Recent Developments in GST Audit: Whether to get the Accounts Audited or not

Dr. Niti Saxena

Associate Professor

Under GST Act all the registered taxable persons are mandatorily required to get their books of accounts audited if the aggregate turnover during the financial year exceeds Rs. 2 Crore from the supply of goods or services. This estimation of turnover is PAN based i.e. supply of goods and services pertaining to each product line are considered for computing the limit of Rs. 2 Crore. GST audit limit conditions are uniform for all registered taxpayers; there is no provision of any separate limit being specified for special category states or UTs across India. However, provisions of GST audit are not applicable in case of Central Government/ State Government/ Legislative Assembly if they are subject to audit by CAG or any Statutory Auditor.  At Jagannath International Management School, one of the top management college in Delhi, provisions of GST Act are taught as part of the course curriculum.

When is GST Audit Required

1. Since GST is the self-assessment tax system therefore audit is needed for checking that the taxable person has properly estimated the tax
2. GST Audit is necessary for verifying the accuracy of GST accounts, records and returns.
3. GST Audit is the benchmark indicator that the financial records and other reports of the entity are not window-dressed and is free from any bias and there is complete disclosure of business transactions.

 Documents to be furnished under GST Audit-

1. The Annual Return of the taxable person
2. A Copy of Audited Annual Accounts of the taxable person pertaining to the financial year for which Audit is taking place.
3. A Copy of reconciliation Statement of the financial documents.

Various kinds of GST Audit

A per section 35 (5) of GST act, mainly three types of GST audit are prescribed:

Sr. No.	Name of Audit	Prescribed Authority	Condition
1.	Based on Turnover	Chartered Accountant/Cost Accountant	Turnover Exceeds Rs 2 Cr.
2.	General Audit	GST Commissioner or any other officer authorized by him	On order passed by Commissioner, giving prior notice of 15 days.
3.	Special Audit	Chartered Accountant/Cost Accountant nominated by Commissioner	On order passed by Deputy/Assistant Commissioner with prior permission.

For estimating the aggregate turnover, following supply of goods and services is included:

1. Assessment of value of total inter-state taxable supply of goods and services
2. Assessment of value of total intra-state taxable supply of goods and services
3. Assessment of value of total exempted supply of goods and services
4. Assessment of total value of all export supplies of goods and services
5. Assessment of supply to agent or job worker on behalf of principal
6. Job work supplies on principal to principal basis
7. Assessment of value of Zero rated supplies

Aggregate Turnover for GST Audit constitutes the following

1. Taxable supply of goods and services on which reverse charge is applicable
2. All the estimated taxes and charges paid under GST Act
3. Goods supplied and received back from job work

Consequences in case of Failure to maintain the accounts and records

In case the registered taxable person fails to maintain books of accounts as required under the GST act then the GST Officer determines the tax payable on non-accounted goods or services in the similar way as if it has been self-assessed.

Auditor Qualification under GST Audit

As per the provisions of Section 35 of GST Audit, audit can be performed by a Chartered Accountant or a Cost Accountant. An Internal Auditor of an organization or a GST practioner cannot be appointed as a GST Auditor.

Accounts to be reviewed under GST Audit-

1. Purchase Register
2. Sale Register
3. Stock Register
4. GST Expenses
5. Statement containing Input Tax Credit availed and utilized
6. Output Tax Challan
7. Statement of E-way Bill generated during the period
8. Any changes made under GST during the period

Forms to be filled under GST Return

GSTR 9	For Filling Annual Return
GSTR 9C	For Certified Reconciliation Statement

GST Audit – Due date and Penalty

The due date of audit and annual return mentioned in the GST Act is 31^st December of subsequent fiscal year. A general penalty of Rs. 25,000 for late filing of GSTR 9C is imposed in case of failure in complying with the same.

 

The above provisions clearly highlight the procedural requirements and applicability of GST Audit in India. JIMS Delhi focuses on not only enhancing the theoretical foundation of a discipline but also on the practical applicability of it.

 

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