The precious indirect tax laws constrained audit by a chartered accountant to State VAT and Central State Tax laws of various states. Correspondingly, Special Audit was recommended in the Central Excise and Service Tax. This was introduced only in cases where there was an uncertainty concerning undervaluation or exorbitant credit by the taxpayer.
Such cases are led to the audit by Chartered Accountants apply to the current GST law as well. Consequently, the focus of the GST authority on self-assessment brings along numerous challenges. These challenges in the new GST law makes taxpayers likely to inaccuracy. This further leads to unintentional extraction of the government’s revenue.
So, in India, the multiple adherences and the demanding tax laws make auditing of records obligatory under various laws. GST also necessitates audit beyond certain turnover limits by tax professionals.
Let’s understand the significance of GST audit, types of audit and people who are required to get their accounts audited under GST. Meaning of audit
According to section 13(2) of CGST Act, the term audit refers to the examination of:
*Records, returns, and other documents which are kept or filed by the registered person under the Act
*Rules or instructions under GST or any other law for the time being in force
This examination is taken up to inspect the accuracy of the turnover mentioned, taxes paid, refund claimed and ITC availed. Further, this examination is undertaken to evaluate the taxpayer’s abidance with the provisions of the Act.
Persons responsible for GST Audit turnover limit
People who are registered with an aggregate turnover exceeding the authorised GST audit turnover limit of Rs 2 Crore throughout a financial year are legally responsible for GST Audit. These persons must get their accounts audited by a Chartered Accountant or a Cost Accountant. A Chartered Accountant or a Cost Accountant must be approached to audit the accounts of these persons.
Types of audits.
GST law renders three types of audits that can be undertaken. These include:
*As per section 44 of the GST Act, Annual Return.
*A copy of Audited Statement of Accounts
*Accommodation Statement that reconciles the value of supplies furnished in the annual return with the audited financial statements. GST Audit by the Tax Authorities Under Section 65
under section 65 of the CGST Act, the Commissioner or an officer authorised by him tackles the audit of the registered person. This is done for such period, at such interludes and in a method as described in the general or specific order. The concerned officers may conduct this audit at the place of business of the registered person or his office.
Further, the tax authorities must intimate the registered taxable person of such an audit through a notice. This notice must be sent to the registered person not less than 15 days before initiating such an audit in Form GST ADT-01.
In addition, such an audit must be completed within 3 months from the date of commencement of the audit. Nevertheless, the Commissioner can decide to extend the time period if according to him the audit cannot be completed within 3 months. Furthermore, he can choose to extend the period of such an audit to a maximum of 6 months. Therefore, he can do so after he records the basis for such an extension in writing.
Ultimately, the concerned officer will intimate the registered person about his final findings of the audit in Form ADT-02. Special GST Audit Under Section 66
An officer who is not below the rank of Assistant Commissioner can demand an audit under Section 66 of CGST Act. He can do this if during the time of scrutiny he believes that:
*The value of supply is not precisely declared, or
*The input tax credit availed by the registered taxpayer surpasses the credit which is actually due.
Therefore, the assessing authority takes the approval of the commissioner to undertake such an audit. Consequently, on such approval, the assessing authority advises the registered person to get the books audited by a Chartered Accountant or a Cost Accountant. And the Assistant Commissioner suggests this accountant himself.
Further, the Commissioner provides such a direction in Form GST ADT-03 to the registered person. Thus, the Chartered Accountant or Cost Accountant picked by the officer then submits the Report of Audit aptly signed and certified by him to the Assistant Commissioner. This process is done within a period of 90 days. And this period can be expanded for another 90 days if there is a delay.
Further, the Officer can order such an audit even though accounts of the registered person have been audited under any other law.
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