Applicability of GST Audit

Applicability of GST Audit

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The Article ‘Applicability of GST audit’ by Ishita Singh delves into the process of audit under Good and Services Tax (GST) in depth. This Article demonstrates various categories of the GST audit as well as the goal of the GST audit. An audit is an intrinsic aspect in order to verify whether the business account is in compliance with the GST applicable laws. The author explains the process of the Departmental GST audit.

Audit under GST is compulsory and the role of a Chartered Accountant is beneficial in the audit process in order to prepare a report and get a vivid picture of the overall business. GST audit is necessary to find it out whether GST is paid by the taxpayer or not. The author further elucidates that even the special audit is carried forward by the taxing authority.

A Brief Introduction: GST audit

The process of audit under GST includes the process of verification and examination of records, returns, and other related documents which are maintained by a person who is taxable, the very significant purpose is to check the correctness of the turnover which is declared, the taxes paid the reference claimed, also about the input tax credit which is availed, and to access the compliance with the provisions of the GST.

The term audit under the vast concept of GST is basically the process of examination of the various records respective returns and other documents maintained by a person who is liable and qualified, so the purpose is naturally to verify and check that the turnover which is declared is correct enough, the various taxes paid, claiming of the refund and other input tax credits which are availed and to access the compliance with the various provisions of GST.

When is the procedure for conducting of GST audit is required to be carried forward?

Now, if a person’s registered annual aggregate turnover exceeds the 5 crore INR during a particular financial year, then such person needs to get his accounts audited by a qualified person.

The goal of the GST audit

  • To examine the records, returns, and other documents related to the finances of the organization or of a particular person.
  • To verify the accurateness and the correctness of

i) the turnover which is declared in the documents and,

ii) the taxes which have been paid,

iii) a refund that is claimed,

iv) input of the tax credit availed.

  • Verify the auditee compliances with the various provisions of the GST act and the other related.

Various kinds of GST audit

  • The very first is the GST Mandatory Audit which deals with Section 35(5) of the audit by professionals.
  • The second audit is the Departmental GST audit which deals with Section 64 of the Audit by Tax Authorities.
  • The third type is the Special Audit which deals with Section 66 of Audit by Tax officials/ authorities.

Discussing the mandatory GST audit by professional

Now the annual turnover of the Enterprise for all of the registered taxpayers is more than rupees 5 crore in a financial year then he is required to get his accounts verified and audited every year.

The business that shall have an annual turnover of more than rupees 5 crores than the filing of GSTR 9C is required, the registered person is required to furnish through electronic mode the common portal along with his annual return in GST 9.

I) Along with the audited annual records/accounts

  • A reconciliation statement stating it is duly verified and certified in the prescribed form in Form GSTR 9C.
  • Aggregate Turnover =The Value of the Taxable Supplies + Exempt Supplies + Export Supplies of all Goods and Services.
  •  And that the calculation of the total turnover must be Pan based which means that once the turnover under the pan is exceeding rupees 5 crores then the filing of GSTR 9C is required.

Departmental GST audit by the taxing authorities

Now, the point of discussion here is the departmental GST audit by the taxing authorities under Section 65

It is determined by the place of office in which the person is registered or in the tax office. Secondly, determines the Commissioner or any other officer authorized by him and the registered person shall be notified by a way of a kind of notice delivered 15 days prior to the conduct of the audit in form GST ADT-01.

Also, the tact authorities of the audit need to be completed within a time period of 3 months from the date of the commencement of the audit, and such a period which is further extendable for a period of another 6 months by the Commissioner for the reasons to be recorded in a way of writing. Also, the proper officer in charge shall within 30 days inform the registered person of who’s records were audited about the findings, his rights and obligations, and also the reasons for such finding and inform in the form GST ADT 02.

The special audit by the taxing authorities under Section 66

In this type of order, the registered person will be directed to get the records that are included in the books of accounts. Records shall be examined and audited by a Chartered Accountant or cost accountant which is nominated by the Commissioner.

This kind of examination will take place during any of the stages of scrutiny, inquiry, investigation, or any other further proceeding, and the assistant manager commissioner has to be informed. There can be an order for a special audit. The Commissioner nominates a Chartered Accountant whose function is to carry out the special audit.

The Chartered Accountant has to submit a report of the audit done within a period of 90 days and also the assistant commissioner can also have the authority to extend the period over to 90 days for the application with regards to sufficient reason.

The person who is tagged will be given an opportunity of being presented and heard in the findings that are gathered out of the special Audit and also the result in detection of unpaid or any kind of the wrong refund etc. Also, the recovery will start regarding the same against the registered person after this process of auditing.

Who bears the expense of the special audit?

The expenses regarding this process of the special audit and including the remuneration of the auditor should be calculated and determined and the Commissioner in charge pays it.

Departmental GST audit procedure

Step 1:  Intimation regarding the occurrence of the GST audit

The concerned department will give notice regarding the commencing of the audit and such a notice must be given to the registered person in concern at least 15 days before the happening of the process of audit.

Step 2: The GST audit will be commenced by the Department

The process of an audit is referred to as acts as a comment when the documents and records by the officer are submitted within the set period of time and at the place of business of the registered person.

Step 3: The manner in which the audit has to be conducted 

The GST audit will be conducted by the officer at the place of the business or at his own very office.  The verification of the various records, the documents, and other information will be proceeded by the departmental officer and for the period of audit, the officer will ensure that the documents or other information which is collected are correct to the best of his knowledge.

Step 4: The conclusion of the audit

The completion of this process includes that the officer will inform about the gathered findings and reports. It shall be made notable by the officer to the registered person. The registered person replies in the appropriate manner to the raised officer’s findings and records.  After keeping into consideration the reply which is filed by the registered person the officer will complete the order by making the final observation in form GST ADT-02 and in kind of special audit in Form ADT 04.


Coming to the concluding statement, it is well observed that an audit under the GST involves the verification of records. These records are maintained by a person who is a registered member of GST. This process also ensures the correctness of the turnover which is declared by a particular organization, the amount of taxes paid, the reference that is claimed, along with the input tax credits which are available. Special care has to be taken towards compliance with the provisions of the GST Act. That has to be checked by an authorized expert in the time period prescribed.


[1] GST Audit-Types, Objective, Applicability, Available Here

[2] Audit under GST, Available Here

[3] GST Audit-Some Basics, Available Here

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