Definition of Audit under GST<\/h2>\n\n\n\n“Audit” has been defined in Section 2(13) of the CGST Act, 2017 and it means the “examination of records, returns and other documents maintained or furnished by the registered person under the GST Acts or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of the GST Acts or the rules made thereunder”.<\/div>\n\n\n\nAn audit under GST\naims to verify that the tax declaration has been correctly made by the registered\npersons, payment of taxes and refunds are accurately determined, and input tax credits\nare availed by taxpayers in conformity with the provisions of the Act.<\/p>\n\n\n\n
What are the different types of audit from GST perspective?<\/h2>\n\n\n\n
Three kinds of audit are defined in GST:<\/strong><\/p>\n\n\n\n- Turnover based GST audit<\/strong>: A registered taxpayer is needed to get his books audited u\/s 35(5) of the CGST Act<\/strong>[1]<\/strong><\/a><\/sup>, in case his annual turnover exceeds the threshold limit of Rs. 2 crores. Such an audit is executed by a chartered accountant or a cost accountant. The taxpayer is needed to furnish a copy of audited annual accounts and a reconciliation statement, duly certified in FORM GSTR-9C, along with his GST annual returns.<\/li><\/ul>\n\n\n\n
- GST normal\/general audit executed by tax\nauthorities<\/strong>: By giving a 15 days’ prior notice to a\nregistered taxpayer, an audit may be done by the Commissioner of CGST\/SGST or\nan officer authorized by him. Such an audit may be carried out for such period,\nat such frequency and in such manner as may be prescribed later. However, such\nan audit needs to be completed within a period of 3 months from the date of its\ncommencement (although the time limit is extendable by the Commissioner on\nvalid grounds). <\/li><\/ul>\n\n\n\n
- Special audit under GST<\/strong>: A registered person in GST may be\ndirected to get his books or records examined by a chartered accountant or a cost\naccountant during any stage of scrutiny, inquiry, investigation or any other\nproceedings, especially where the case is complex in nature. <\/li><\/ul>\n\n\n\n
Read our article<\/b>:GSTR-9 : GST Annual Return Filing Form, Eligibility and Due Date<\/a><\/mark><\/p>\n\n\n\nSpecial Audit under GST<\/strong><\/h3>\n\n\n\nSection 66 of the CGST\/SGST\nAct gives a special power to GST authorities to conduct a special audit of\ntaxpayers in certain cases. <\/p>\n\n\n\n
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<\/figure><\/div>\n\n\n\nWhen is Special Audit under GST conducted?<\/strong><\/h3>\n\n\n\nThe GST authorities may conduct a special audit if, at any stage of scrutiny, inquiry, investigations or any other proceedings, they believe that the value of the tax is not correctly declared or input tax credit<\/a> availed is not within the normal limits. In other words, when the department holds doubts about the accuracy of GST details declared by a registered taxpayer, it may conduct a special audit. <\/p>\n\n\n\nBut usually, a\nspecial audit is instituted in limited circumstances where a complex case is brought\nto the notice of the department or when the revenue stake is high.<\/p>\n\n\n\n
Special Audit under GST is conducted by\nwhom?<\/strong><\/h3>\n\n\n\nThe department may\norder a special audit to be conducted by a chartered accountant or a cost\naccountant, as may be nominated by it. More specifically, a chartered\naccountant or a cost accountant nominated by the Commissioner is authorized to\nundertake a special audit.<\/p>\n\n\n\n
Who shall issue a notice of communication\nfor special audit under GST?<\/strong><\/h3>\n\n\n\nThe communication\nfor the special audit has to be served to the concerned taxpayer by the Assistant\nCommissioner\/Deputy Commissioner or any officer senior to him. Prior approval\nof the Commissioner is, however, necessary for the same.<\/p>\n\n\n\n
Directions for Special Audit<\/strong><\/h3>\n\n\n\nThe Assistant\nCommissioner or any officer senior to him can, by issuing FORM GST ADT-03, direct\nthe registered taxpayer to get his records including books of account examined and\naudited by a specified chartered accountant or a cost accountant.<\/p>\n\n\n\n
