared sum in Form GSTR 9 .
- led Annual Return in Form GSTR-9 (GSTIN-based)
Forms for Annual Return and GST Audit
Required Forms are mentioned below for filing the annual returns and GST Audit are as follows-
Type of Taxpayer
Form to be Filed
Whether it is or not applicable to Audit under GST
A regular Indian taxpayer who is filing GSTR 1 along with GSTR 3B
A taxpayer as per the composition scheme
Operator of E-commerce
Form GSTR-9B(yet to come into practice)
Applicable Forms for GST Audit
Taxpayers whose turnover annually exceeds Rs. 2 crores in a Financial Year
What are the Accounts Reviewed by an Auditor?
The following are the account of taxpayers to be audited by an auditor-
- Purchase Register
- Stocks Register
- Sales Register
- Paid or payable output tax
- Tax Credit/ITC utilized, available, or accounted
- Expenses Register
- Any records, documents, communication received by the regarded GST department in the financial year.
Penalty for not Submitting Audit Report
There is still no defined condition for the GST Audit report. Regardless, a penalty of Rs. 25,000 is levied and paid to the authority. This penalty does not apply to the taxpayers whose annual turnover is less than the limit of Rs. 5 crores, as well as GST, return filing, which has been waived off in Form GSTR 9C in FY 2018-19.
Due Date for Submission GST Report
31st December of the preceding financial year is the last date for the submission and GST Audit limit and submission. The due date can be raised more for the registered taxpayers for the submission.