Going for a GST Audit for the first time can seem challenging. Since the law of the land wants examination of tax and accounts of the registered taxable person, it is essential to go through the GST audit process. In India, it also helps tax authorities know about the information provided by the business, input tax credit availability of different companies, and the charged tax liability.  

This article will prove helpful if you want to know more about GST, what the GST audit limit is, and how to do GST audit 

As per CGST Act 2017, every person whose taxable income exceeds 2 crore rupees annually is needed to get his accounts audited by a Chartered Accountant or a Cost and Management Accountant. Taxable persons are audited as per the provisions contained under section 35(5).  

Step 1: Maintenance of Records

Every taxable person needs to have an accurate record to show the correct value of:

  • Production of goods.
  • Outward supply of goods or services.
  • Inward supply of goods or services.
  • Input tax credit (if) received by the taxpayer.
  • The stock of goods available.
  • Output tax that’s payable or output tax already paid. 

Step 2: Audit by Tax Authorities 

According to the GST law, the audit commissioner or someone on his behalf may conduct the GST of the registered person at this stage. For audit by tax authorities, following points needs to be considered:

  • 15 days notice for conducting the audit.
  • The audit needs to be completed within three months of the audit commencement date.
  • The CGST or SGST commissioner can extend the period by giving a six-month notice.

Step 3: Complete GST Audit Process 

The officials will check each and every account and statement of the taxable person that is required as per the GST law 2017. They will check the books maintained by the registered person, and they will also check the returns and statements provided under the act. The officers will verify the correctness of the numbers, accuracy of turnover, the rate of tax applied on the goods and services sold by the GST payer, the deductions or exemptions claimed by the registered person, and the refund input tax credit claimed. Thus, every document supplied by the person is verified by the officials. 

Step 4: Additional Information

When conducting the audit, the authorities and officials can also ask the auditee to provide additional information in terms of:

  • Extra information needed by the authorities to conduct the audit.
  • The auditee may need to provide a facility for the verification of the accounts and records.
  • To provide them with assistance so that the audit can be completed in time. 

Step 5: Information About Discrepancies

At this stage, the officer will inform the person whose account is audited about any discrepancies found. In return, the registered person may file his reply as per the GST audit applicability rule. The proper officer will finalize the findings after getting an appropriate response from the auditee.  

Step 6: Audit Finalization

This is the final step in the GST audit process. At this stage, the concerned officer will finalize his observation after going through all books of account and after considering the reply of the registered person. After completion of 30 days of the audit process, the concerned officer will inform the registered person about his findings, the observations, the reasons for results, and the rights and obligations of the auditee. In the end, if the officer finds about any amount unpaid, short paid, less refunded amount or any other discrepancies, legal actions can be taken against the registered person as per the GST law 2017. 

We hope knowing about all these steps and procedures will help you in the first GST of your company well. Although the GST audit process may seem complicated initially, if you follow the rules correctly, you don’t need to worry about any step. So, get ready for the GST audit and let us know if you need any more information.