A GST Audit is conducted to verify a taxpayer’s compliance with the Goods and Services Tax (GST) laws. The audit ensures that businesses have correctly reported turnover, input tax credit (ITC), tax liability, and payments as per the GST Act.
1. Applicability of GST Audit
GST audits apply to businesses based on turnover thresholds and specific circumstances. The applicability varies by country (e.g., India under the CGST Act, 2017).
A. Turnover-Based Audit
⇒ In India, as per the GST Act, 2017, businesses with an annual aggregate turnover exceeding ₹5 crore in a financial year were earlier required to get their accounts audited by a Chartered Accountant (CA) or Cost Accountant.
⇒ However, GST audit by professionals has been removed (Finance Act 2021), and self-certification by taxpayers is now required.
B. Departmental Audit (Section 65)
⇒ Conducted by GST officers authorized by the Commissioner.
⇒ The taxpayer is notified 15 days in advance before the audit begins.
C. Special Audit (Section 66)
⇒ Ordered by the GST Commissioner if complexity or misreporting is suspected.
⇒ Conducted by a Chartered Accountant (CA) or Cost Accountant, appointed by the authorities.
⇒ The audit report must be submitted within the prescribed time.
2. Who Can Conduct a GST Audit?
⇒ For self-certification, the registered taxpayer files an annual return (GSTR-9) along with a self-certified reconciliation statement (GSTR-9C).
⇒ For departmental and special audits, government-appointed auditors or professionals conduct the audit.
3. GST Audit Reports & Filing
⇒ GSTR-9 (Annual Return): A summary of outward and inward supplies, ITC claims, and tax payments.
⇒ GSTR-9C (Reconciliation Statement – if applicable): A comparison of financial statements with GST returns, earlier certified by a CA.
⇒ Audit Report Submission: The auditor provides findings on discrepancies, tax liabilities, and compliance issues.
4. Penalty for Non-Compliance
⇒ Failure to file GST audit reports can result in fines and penalties under the GST Act.
⇒ If fraud or tax evasion is detected, additional interest and penalties may apply.