GST Audit would be applied every year for those GST registered a business (GSTIN) who have a turnover of above Rs 2 crores, by means of the sale of goods or services in the financial year. Audit under GST is the examination of records that is maintained by a registered dealer. The intent is towards verifying the accuracy of information stated, taxes paid as well as towards assessing the compliance with GST.
a. Audit by Registered Dealer
Every registered dealer whose turnover in a financial year is above the Rs 2 crore is required to get his accounts audited by a CA or a CMA.
b. Audit by GST Tax Authorities
General Audit: The commissioner or on his orders an officer might carry out an audit of any registered dealer.
Special Audit: The department might carry out a special audit on account of the complexity of the case and in view of the interest of revenue. The CA or a CMA would be appointed towards conducting the audit.
GST Audit Check List
GSTR 9C is for every one of the taxpayers who have a turnover of more than 2 crores in a particular financial year. Along with the form, the individual is also required to fill up a reconciliation statement along with the certification of an audit.
Every registered individual whose turnover in a financial year is more than the prescribed limit of rupees 2 crores would get his accounts audited by a chartered accountant or a cost accountant.
GSTR-9C is a statement of reconciliation amid:
the Annual Returns in GSTR-9 filed for a financial year, and
the figures as per the audited annual Financial Statements of the taxpayer.
The certified statement shall be issued for every GSTIN. Therefore, for a PAN there could be several GSTR-9C forms to be filed.
Due dates for submission of GST Audit report
GSTR-9, as well as GSTR-9C, is due on or before 31st December of the following financial year.
For Financial Year 2017-18, the due date for filing GSTR 9 and GSTR-9C has been extended to 30th June 2019, through an order.
The Checklist for Initiating GST Audit – FORM GSTR -9C
The GSTR-9C comprises of two main parts:
Part-A: Reconciliation Statement
Part-B: Certification
Part-A: Reconciliation Statement
The figures in the audited financial statements are at PAN level. Thus, the turnover, Tax paid and ITC earned on a particular GSTIN( or State/UT) must be pulled out from the audited accounts of the organization as a whole.
The Statement of Reconciliation is divided into five parts:
Part-I: Basic details: Consists of FY, GSTIN, Legal Name, and Trade Name. The taxpayer should also state if he is subjected to audit under any other law.
Part-II: Reconciliation of turnover declared in the Audited Annual Financial Statement with turnover declared in Annual Return (GSTR-9):
This includes reporting the gross and taxable turnover declared in the Annual return with the Audited Financial Statements.
Part-III: Reconciliation of tax paid:
This section needs GST rate-wise reporting of the tax liability that emerged according to the accounts and paid as reported in the GSTR-9 individually with the differences thereof. Furthermore, it needs the individuals to also declare the additional liability because of un-reconciled differences noticed on reconciliation.
Part-IV: Reconciliation of Input Tax Credit (ITC):
This part comprises the reconciliation of input tax credit availed as well as used by an individual as reported in GSTR-9 and as reported in the Audited Financial Statement. Furthermore, it requires a reporting of Expenses booked according to the Audited Accounts, with a breakup of eligible as well as not eligible ITC and reconciliation of the eligible ITC with that sum claimed according to GSTR-9. This declaration would be after considering the reversals of ITC claimed, if any.
Part-V: Auditor’s recommendation on additional Liability due to non-reconciliation:
In this part, the Auditor would report of any tax liability identified through the reconciliation exercise as well as GST audit, pending for payment through the individual. This could be non-reconciliation of turnover or ITC on account of:
Sum paid for supplies not included in the Annual Returns(GSTR-9)
Erroneous Refund towards being paid back
Extra Outstanding demands that need to be settled
Lastly, the guidelines towards the format of GSTR-9C specify that an alternative would be given to individuals to settle taxes as suggested by the auditor at the end of the reconciliation statement.
Part-B: Certification
The GSTR-9C could be certified through the same CA who carried out the GST audit or it could be also certified through any other CA who didn’t carry out the GST Audit for that particular GSTIN.
Conclusion
Thus, it could be concluded that when an individual taxpayer has the registration under GST, each and every one of the records maintained by that individual shall pass through GST audit. The purpose is to check the correctness of the declaration of data made in records and understand their compliance with the GST rules.
Note: A financial year means the 12-month period beginning from April of a calendar year to March of the next calendar year.
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