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GST Audits | SG Legals

GST Audits

Comprehensive GST audit services to verify the accuracy of GST returns, ensure proper Input Tax Credit utilization, and maintain full compliance with GST laws.

What is a GST Audit?

A GST Audit is an examination of the records, returns, and other documents maintained by a GST-registered taxpayer to verify the correctness of the turnover declared, taxes paid, refunds claimed, and Input Tax Credit (ITC) availed. It ensures compliance with the provisions of the Central Goods and Services Tax (CGST) Act, 2017.

Under Section 35(5) of the CGST Act, taxpayers with turnover exceeding ₹2 crore were earlier required to get their accounts audited by a CA or CMA and submit GSTR-9C as a reconciliation statement. However, with effect from FY 2020-21, the mandatory GST audit and CA/CMA certification of GSTR-9C have been removed. Currently, GSTR-9C is required only as a self-certified reconciliation statement for eligible taxpayers based on prescribed turnover thresholds. While statutory GST audit is no longer mandatory, voluntary GST compliance reviews and internal audits continue to be important for ensuring accuracy and regulatory compliance.

Governed by Section 35(5) & Section 65/66 of the CGST Act, 2017

Types of GST Audits

The CGST Act provides for several types of GST audits depending on the initiating authority and the nature of verification required.

Turnover-Based Audit (Sec 35)

Taxpayers with aggregate annual turnover exceeding prescribed limits were required to get accounts audited and file GSTR-9C reconciliation statement.

Departmental Audit (Sec 65)

Conducted by the Commissioner of GST or an authorized officer at the business premises of the taxpayer to verify compliance with GST provisions.

Special Audit (Sec 66)

Ordered by the Deputy Commissioner when the complexity of the case warrants examination by a CA or cost accountant nominated by the Commissioner.

Voluntary GST Audit

Companies proactively engage GST professionals to audit returns and reconcile data, identifying and correcting discrepancies before departmental scrutiny.

GSTR-9 & GSTR-9C Reconciliation

GSTR-9 Annual Return

GSTR-9 is the annual return to be filed by all registered taxpayers (except composition dealers and a few others) summarizing all outward and inward supplies, ITC availed, and tax paid during the financial year. It is mandatory for taxpayers with turnover exceeding ₹2 crore.

GSTR-9C Reconciliation Statement

GSTR-9C is a reconciliation statement between the annual return (GSTR-9) and the audited annual financial statements. Though CA certification was made optional from FY 2020-21, taxpayers with turnover exceeding ₹5 crore must still file GSTR-9C (self-certified).

Filing Deadline: Both GSTR-9 and GSTR-9C are due by 31st December following the end of the respective financial year. Late filing attracts a fee of ₹200 per day (₹100 CGST + ₹100 SGST) subject to a maximum of 0.25% of turnover.

Documents Required for GST Audit

The following documents are typically examined during a GST audit to verify compliance and reconcile returns with financial statements:

Audited Financial Statements

GST Registration Certificate

All GST Returns (GSTR-1, 3B)

Purchase & Sales Registers

Input Tax Credit (ITC) Ledger

Debit Notes & Credit Notes

E-way Bill Records

Export Documentation (if applicable)

Job Work Records

Bank Statements & Payment Records

GST Audit Process

Data Collection & Reconciliation

Collect all GST returns, financial statements, and ledgers. Reconcile turnover and ITC figures between GSTR-1, GSTR-3B, GSTR-2A/2B, and the audited books of accounts.

ITC Verification

Verify that all ITC claims are valid, supported by proper tax invoices, and that credits on blocked items (Section 17(5)) have not been claimed incorrectly.

Liability Computation

Assess tax liability on all outward supplies including exempt, nil-rated, and zero-rated supplies, and verify reverse charge mechanism (RCM) compliance.

Report & Compliance Filing

Prepare the reconciliation statement (GSTR-9C), highlight discrepancies, recommend corrective actions, and assist with timely filing of all annual returns.

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GST Audits

What is a GST Audit?

Types of GST Audits

Turnover-Based Audit (Sec 35)

Departmental Audit (Sec 65)

Special Audit (Sec 66)

Voluntary GST Audit

GSTR-9 & GSTR-9C Reconciliation

GSTR-9 Annual Return

GSTR-9C Reconciliation Statement

Documents Required for GST Audit

GST Audit Process

Data Collection & Reconciliation

ITC Verification

Liability Computation

Report & Compliance Filing

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