Who shall bear the cost of special audit?<\/strong><\/h3>\n\n\n\nAll the expenses\npertaining to special audit are to be determined and borne by the Commissioner.\nThe term ‘expenses’ here is construed in a manner so as to comprise the remuneration\npayable to the chartered accountant or cost accountant.<\/p>\n\n\n\n
The time limit for completion of special\naudit<\/strong><\/h3>\n\n\n\nThe designated chartered\naccountant or cost accountant needs to submit an audit report within a period\nof 90 days of the direction issued by the department, duly signed and certified\nby him. Such a report needs to be furnished to the Assistant Commissioner.<\/p>\n\n\n\n
However, this\nperiod may be further extended by the Assistant Commissioner by another 90 days\nin case an application for the same is made by the concerned taxpayer or the chartered\naccountant or cost accountant.<\/p>\n\n\n\n
Immaterial if accounts are already audited <\/strong><\/h3>\n\n\n\nThe provisions of special audit under GST shall apply and have due effect irrespective of the fact that the taxpayer’s accounts have been already audited under any other provision of the CGST Act or any other law. Even if the books of accounts of the taxpayer have been earlier audited by virtue of any other provision, a special audit under GST will still be conducted.<\/p>\n\n\n\n
Communication of findings of special audit<\/strong><\/h3>\n\n\n\nOnce the procedures of a special audit are concluded, the registered taxpayer is duly informed on the findings of the special audit. Such communication is done in the prescribed FORM GST ADT-04.<\/p>\n\n\n\n
What action can be taken by the GST\nauthorities after the completion of a special audit?<\/strong><\/h2>\n\n\n\nDepending upon the\nfindings or observations of the special audit, the tax authorities may initiate\nappropriate action against the registered person under Section 73 or Section 74.\nThis may be with regard to the demand and recovery of tax unpaid, erroneously\npaid or refunded, ITC fraudulently claimed, or tax short paid.<\/p>\n\n\n\n
An opportunity of being heard to the\ntaxpayer<\/strong><\/h3>\n\n\n\nIn respect of any material information procured under special audit and before initiating any proceedings against a registered person under GST<\/a><\/strong>, the taxpayer is usually accorded a reasonable opportunity of being heard.<\/p>\n\n\n\nConclusion<\/strong><\/h3>\n\n\n\nA special audit under\nGST offers a legitimate means to the tax officials to determine the tax liabilities\nof assessees in complex cases.<\/p>\n\n\n\n
It allows the GST authorities to take the assistance of the professional expertise of a chartered accountant or a cost accountant in order to ensure that the interest of revenue is safeguarded at all times.<\/p>\n\n\n\n
An audit under GST\naims to verify that the tax declaration has been correctly made by the registered\npersons, payment of taxes and refunds are accurately determined, and input tax credits\nare availed by taxpayers in conformity with the provisions of the Act.<\/p>\n\n\n\n
What are the different types of audit from GST perspective?<\/h2>\n\n\n\n
Three kinds of audit are defined in GST:<\/strong><\/p>\n\n\n\n Read our article<\/b>:GSTR-9 : GST Annual Return Filing Form, Eligibility and Due Date<\/a><\/mark><\/p>\n\n\n\n Section 66 of the CGST\/SGST\nAct gives a special power to GST authorities to conduct a special audit of\ntaxpayers in certain cases. <\/p>\n\n\n\n The GST authorities may conduct a special audit if, at any stage of scrutiny, inquiry, investigations or any other proceedings, they believe that the value of the tax is not correctly declared or input tax credit<\/a> availed is not within the normal limits. In other words, when the department holds doubts about the accuracy of GST details declared by a registered taxpayer, it may conduct a special audit. <\/p>\n\n\n\n But usually, a\nspecial audit is instituted in limited circumstances where a complex case is brought\nto the notice of the department or when the revenue stake is high.