Types of Audits in GST

8 Sep,2023

What are the types of Audits in GST?

The Goods and Services Tax (GST) is designed to be self-policing, and so the taxpayers are expected to voluntarily comply with the provisions of the law. Since it is susceptible to errors, taxpayers are required to self-assess their tax liability to avoid unnecessary departmental interventions and litigations.

An audit under GST is an examination of taxpayers records to verify the accuracy of their reported GST liability. It may be conducted by the tax authorities wherein taxpayers will have to cooperate and provide all relevant information and documents.

From the statutory audit that assesses the correctness of the financial statements to the compliance audit that assesses the compliance with the rules, familiarising with audits and its types under GST is crucial.

Equally essential is to know which type of audit is suitable for the taxpayers following the GST audit turnover limit. For this purpose, taxpayers will have to calculate the total turnover under the PAN. The GST audit procedure depends upon the type of audit. For instance, special audits under GST are conducted by CA CMA nominated by the commissioner while department GST audits are conducted by the commissioner or any officer authorized.

Types of Audit Under GST

Section 2 (13) of CGST defines audit as an examination of records, returns, and other documents maintained or furbished by a registered person under this Act to verify the correctness of turnover declared, taxes paid, refund claimed, assess compliance, and input tax credit availed.

The GST Act provides for different types of audits under GST, including;

Departmental Audit

To ensure proper calculation and discharge tax liability, tax authorities conduct departmental audits regularly. Section 65 and Rule 101(3) of GST Audit Rules, the commissioner or an officer authorized by him can conduct this audit and verify the details of the records and books of account of the registered person.

The audit by tax authorities shall be conducted at the place of business of a registered person or office. An intimation of the audit is provided at least 15 days in advance and has to be completed within 3 months from the date of commencement.

Statutory Audit

As of 30th July 2021, the government has notified the removal of GST audit and certification done by CA CMA. Now the GST audit turnover limit is Rs 2 crores in a financial year, which means taxpayers exceeding the turnover limit shall submit self-certified GSTR 9C.

Special Audit

According to Section 66 and Rule 102 of GST Audit Rules, an authorized officer at any stage of scrutiny, inquiry, or investigation may avail of the services provided by CA CMA. The authorized officer can consider the nature and complexity of the business to know if the value has not been correctly declared or credit availed is not within the normal limits.

The expense of such special audits and examination of records returns is paid by the commissioner. The period required to audit the account can be provided with an extension of an additional ninety days. Conclusions of the special audit under GST are communicated to the auditee in Form GST ADT-04.

Limited Scrutiny Audit

A limited audit is conducted only in specific cases wherein tax authorities suspect non-compliance with the provisions of the GST Act. The objective of this audit is to verify compliance with other provisions of the law and ensure the tax returns filed are correct.

Taxpayer-initiated Audit

This audit is initiated by the taxpayer to verify compliance with the provisions of the GST Act. The law provides for several consequences of non-compliance including fines, imprisonment, and penalties. Henceforth, taxpayers must ensure compliance.

Taxpayers are advised to keep accurate and complete books of accounts including invoices, receipts, returns, and other documents.

In Conclusion

Understanding the five types of audits under GST is essential for businesses operating in India as it will serve as a crucial tool to ensure compliance, accountability, and transparency in the GST framework.

Audit Type Conducted By Frequency Provision
Departmental Audi Tax authorities Ad-Hoc Section 65, Rule 101 (3)
Statutory Audit Self Annually Section 35(5)
Special Audit Tax authorities Ad-Hoc Section 66, Rule 102
Limited Scrutiny Tax authorities Ad-Hoc Form ASMT-10/11
Taxpayer Initiated Audit Self As per your own discretion GST Law

Taxpayers are advised to keep accurate and complete records of their books of account, business transactions, file their tax returns on a timely basis. Non-compliance with the provisions of the GST law can lead to severe consequences, including fines, penalties, and imprisonment. Litigation Management Solutions (LMS) are developed with in-depth experience in litigation, knowledge of the subject, and an understanding of practical difficulties faced by various industries.


What are the 4 types of GST?

The 4 types of GST audit under GST are; Mandatory GST audit, Departmental GST Audit, Special Audit under GST, and Statutory Audit. Taxpayers must familiarize themselves with these GST audits to gain valuable insights into the requirements, timelines, and ethical practices. This knowledge will mitigate the risk of non-compliance.

What is audit under GST?

Instead of mandatory audits by CAs, the current system relies on self-certification. GST audit ensures taxpayers are complying with the provisions of the Goods and Services Tax (GST) Act. Further, it identifies errors and discrepancies in taxpayers records. Taxpayers with an annual turnover exceeding Rs. 5 crores in a financial year were required to file a reconciliation statement on the GST portal.

Who can file GST audit?

Starting the financial year 2020-21, all registered taxpayers exceeding a turnover of Rs. 5 crores are required to get their accounts audited by a Chartered Accountant; CA CMA, and submit a copy of the audited financial statements on the GST portal.

What is the time limit for GST audit?

Tax authorities send a notice to the auditee at least 15 days prior to the audit. The entire GST audit procedure must be completed within 3 months from the date of commencement of the audit. The jurisdictional Commissioner CGST, audit can extend the audit period for a further 6 months with reasons recorded in writing.

Why is GST audit important?

The audit is crucial to verify compliance with the provisions of GST law. It ensures that taxpayers pay the correct amount of GST. The audit identifies errors and discrepancies in the records and further educates the taxpayers on the GST laws and procedures.

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