What Is The Time Limit For GST Audit Under Section 65?

4 Mar,2024

Goods and Services Tax (GST) audit plays an essential role in complying with the tax regulations in India. The process is conducted to ensure that businesses comply with GST rules and regulations. Further, section 65 of GST Act empowers the tax authorities to conduct the audit of any registered person under the GST regime.

Section 65 GST Act allows the Commissioner or any officer authorized by the registered person to conduct the audit at any time during the financial year. It can also be conducted within two years from the date of filing of the annual return for the financial year to which the audit relates.

It is important to note here that GST audit Section 65 extends the time limit by the Commissioner for six months if he is satisfied that there is no reasonable cause of delay.

Understanding the time limits associated with Section 65 GST audit is crucial for both taxpayers and tax authorities. This article delves deep into the various aspects of the tie limit for GST audits under Section 65.

GST Audit Under Section 65 GST Act

Under the Goods and Services Tax (GST) regime in India, a GST audit is an examination of the books of accounts and other relevant documents of registered taxpayers to ensure compliance with the various provisions of the GST Act.

GST Department conducts the audit to verify the books for accuracy and completeness of the return filed, claiming input tax credit, and payment of taxes due. The audit focuses on the maintenance of proper records, accuracy of documentation, and other compliance requirements under the law.

The objective here is to ensure that the registered taxpayer is complying with the provisions of the GST Act 2017 and to detect non-compliance issues that might require corrective action. Audit under Section 65 has to be conducted either once a year or at any time deemed necessary by the department. The outcome can have a significant impact on business and non-compliance can result in penalties and interest charges.

Role of Section 65 In CGST Act

The Commissioner or any officer authorized undertakes an audit of any registered person for such period at a frequency prescribed under GST audit Section 65. This audit can be conducted at the place of business of the registered person or their office. Before the conduct of an audit, the taxpayer has to be informed by way of a notice at least fifteen working days in Form GST ADT-01. As per Section 65(4) of GST Act audit of taxpayers has to be completed within three months from the date of the inception of the audit.

However, in case the Commissioner is satisfied that the audit of the taxpayer cannot be completed within three months, he shall extend the period for a further six months after recording genuine reasons for doing so.

In case the assessing authority thinks that the value has not been correctly declared by the taxpayer or the credit availed is not within the normal limits, the Commissioner or any officer can direct the taxpayer to get his books of account examined and audited by a Chartered Accountant.

Section 65 and 66 of the GST Act also mandate to inform registered persons about the audit finding in Form GST ADT-04 after the audit is concluded. In case of discrepancies in terms of tax short paid, tax not paid, or input tax credit wrongly computed, the officer shall initiate action under Sections 73 and 74 of the Act.

Understanding the time limits for GST audits under Section 65 empowers taxpayers to:

  • - Taxpayers remain prepared for potential audits by maintaining proper records and adhering to compliance norms.

  • - Taxpayers must seek clarification in case they receive an audit intimation outside the stipulated timeframe.

  • - Taxpayers must engage constructively with authorities during the audit process.

Timeframe For Different Stages Of GST Audit

The timeframe in the GST audit is essential. Exceeding the stipulated timeframe might raise concerns but it doesn't automatically render the audit invalid. Despite this, if the taxpayer feels that the extended period is unreasonable or unjustified, they can approach higher authorities with their grievances.

Initiation of Audit

The Commissioner can commence an audit anytime within the ongoing financial years. The audit can be conducted within two years from the date of filing the annual return for that relevant financial year. This means that even if the return is filed after the due date, an audit is mandatory. The GST Act does not prescribe any specific frequency for conducting audits. The authorities can select taxpayers for audit based on various factors; turnover threshold, potential non-compliance indicators, and risk assessment.

Duration of the Audit

As per Section 65(4) of GST Act, the audit ideally has to be completed within three months from the date of the inception and can be extended for six months only if the Commissioner is satisfied that the audit could not be completed due to genuine reasons.

The commissioner can give in writing extend the period for the following factors affecting the time limit:

  • - In case there are complexities of the case like complex transactions, large turnovers, or suspected irregularities, an audit might require more time for scrutiny, potentially leading to an extension.

  • - The taxpayer's promptness in providing necessary records and other documents and cooperating with the audit process can expedite its completion. In case a taxpayer fails to cooperate with the audit or provide account or other documents, Section 62 of the CGST Act empowers the authorities to resort to a best judgment assessment. This assessment can be made within a period not exceeding five years from the due date of the annual return for the relevant financial year.

  • - The overall workload of the tax departments and their assessing officers in a particular jurisdiction can influence the audit duration.

In Conclusion, it is crucial to remember that the time limits outlined in the Act serves as a guideline for authorities and taxpayers. While adhering to these time limits is essential, transparency and communication help to adhere to the process. it ensures a fair and efficient GST audit process.


What are the documents required to be maintained for GST Audit Under Section 65?

Registered taxpayers must have the following documents for the GST audit;

  • - Invoices received and issued

  • - Purchase orders

  • - Payment vouchers

  • - Debit and credit notes

  • - Receipt vouchers

  • - Input tax credit registers

  • - Stock registers

  • - Output tax liability registers

  • - Book of accounts

  • - Annual financial statements

  • - Bank statements and reconciliation statements

  • - Other documents maintained under the GST

All these documents are required from the date of last used to at least six years from the end of the relevant financial year.

What is the Timeline For GST Audit Completion?

The entire audit process conducted under Section 65 of the CGST Act has to be completed within 3 months from the date of inception of the audit. Delays caused beyond the reasons mentioned by the jurisdictional Commissioner are subjected to penalties and interest charges.

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