<\/p>\n\n\n\n The department may\norder a special audit to be conducted by a chartered accountant or a cost\naccountant, as may be nominated by it. More specifically, a chartered\naccountant or a cost accountant nominated by the Commissioner is authorized to\nundertake a special audit.<\/p>\n\n\n\n The communication\nfor the special audit has to be served to the concerned taxpayer by the Assistant\nCommissioner\/Deputy Commissioner or any officer senior to him. Prior approval\nof the Commissioner is, however, necessary for the same.<\/p>\n\n\n\n The Assistant\nCommissioner or any officer senior to him can, by issuing FORM GST ADT-03, direct\nthe registered taxpayer to get his records including books of account examined and\naudited by a specified chartered accountant or a cost accountant.<\/p>\n\n\n\n All the expenses\npertaining to special audit are to be determined and borne by the Commissioner.\nThe term ‘expenses’ here is construed in a manner so as to comprise the remuneration\npayable to the chartered accountant or cost accountant.<\/p>\n\n\n\n The designated chartered\naccountant or cost accountant needs to submit an audit report within a period\nof 90 days of the direction issued by the department, duly signed and certified\nby him. Such a report needs to be furnished to the Assistant Commissioner.<\/p>\n\n\n\n However, this\nperiod may be further extended by the Assistant Commissioner by another 90 days\nin case an application for the same is made by the concerned taxpayer or the chartered\naccountant or cost accountant.<\/p>\n\n\n\n The provisions of special audit under GST shall apply and have due effect irrespective of the fact that the taxpayer’s accounts have been already audited under any other provision of the CGST Act or any other law. Even if the books of accounts of the taxpayer have been earlier audited by virtue of any other provision, a special audit under GST will still be conducted.<\/p>\n\n\n\n Once the procedures of a special audit are concluded, the registered taxpayer is duly informed on the findings of the special audit. Such communication is done in the prescribed FORM GST ADT-04.<\/p>\n\n\n\n Depending upon the\nfindings or observations of the special audit, the tax authorities may initiate\nappropriate action against the registered person under Section 73 or Section 74.\nThis may be with regard to the demand and recovery of tax unpaid, erroneously\npaid or refunded, ITC fraudulently claimed, or tax short paid.<\/p>\n\n\n\n In respect of any material information procured under special audit and before initiating any proceedings against a registered person under GST<\/a><\/strong>, the taxpayer is usually accorded a reasonable opportunity of being heard.<\/p>\n\n\n\n A special audit under\nGST offers a legitimate means to the tax officials to determine the tax liabilities\nof assessees in complex cases.<\/p>\n\n\n\n It allows the GST authorities to take the assistance of the professional expertise of a chartered accountant or a cost accountant in order to ensure that the interest of revenue is safeguarded at all times.<\/p>\n\n\n\nSpecial Audit under GST<\/strong><\/h3>\n\n\n\n
<\/figure><\/div>\n\n\n\nWhen is Special Audit under GST conducted?<\/strong><\/h3>\n\n\n\n
Special Audit under GST is conducted by\nwhom?<\/strong><\/h3>\n\n\n\n
Who shall issue a notice of communication\nfor special audit under GST?<\/strong><\/h3>\n\n\n\n
Directions for Special Audit<\/strong><\/h3>\n\n\n\n
Who shall bear the cost of special audit?<\/strong><\/h3>\n\n\n\n
The time limit for completion of special\naudit<\/strong><\/h3>\n\n\n\n
Immaterial if accounts are already audited <\/strong><\/h3>\n\n\n\n
Communication of findings of special audit<\/strong><\/h3>\n\n\n\n
What action can be taken by the GST\nauthorities after the completion of a special audit?<\/strong><\/h2>\n\n\n\n
An opportunity of being heard to the\ntaxpayer<\/strong><\/h3>\n\n\n\n
Conclusion<\/strong><\/h3>\n\n\n\n