Audit under GST is simply related to the inspection of returns, records, and other documents furnished by the taxpayer. GST Audit is carried out to test whether the turnover (Supply), taxes paid, ITC refund claimed and ITC availed mentioned in the taxpayer’s annual report are true and fair or not. Moreover, a GST audit also provides a great help in evaluating whether the taxpayer is compliant with the GST provisions or not.
This is an important exercise because the GST taxation regime depends on the individual’s honesty and trust, wherein the taxpayer is required to assess his own liabilities. Thus a crucial mechanism sort of a GST audit is required to confirm that the self-assessment by the taxpayer is accurate, transparent, and devoid of any financial discrepancies. This is a check and balance that is placed by the Govt. to curb fraudulent activities among businesses and professionals. And the taxpayers are liable for their tax claims.
The Audit described under GST
Audit by taxable person
|Audit by GST tax authorities|
|1. File Audited Returns |
2. Audited Accounts
3. Reconciliation statement
|General Audit||Special Audit by CA nominated by commissioner|
Eligibility for Audit under GST
Any registered taxable person whose annual aggregate turnover exceeds 5 crore INR during a year (F.Y 2018-19) has to get their accounts audited. The eligible taxpayers are required to get their records and account audited either by a certified CA (Chartered Accountant) or a CWA (Cost and Work Accountant).
It shall be noted that the audit under GST is disbursed state-wise. This is often the explanation of why a separate GST audit is finished for every unique registration under the identical Permanent Account Number (PAN).
Applicability for the Audit under GST
Every registered person must get its accounts audited if the turnover during (FY-2018-19) exceeds Rs. 5 Cr from the sale of products and/or services. Calculation of turnover shall be PAN based i.e. all sales of goods/ services shall be taken for computing the limit of Rs. 5 Cr.
GST audit limit is the same for all registered taxpayers, i.e. no separate limit is specified for special category states or UTIs.
Documentation required for GST Audit
Submission of GST Audit report (Part-B) and Reconciliation statement (Part-A)
After GSTR-9C gets audited by the CA or CWA, the subsequent things shall be reported by him or her:
Penalty for not submitting the GST Audit Report
Under GST, there’s no such specific penalty for not submitting the GST Audit Report. Hence, the final provisions of the penalty (other than late fees) are applications that will amount up to 25,000 INR.
However, a GST auditor is the perfect catalyst for smoothening the Annual Return filing and Audit Report submissions. From documentation to return filing, a GST auditor ensures all verticals add perfect tandem for zero-friction reconciliation with audited financial statements with the GST audit.
Although GST has passed many years, still it is not everyone’s cup of tea. Businesses are facing challenges in the transition and application of GST. To know more about GST, feel free to contact us or read more of our articles.
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