GST Audit will apply every year for those GST registered business (GSTIN) having turnover more than Rs. 2 crores, by the sale of goods or services in the financial year.
The total turnover calculation must be PAN-based, which means that once the turnover under the PAN is more than Rs. 2 crores all business entities registered under GST for that PAN will be liable for GST audit for a financial year. A financial year covers the 12-month period beginning from April of a calendar year to March of the next calendar year.
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.
It’s important that companies start preparing for these audits in order to avoid any loss of credits, applicability of interest/penalties, etc. 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.
Forms for Annual return and GST Audit:
| Type of taxpayer | Form to be filled |
| Whether or not applicable to GST audit | |
| A Regular taxpayer filling GSTR-1 & GSTR-3B | GSTR-9 |
| A Taxpayer under Composition Scheme | GSTR-9A |
| E-commerce operator | GSTR-9B |
| Applicable for GST Audit | |
| Taxpayers whose turnover exceeds Rs. 2 crores in FY | GSTR-9C |
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