Audit under GST in detail

Audit under GST in detail

Audit under GST in detail

The GST regime continues to promote the scheme of self-assessment like erstwhile indirect tax laws and Audit of records of tax payers is the basis for the proper functioning of self-assessment based tax system. The GST regime continues to promote the scheme of self-assessment like erstwhile indirect tax laws and Audit of records of tax payers is the basis for the proper functioning of self-assessment based tax system.

As per section 2(13) of CGST Act, 2017. GST Audit means examination of records, returns and documents maintained and furnished by registered person to check the following:-

  • Verify the correctness of turnover declared.
  • Input tax credit availed and utilized.
  • Exemptions and deductions claimed.
  • Rate of tax applied in respect of supply of goods or services etc.

The following three types of GST audit are envisaged under the GST Law:-

  1. GST  Audit u/s 35(5) of Act, if turnover exceeds prescribed limit (i.e  Rs. 2 Crore)
  2. GST Audit by tax authorities u/s 65.
  3. Special GST audit direction from department u/s 66.

Types of Audit in GST Law

1) GST Audit u/s 35(5)
As per section 35(5) with rule 80, in case registered person whose aggregate turnover during the financial year exceeds Rs. 2 crore, he shall get his accounts audited by Chartered Accountant or Cost Accountant.

Here the term used is aggregate turnover and not turnover in state. Aggregate turnover is computed on all India basis having same PAN. Therefore, if a registered person is liable to gets his accounts audited under section 35, then all the registration obtained under same PAN will also be liable to GST audit.

For example, if a company XYZ Ltd has operations in two states Haryana and Rajasthan, and turnover in Haryana is 3.75 crore and in Rajasthan is 25 lakh, then GST audit to be conducted for both the states. GST Audit under this section to be conducted GSTIN wise.The registered person whose accounts are to be audited, he shall submit audited accounts along with his annual return in Form GSTR-9C and a reconciliation statement reconciling turnover in audited financial statement and return furnished for financial year.

2) GST Audit by u/s 65
It is important tool in tax administration to ensure compliance of law and prevent revenue leakage. This section authorizes conduct of GST audit by commissioner or any officer authorized by him of transactions of registered person only. It means GST audit of unregistered person cannot be carried out under this section even if he is liable to register. The commissioner may issue general or specific order to authorize officers to conduct GST audit.
Before commencement of audit, proper officer will issue a notice in form ADT-01 at least 15 days prior to commencement of audit. The audit may be conducted at place of business of registered person or in the office of proper officer. During audit, officer will ensure correctness of turnover declared, input tax credit availed and utilized, deductions and exemptions claimed etc. The GST audit under this section be completed within 3 months (subject to extension by commissioner) from commencement of audit. On completion of audit, officer will inform the discrepancy noticed with registered person and after considering reply of registered person, his findings to be finalize.
The proper officer will inform the final findings of his audit to the registered person in form ADT-02.The finding under GST audit may be used by proper officer to initiate action u/s 73 or 74.

3) Special GST audit direction by department u/s 66
Special GST audit direction under this section is issued to registered person only when any proceeding (being scrutiny, enquiry, investigation or any other proceeding) is pending before him and having regard to nature and complexity of case and interest of revenue , he is of opinion that

  • Value has not been correctly declared    OR
  • Credit availed is not within normal limits

In such a case, proper officer with prior approval of commissioner, issue direction to registered person in form ADT-03 to get his records including accounts audited by Chartered Accountant or cost Accountant as nominated by commissioner (Auditor is not choosed by registered person).

The audit direction under this section may be issued even if accounts/records of such person is already audited under this act or any other act.

On completion of audit, Auditors will submit his report to proper officer within 90 days (subject to extension) and registered person will be informed of finding in form ADT-04. Opportunity of being heard is given to person, if officer intends to use material gathered during GST audit in any proceeding.

The proper officer may initiate proceeding u/s 73 or 74 on the basis of finding of special GST audit.

