Last Updated on July 26, 2023
We all know that businesses will need to do a GST audit with a turnover of more than Rs 2 crores from selling products or services during the financial year.
But do you know what is GST Audit, GST Audit Limit, GST Audit Applicability? Well, if you’re in confusion, You have come to the right place. In this article, we will learn about all these.
Table of Contents
- What is a GST Audit and why do we need it?
- Types of GST Audit
- GST Audit Limit
- Things to include while calculating GST Audit Turnover limit
- Things to eliminate while calculating GST Audit Turnover Limit
- Accounts to be audited by the GST auditor
- Mandatory Forms for GST Audit Applicability
- GST Audit Date
- Special Audit
What is a GST Audit and why do we need it?
As we know, GST is a taxation system in which a taxpayer must calculate his or her tax liability, pay any taxes, and file returns. As a result, a rigorous audit process is needed to ensure that the taxpayer has adequately self-assessed his tax payments.
The government has taken several steps to ensure that GST is fully enforced, one of which is an audit.
A Goods and Services Tax audit contains the review of a GST-enrolled individual’s records, refunds, and other documents. It also verifies the accuracy of the turnover reported, taxes charged, refunds received, input tax credits claimed, and other GST Act compliances that an approved expert must verify.
Therefore, it is an important process for both the government and businesses having GST.
Types of GST Audit
|GST Audit Varieties||Who Performs this?||When to do?|
|Audit on the basis of turnover||Chartered Accountant (CA) as appointed by the taxpayer||At the moment of turnover exceeding 2 crores|
|General Audit||Commissioner of CGST/SGST or any Officer authorized by the government||As per directions of the Deputy Commissioner or Assistant Commissioner with prior approval of Deputy Commissioner|
|Specialised Audit||CA(Chartered Accountant) to be appointed by the taxpayer||As per directions of the Deputy Commissioner or Assistant Commissioner with prior approval of the Deputy Commissioner|
GST Audit Limit
Any taxable individual whose annual turnover exceeds the specified limit must have his accounting audited by a chartered accountant or a cost accountant. GST Audit limit or Threshold is Rs. 2 crore as per the latest GST Rules.
To do the GST Audit, the taxpayer needs to fulfil the following requirements.
- The audited version of the financial statements.
- A valid summary document in the form GSTR-9C coordinating the value of products reported in returns with its evaluated annual financial report, and other details as specified.
Things to include while calculating GST Audit Turnover limit
Following are the things that you must include while calculating the GST Audit turnover limit.
- Applicants need to include the pieces of equipment that agents/workers are given on behalf of the principal.
- All services that are excluded. Farm produce, for example, is delivered with labelled ready-to-eat food.
- The GST doesn’t cover both taxes. For example, on the selling of movie tickets, there is an Entertainment Tax.
- Except for supplies subject to the reverse charge, all taxable (interstate and intrastate) supplies are subject to the reverse charge.
- The exchange of materials between various business market segments.
- On a principal-to-principal basis, products in supply to/received from work employees.
- All export/zero-rated goods that have value at that same amount.
Things to eliminate while calculating GST Audit Turnover Limit
- All CGST, SGST, or IGST taxes, and Reimbursement Fee that are imposed under the Goods and Service Tax should be eliminated.
- Inward supplies that are subject to a reverse rate should be excluded while calculating GST Audit Limit.
- Schedule III of the CGST Rules. It includes activities that are neither a source of products nor a service.
- Goods shipped to or returned by employees.
Accounts to be audited by the GST auditor:
Businesses eligible for GST audit should review the accounts or records listed below:
- Purchases transaction data, Stock transactions, Sale transactions, and Expenditures transactions.
- Any records about the GST department’s interactions for the year. Utilisation records of the input tax credit.
- Output tax which is due.
- Generate a record of E-way bills during the audit period.
Mandatory Forms for GST Audit Applicability:
|Which taxpayer should fill the forms?||Mandatory Forms Requirement under GST|
|An ordinary taxpayer filing GSTR 1 and GSTR 3B||GSTR-9|
|A Taxpayer under Composition Scheme||GSTR-9A|
Candidates eligible for GST Audit Applicability
|Taxpayers whose turnover exceeds Rs. 2 crores in Financial Year||GSTR-9C|
GST Audit Date
The Ministry of Finance has set the deadline for filing GSTR 9, GSTR 9A, and GSTR 9C forms for the fiscal year 2020-21 as of December 31, 2021. In order to avoid penalties, businesses must file the GSTR 9 annual return form and the GSTR 9C audit reconciliation form as soon as possible. However, sometimes the GST Audit Due Date gets an extension. In that case, it is crucial to get the necessary updates from the official press.
Now let us look at why it is vital to do Audit accurately. Because in case of improper GST audits, the government can take strict actions such as special audits or inspections.
1. When a special audit might happen?
The Assistant Commissioner may order a special audit depending on the nature and importance of the situation and also the revenue’s interest. Suppose he believes that the amount is not being accurately disclosed or that the incorrect compensation has been obtained during the inspection, investigation, or review. In that case, he may conduct a special goods and services tax audit.
2. Do Special audits have a time limit?
Yes, the auditor will have 90 days to file the report. However, the tax officer may extend this period for another 90 days on the taxable person’s or auditor’s request.
3. Is there any checklist for Goods and Service Tax Audit?
Yes, we have mentioned the GST Audit Checklist, which auditors should duly take care of.
- GSTR 3B matches with GSTR 1 and GSTR 2A.
- GSTR Amendment Correctly complies with ITC.
- Examine the invoice format carefully.
- Reversal of the Input Tax Credit (ITC) for failure to pay within 180 days.
- e-Way Bills and Invoices Reconciliation.
In this article, we have learned about the Goods and Service Tax Audit in detail. It is an essential aspect of the GST, and you should always keep this guide handy to make sure the correct audit of Goods and Services for your business has been done.