Overview on GST Audit:
GST Audit is applicable to every GST Registered Business having Aggregate Turnover more than Rs. 2 Crores by the sale of Goods and Services in the Financial year. (For businesses with an Annual Turnover of less than Rs.5 crore, filing of GSTR-9C has been waived off for the F.Y 2018-19).
This involves Examination of records and returns and ensures the correctness of Turnover declared, taxes paid, refund claimed, ITC availed, and other such compliances under GST Act.
Since, assess has to self-assess his Tax Liability and declare the GST Return, hence it is mandatory to ensure whether the Tax Payer has correctly self-assessed his Tax Liability. GST Audit has to be conducted by a Chartered Accountant or Cost Accountant.
Aggregate Turnover (PAN Based) = Value of all Taxable Supplies (Inter State and Intra State) + Exempt Supplies + Export of all Goods and Services
Objective of Audit under GST Law:
Examination to verify the correctness of
- Turnover Declared
- Taxes Paid
- Refund claimed
- Input Tax Credit Availed
Documents to be Furnished by Tax Payer:
- Audited Financial Statements
- Annual return in form of GSTR 9 and other monthly and Quarterly returns
- Reconciliation statement of GSTR 1, GSTR 3B and GSTR 2A
- Accounts and records
To be reviewed by the Auditor:
- Sales and Purchase Register
- Stock Register
- Expenses Ledger
- Output Tax Payable and Paid
- Input Tax Credit Availed and Utilised
- E-Way bills
It is important for Auditors to be conversant with various related software. Different software tools are available for conducting an Audit, and the one appropriate to the Auditee must be chosen based on the Nature of Audit and size of Auditee.
Understanding the Business of the Auditee:
The GST audit casts a huge responsibility on the auditor, and it is very important that the auditor is aware of the nature and complexity of the business/ operations of the auditee. It may be advisable that he prepares a suitable standard questionnaire (depending on the nature of business and facts and circumstances of each case) in order to become familiar with the business
Penalty for not getting the Accounts Audited:
There is no specific penalty prescribed in GST Law, therefore it shall be subject to a Penalty upto Rs.25,000 in terms of Section 125 of CGST Act 2017.
GST Audit involves preparing GSTR 9C by the Auditor which is a reconciliation statement where Auditor reports any Tax Liability pending for Payment by the Taxpayer, identified in the course of GST Audit through Reconciliations.
Tax Payers are advised to pay the dues through Form DRC 03.
Audit by Tax Authorities: Irrespective of the turnover, Commissioner or any other officer authorized by him may require to conduct Audit of any Tax Payer.
During the course of Audit, the officer may require the Taxpayer to :
- Give Information required by Tax Authorities
- To provide Facility for the Verification of Accounts
- To provide Assistance for Timely completing of Audit
An auditor is expected to exercise due and adequate care, prudence, diligence, and adopt the best practices considering the complexity of each business and its surrounding circumstances.