The content of the articles is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

E-Way Bill: The First Step of Revolution in The Trade System

“Mom: ‘Could you bring 10kg of rice from the nearby grocery store.’ Son: ‘Of course mom.’ (Son walks to store and complete the order by mom). ” Well wish all transfer goods could be that simple. Transfer of any good (mainly for trade purpose) from one place to another is not just as simple as it sounds. It’s not only the size of consignment /goods or time which is the main concern; It’s actually documentation and legalities which brings the major concern for the traders. Timely and hassle free transaction of goods is what all require in today’s Trade World. E- Way Bill, is one of the solution or you can say relief for trade world.

What is E – Way Bill?
As you get a simple hint by its name itself, which is Electronic Way Bill. So for every transfer of goods of value more than Rs.50,000, a registered user can easily generate E-Way Bill online by Web portal or Mobile Application. It actually came into effect on 1st April 2018, mandated by govt. in terms of section 68 of the Goods and Services Tax (GST) Act.

How to Generate E- Way Bill?
If you are familiar with internet, computer and Smart phone, then E- Way Bill is no Big Deal you can get it with tap of your fingers online. All you have to do is register yourself on Web Portal which can be done with few simple steps.

  • Visit E-Way Bill Portal.
  • Go to Registration >> Click E- Way Bill Registration.
  • Enter GSTIN
  • Generate an OTP ( on your registered Mobile No. )
  • Create a new User ID and Password.

(Note: This is for GST registered user)

For Unregistered (GST) Transporter: They will be issued a Transporter ID.
When Registered (GST) receiver receive Goods from Unregistered Supplier, then receiver have to generate the E- Way Bill.

Steps to Generate E- Way Bill:

  • Login to E- Way bill system
  • Under E-Way Bill >> Click ‘Generate New’.
  • Fill Up the Form and required Details.
  • Submit.

You can also Print E- Way Bill.

Advantages and Disadvantages of E- Way Bill:

Less Documentation: The biggest Advantage of E- Way Bill is that it reduces the Documentation procedure and made it way easy as you can generate it sitting at your home or office.

Cost Efficient: It will reduce the logistic cost and tax avoidance also get reduced.

Will enhances the efficiency of Transportation: As the load of documentation is reduce, which means less paper work and hassle free movements of transport and thus will make it efficient and speedy.
It is Very user friendly, via use of web portal or mobile app; Dealers can self download it anywhere at anyplace easily.

Lack Of Internet Connectivity: Internet connectivity is still not perfectly established in many part of India Properly so this is big concern.

Different Opinion: Different states have different opinion about it and many want to implement their own system.

Glitches in Generating Bills: As it’s still going under changes and modifications so its facing some technical glitches sometime.

E- Way Bill is a New Revolution in the world of Indian Trade System. We will keep learning about it and it will keep learning and getting better as the time progress. For any further Details Contact SP Chopra & Co. is one stop solution for all your business problems so feel free to contact them and run your business with smoothness and smile.

What is GST | Goods and Services Tax ?


Goods and Services Tax is a multi-stage & destination-based tax that will be applied on each and every value addition.

Let’s start with the Multi-stage, there are multiple way an product goes to manufacture or production to the final sale. First stage is Buying of raw materials. The second stage is production or manufacturing. Then, warehousing of materials. Now sale of the product to the retailer and  finally the retailer sells you

Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax.

GST will be applied on these value additions and at every point of sale.

At present, Indian tax structure is divided into two segments 1) Direct Tax 2) Indirect Taxes. Direct Taxes are applied on where the liability cannot be passed on to someone else.

Indirect Taxes are the liability of the tax that can be passed on to someone else. When the shopkeeper must have to pay VAT on his sale, he can pass on the liability to the customer.

How GST will work?

When Goods and Services Tax is implemented, there will be 3 kinds of applicable Goods and Services Taxes:

CGST: Central government will collect the revenue

SGST: State governments for intra-state sales will collect the revenue

IGST: Central government for inter-state sales will collect the revenue