Insights of GST Audit

Insights of GST Audit

Section 2(13) defines Audit as:

“Audit” means:

the examination of records, returns and other documents maintained or furnished by the registered person under this Act or rules made thereunder or under any other law for the time being in force to verify;

Ø the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed; and

Ø to assess his compliance with the provisions of this Act or the rules made thereunder.


There are three types of Audit under GST:

  1. Audit by CA/CMA (Section 35)
  2. Audit by GST Authorities (Section 65)
  3. Special Audit (Section 63)

According to Section 35(5) of the CGST Act:

Every registered person whose turnover during a financial year exceeds the prescribed limit (presently two crore rupees) shall get his accounts audited by

a Chartered Accountant or

a Cost Accountant

and shall submit a copy of the audited annual accounts along with a reconciliation statement (in FORM GSTR-9C, reconciling the value of supplies declared in return with audited annual financial statements)

Contents of the audit report and other particulars to be prescribed

Audited Report and Audited Annual Accounts to be submitted along with annual return on or before 31st December following the end of financial year. (The last date for the GST Audit for the FY 2017-18 is extended till 30th June 2019).

The Business has to re-verify all its GST Compliances such as input and output reconciliations, Turnover matching with Returns, GSTR-2A reconciliation, Transitional Credit etc.

Although the dates are extended till 30th June 2019, it is a high time for the companies to prepare for the Audit.  Some of the key aspects to be considered by companies are as follows:

  • Reconciliations: Ensure reconciliations of output tax/input tax between the books of accounts, returns and e-waybills issued (output side)/tax discharged by the vendors (input side).
  • Tax positions: Review the tax positions adopted by the company and also whether these are correctly reflected in documentation.
  • Credits: Review if any ineligible credits have been availed (including review of credits availed) and in the process also ensure completeness of credits.
  • Applicability of other provisions like free of cost services/goods, valuation, and cross-charges between related persons/distinct persons.

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