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Company Audits & GST

Company Audits & GST

Company Audits & GST

GST audit is necessary at times to maintain a check and examine whether correct GST is being paid and the refund claimed, especially for certain categories of taxpayers.

Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the compliance with the provisions of GST.

Threshold Limit for Audit under GST

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

Rectifications to Returns After GST Audit

If any taxable person, after furnishing a GST return discovers any omission/incorrect details (from results of audit), he can rectify subject to payment of interest.
However, no rectification will be allowed after the earlier of:

  •  the due date for filing of return for the month of September or second quarter, (as the case may be), following the end of the financial year, or
  • the actual date of filing o the relevant annual return.

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.

Obligations of the Auditee

The taxable person will be required to:

  • provide the necessary facility to verify the books of account/other documents as required
  • to give information and assistance for timely completion of the audit.

Findings of Audit

On conclusion of an audit, the officer will inform the taxable person within 30 days of:

  • the findings,
  • their reasons, and
  • the taxable person’s rights and obligations

If the audit results in the detection of unpaid/short paid tax or wrong refund or wrong input tax credit availed, then demand and recovery actions will be initiated.