Audit in GST includes examination of accounts, returns and other documents retained by a GST registered person. It also ensures correctness of turnover declared; taxes paid, refund claimed, input tax credit availed and assess other such compliances under GST Act to be checked by an authorized expert.
GST is a trust-based taxation regime wherein a taxpayer is required to self-assess his tax liability, pay taxes and file returns. Thus, to confirm whether the taxpayer has properly self -assessed his tax liability tough audit machinery is a must.Numerous measures are taken by the administration for suitable implementation of this &GST audit is one amongst them.
GST Annual Audit applies every year for those GST registered businesses (GSTIN) having turnover more than Rs.2 crore, by the sale of goods or services in the financial year. GST annual audit can be conducted by some Certified CAor it can also be certified by any other CA who did not conduct the GST Audit for that particular GSTIN.
Government has announced for annual return to be filed under GST Act.After filing monthly returns, a regular person has to even file an Annual Return which is quite detailed.
The GST Audit can be carried out either in the premises of the registered person or may also be done at the office of the proper officer. The GST audit proceedings have to be closed within 3 months from the date of commencement of audit.
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1) Turnover based Audit:
- It is performed by Chartered Accountant/Cost Accountant appointed by the taxpayer.
- It is initiated when and if Turnover exceeds 2 crores, the taxpayer has to get his account & records audited.
2) Normal Audit/General Audit:
- It is performed by Commissioner of CGST/SGST or any officer authorized by him.
- It is initiated on order of Commissioner by giving 15 days prior notice.
3) Special Audit:
- It is performed by a Chartered Accountant or Cost Accountant, nominated by Commissioner.
- It is initiated on order of Deputy/Assistant Commissioner with prior approval of commissioner.
If the annual turnover/sales of a registered GST taxpayer is more than Rs.2 cr. in a FY, he is required to get his books audited by a CA or Cost Accountant (ICWA) every year.
A FY covers the twelve months period start from April of a year to March of the next year.
The total turnover/sales calculation must be PAN linked based, which means that when the turnover/sales under the PAN is more than Rs.2 cr. all business bodies registered under GST for that PAN will be accountable for GST audit for a FY.
For companies with anyearly turnover/sales of less than Rs.5crore filing of GSTR-9C return for FY 18-19 is waived off by the government.
Items included while calculating turnover:
- All taxable (inter-state and intra-state) supplies other than supplies on which reverse charge is applicable
- Supplies between separate business verticals.
- Goods supplied to job worker and same received from job worker on P 2 P Basis.
- Value of all export/zero-rated supplies.
- Supplies/sale of agents, mediators or job worker on behalf of the principal person.
- All exempt supplies. E.g. Agricultural produce supplied along with branded ready-to-eatfood.
- All taxes other than those covered under GST Eg: Entertainment Tax paid on the sale of movie tickets.
Items excluded while calculating turnover:
- Inward supplies or purchases from other parties on which gsttax is paid under reverse charge mechanism.
- All taxes and cess charged under Goods and Service Tax like CGST, SGST or IGST, Compensation Cess.
- Goods supplied or transferred to job worker or received back from a Job Worker after some time.
- Activities which are neither supply of goods nor service under schedule III of CGST Act.
A proprietor, partner or Board of Director in case of a company should appoint a GST Auditor at the beginning of the financial year.
Following are important accounts or records for review:
- Sales Register
- Stock Register
- Purchase Register and Expenses ledgers
- Input tax credit availed and utilized
- Output tax payable and paid
- E-way bills generated during the period under Audit, if in compliance with rules.
- Any documents that record communications from the GST department relating to the year.
Audit under GST can be undertaken only after filing of Annual GST Return in the form of GSTR-9.
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