GST Audit

GST Audit

GST Audit applies every year for those GST registered businesses (GSTIN) having turnover more than Rs.2 crore, by the sale of goods or services in the financial year. It is dealt under Sections 35(5) and 44(2) of the CGST Act.

A GST audit entails the review of a GST registered person's records, returns, and other documents. It also verifies the accuracy of the turnover declared, taxes paid, refunds claimed, and input tax credits claimed, as well as other GST Act compliances that must be verified by an authorized expert.

GST Audit
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Threshold Limit for Audit under GST by CA/CMA

Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit is subject to audit. As per the current notified GST Rules, the turnover limit is above Rs 2 crore^. Such businesses must get their books of accounts audited by a chartered accountant or a cost accountant. Such taxpayer shall electronically file:

  • An annual return using the Form GSTR 9 by 31st December of the next Financial Year
  • The audited copy of the annual accounts
  • A certified reconciliation statement in the form GSTR-9C, reconciling the value of supplies declared in the return with the audited annual financial statement
  • Any other particulars as prescribed

Audit by Tax Authorities

  • The Commissioner of CGST/SGST (or any officer authorized by him) may conduct an audit of a taxpayer. The frequency and manner of an audit will be prescribed later.
  • A notice will be sent to the auditee at least 15 days before.
  • The audit will be completed within 3 months from the date of commencement of the audit.
  • The Commissioner can extend the audit period for a further six months with reasons recorded in writing.

Items included while calculating Aggregate Turnover

  • All taxable (inter-state and intra-state) supplies other than supplies on which reverse charge is applicable
  • Supplies between separate business verticals.
  • Goods supplied to/received from the job worker on a principal to principal basis.
  • Value of all export/zero-rated supplies.
  • Supplies of agents/job workers on behalf of the principal.
  • All exempt supplies. For example, agricultural produce supplied along with branded ready-to-eat food.
  • All taxes other than those covered under GST. For example, entertainment tax paid on the sale of movie tickets.

Items excluded while Calculating Turnover

  • Inward supplies on which tax is paid under reverse charge.

  • All taxes and cess charged under Goods and service tax like CGST, SGST or IGST, compensation cess.

  • Goods supplied to or received back from a job worker.

  • Activities which are neither supply of goods nor service under schedule III of CGST Act.