Goods and Service Tax (GST) Audit can be simply understood as the scrutiny and verification of the documents, returns, and various records maintained by a person who pays GST or is liable to pay the same. GST audits enable the tax officials to check the correctness of submitted documents and spot fraudulent activities.
By virtue of the GST Act, 2017, the GST Audits are of 3 kinds, and they include Statutory Audit, Audit by Tax Authorities, and Special Audit. We will be looking in detail at each of these GST audits and the legal framework that governs them. Handling the GST Audit is not as tedious as one may presume, and it can be handled easily. It is vital to keep in mind the various rights and obligations you, as a taxpayer, have.
GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines Click here
It is to be noted that Section 35(5) of the GST Act, which deals with Statutory Audit, has been discontinued as of 1-8-2021.
The objective of this provision is to check as to if the businesses and enterprises meet the tax obligations and responsibilities mandated under the GST Act. Section 65 of the Act enables the Commissioner or any authorised officer to undertake an audit of any registered person to ensure compliance with GST laws. The audit can cover any time period, and the guidelines specify the frequency and method of conducting such audits.
The registered person must be notified at least fifteen working days before the start of the audit. The purpose of this notification requirement is to provide companies ample time to get ready for the audit and supply the required paperwork and support. Schedules for Completing Audits.
According to Section 65(4), the Audit must be completed within the time span of 3 months from its commencement. In legality, the “commencement of audit” is either the date the registered person submits the appropriate documentation or the actual start of the audit at the business premises. In circumstances where the Commissioner determines that the audit cannot be completed within the specified time frame, the deadline might be extended by six months, subject to a written explanation for the delay.
Complete Referencer of GSTR-1, GSTR-1A, GSTR-3B, GSTR-9 & GSTR-9 – CLICK HERE
Read More : Can GST Audit Team issue SCN u/s 74 after Completing Audit u/s 65 ? Here’s what you need to know
Section 66 (1) of the GST Act states that “If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner.”
This means that at any point during the scrutiny or the investigation, if the Assistant Commisioner or his superiors feels that the declared value or claimed credit seems inaccurate or unusually high, they can with the Commissioner’s approval ask the taxpayer to get their records audited by a chartered or cost accountant chosen by the Commissioner.
Section 66(2) of the Act deals with the time limit. The Characterd Account or the Cost Accountatnt has to submit the report within 90 days, but under special circumstances, the 90-day limit can be extended.
Complete Referencer of GSTR-1, GSTR-1A, GSTR-3B, GSTR-9 & GSTR-9C – CLICK HERE
Read More: Audit and Special Audit Provisions under GST: A Comprehensive Analysis of Section 65 and 66
Similar to the audit conducted under Section 65 of the Act, a special audit may reveal tax irregularities such underpaid or unpaid taxes, incorrect refunds, or incorrectly used input tax credits.
By dividing the whole situation into 3 stages, we have provided a checklist that you can follow if you face GST Audits in the near future.
Section 65(5) of the GST Act states that during the audit, the authorised officer may request that the registered person supply the necessary facilities for verifying the books of accounts or any other documents required by the audit. The registered person is also required to provide any information and support to ensure the timely completion of the audit.
Step by Step Handbook for Filing GST Appeals – CLICK HERE
Thus, the GST Audits are not just mere compliance checks, but rather, they require careful and legal consideration. The GST Audit is not as complex as one might think. It is critical that you understand your different rights and obligations as a taxpayer.
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