ANNUAL RETURNS AND GST AUDIT

GST is a trust based taxation regime wherein the registered dealer is required to self- assesses his returns and determine tax liability.

Audit has been defined in section 2(13) of the CGST Act, 2017 and it means the examination of records, returns and other documents maintained or furnished by the registered person under the GST Acts or the rules made there under or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of the GST Acts or the rules made thereunder.

TYPES OF GST AUDITS

There are basically three kinds of GST audit that may be conducted under GST Audit Rules:

  • Mandatory GST Audit
  • Departmental GST Audit
  • Special GST Audit

There is a strong GST audit mechanism in place under GST Audit Rules, however still there may be certain confusions related to when an assessee is liable to tax from multiple states, and then he should be audited at one centralized unit or should undergo multiple audits. Manual Audits are more proficient or e-audits.

Mandatory GST Audit (Section 35 of CGST Act, 2017)

  • Conducted by CA / CMA where aggregate turnover exceeds Rs. 2 crore. This is a mandatory audit by CA / CMA where aggregate turnover exceeds Rs. 2 crore.
  • Form used for this is GSTR-9C.
  • Due date for filing GSTR-9C is 31st December of following year to which audit relates. For e.g. If F.Y. 2020-21 due date will be 31.12.2021.

Departmental GST Audit

Commissioner or any officer can undertake audit of any registered person for such period, at such frequency as may be prescribed. It is also called as audit by tax authorities.

  • Commissioner or authorized officer can undertake audit of registered person.
  • Audit can be conducted for financial year or part thereof or multiplies thereof.
  • Place of audit will be place of business of registered person or in their office.
  • Fifteen days prior notice for conduct of audit in form GST ADT-01.
  • Time limit for conducting audit is three months from date of commencement of audit. Further extension by Commissioner by six months with reasons to be recorded in writing.
  • Findings of audit to be informed to taxable person within thirty days.
  • Initiation of action against taxable person if tax liability identified.

Special GST Audit

Registered person directed to get his records audited including books of accounts by CA / CMA during any stage of scrutiny, inquiry depending upon the complexity of accounts.

  • Special audit resorted if value not correctly declared or excess input tax credit availed.
  • Assistant Commissioner with prior approval of Commissioner directs this audit.
  • Audit conducted by CA / CMA nominated by the Commissioner.
  • Report by CA within period of ninety days. Further extension by ninety days if
    • on an application made by registered person or CA or
    • for any reason sufficient and material available
  • Accounts to be audited even if already audited.
  • Opportunity of being heard is to be given.
  • Expenses w.r.t. Audit borne by the Department.
  • Initiation of action against taxable person if tax liability identified.
  • GST ADT-04 used for Audit Findings.

NEED FOR GST AUDIT

Audit under GST involves examination of records, returns and other documents maintained by a GST registered person. It also ensures correctness of turnover declared; taxes paid, refund claimed, input tax credit availed and assess other such compliances under GST Act to be checked by an authorized expert.

GST is a trust-based taxation regime wherein a taxpayer is required to self-assess his tax liability, pay taxes and file returns. Thus, to ensure whether the taxpayer has correctly self -assessed his tax liability a robust audit mechanism is a must. Various measures are taken by the government for proper implementation of GST and audit is one amongst them.

FORMS FOR ANNUAL RETURNS AND GST AUDIT:

Type of taxpayerForm to be filed
Whether or not applicable to GST Audit
A Regular taxpayer filing GSTR 1 and GSTR 3BGSTR-9
A Taxpayer under Composition SchemeGSTR-9A
E-commerce operatorGSTR-9B
Applicable for GST Audit
Taxpayers whose turnover exceeds Rs. 2 crores in FYGSTR-9C

ANNUAL RETURN UNDER GSTR-9

GSTR 9 is an annual return form that is to be filed by every taxpayer registered under GST. This form comprises income and expenditure details for the financial year and consolidates the returns filed in GSTR-1, GSTR-2A and GSTR-3B into one document. Recently, the last date to file this GST annual return form for FY17-18 was extended to 30th November 2019.

Who is liable to file GSTR-9?

Every GST registered taxpayer must file GSTR 9 once a year. Currently intra-state suppliers and service-sector businesses with annual turnovers over Rs. 20 lakhs and goods-sector businesses with annual turnovers over Rs. 40 lakhs need to register for GST.

Here are some individuals who do not need to file GSTR 9:

  • Casual tax persons
  • Input service distributors
  • Non-resident taxable persons
  • Individuals paying TDS

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