ನಮ್ಮ ಸಮಗ್ರ ಮಾರ್ಗದರ್ಶಿಯಲ್ಲಿ ಸುಗಮ GST ಆಡಿಟ್ ಪ್ರಕ್ರಿಯೆಗಾಗಿ ನಿಮ್ಮ ವ್ಯಾಪಾರವನ್ನು ಸಿದ್ಧಪಡಿಸಲು ಅಗತ್ಯವಾದ ತಂತ್ರಗಳನ್ನು ತಿಳಿಯಿರಿ. ದಸ್ತಾವೇಜನ್ನು ಸಂಘಟಿಸುವುದರಿಂದ ಹಿಡಿದು ಆಂತರಿಕ ಲೆಕ್ಕಪರಿಶೋಧನೆಗಳವರೆಗೆ, ಲೆಕ್ಕಪರಿಶೋಧನೆಗಳನ್ನು ಪರಿಣಾಮಕಾರಿಯಾಗಿ ನ್ಯಾವಿಗೇಟ್ ಮಾಡಲು ವ್ಯವಹಾರಗಳಿಗೆ ಸಹಾಯ ಮಾಡಲು ನಾವು ಕ್ರಮಬದ್ಧ ಸಲಹೆಗಳನ್ನು ಒದಗಿಸುತ್ತೇವೆ.

What is GST Audit?

According to Section 35 (5) of CGST Act a registered taxpayer in India has gross turnover exceeding Rs. 2 crores in a financial year should go to GST audit. For this purpose they can avail the services of the best Chartered Accountants in Bangalore. A certified accountant verifies the records, returns and other important documents they maintain and submit to the tax authorities.

Next, the registered taxpayer submits a copy of the GST audit report, reconciliation statement and financial statements through Form GSTR 9C. GST audit is mandatory for all registered taxpayers once in a financial year. Currently, the GST audit limit is Rs. 2 crores, and as per the GST registration process, taxpayers registered under GST have a total turnover of Rs. 2 crores should have a duly audited GST return filed before the due date of 31st December of the previous financial year.

Audit Obligation under GST

An annual audit under GST is necessary to ensure accuracy of financial information and to check whether taxpayers comply with the GST Act 2017. Under the GST scheme launched by the Government of India in 2017, GST is a tax system where taxpayers can easily access their tax returns. File liabilities, ITR or Income Tax returns and pay taxes. And to check whether taxpayers have assessed everything correctly, GST audit is mandated. A GST audit is a way to check the accuracy of annual accounts, one of the various other methods to ensure proper GST practice. For more information and assistance, taxpayers can avail GST Advisory Services .

Types of GST Audit in India

There are three types of GST audits. They are:

• Transaction Based GST Audit: This type of GST audit is performed by a chartered accountant or cost accountant appointed or appointed by the taxpayer. Taxpayers should get audits of their accounts and records through a transaction-based GST audit, which involves transactions exceeding Rs. 2 crores.
• General or Ordinary GST Audit: This type of GST is conducted by SGST or CGST Commissioner or any other recognized officer with 15 days prior notice to the registered taxpayer.
• Special GST Audit: A special GST audit is conducted by a Chartered Accountant or Cost Accountant recognized by the Commissioner on the orders of the Collector or Assistant Commissioner with the prior approval of the Commissioner.

Objectives of GST Audit under the Act

As per definition of audit of Central Goods and Services Tax under Section 2(13) the objectives of GST audit are as follows:

• A GST audit is a close analysis of tax records, returns and other related documents
• This analysis is done to check the amount of taxes paid, turnover declared, input tax credit available and refund claimed.
• Records, returns and other related documents maintained or issued under GST and other laws
• Due diligence is done to assess auditor’s compliance with GST Act laws and regulations.

The main objective of a GST audit is to ensure that the refunds claimed, turnover declared, taxes paid and input tax credits are correct. A GST audit ensures that the taxpayer’s intentions are compliant with the GST rules.

How to prepare for GST audit?

So, how to prepare for GST audit? Here are the steps:

Filing of Annual Return Form

The GST audit form checks all discrepancies between the annual return and the audited financial records. Annual return is the aggregate of quarterly returns filed by registered GST taxpayers. Therefore, taxpayers are required to file the annual return before GST audit. On that note, the due date is the same for GST audit and annual return. But businesses should file their annual return a few weeks before the due date, so that the GST audit goes smoothly.

At the same time, registered taxpayers should disclose errors in their annual returns separately at the time of GST audit to mitigate all reconciliation differences. Taxpayers should also provide reasons for errors in their GST audit report. All annual returns without errors and with proper disclosures are crucial for an easy GST audit.

Preparation for annual return filing and GST audit report

Taxpayers have to submit several reconciliation statements in their GST audit report and annual return filing for ITC claims disaggregated according to cost and nature of ITC claims. These are:

• Cost-wise adjustment or three-way division of ITC is obtained on capital goods credits, inputs and input services.
• Nature-wise reconciliation of GST ITC is available as per self-generated GSTR-2A form.

All these documents and returns are an integral part of the electronic credit ledger and keeping everything available in sync at the time of accounting data can be stressful for businesses. The key to success in this field is pre-planning on the part of the business owner.

Preparations for GST Department Audit Prepare a brief note on the nature of the business and its revenue streams. This may be requested by the department. Prepare GSTIN wise financial statements to avoid unnecessary disputes as it is of no use to the company level financial officer. Reconcile your financial transactions with transactions as per GST. An explanation of the difference should be kept ready. Various reasons for discrepancies include unbilled revenue, financial discounts, cross charge invoices etc. Various other adjustments can be easily accommodated. Reconciliations GSTR-3B and GSTR-1, GST Returns and Books, GSTR-2B and GSTR-3B, E-Way Bill and GSTR-1, etc.

Following are some best practices for conducting departmental audits: 

• Ensure that the department has issued Form GST ADT-01 i.e. Notice to conduct audit before actually conducting the audit. Check the place where the audit is intended to be conducted
• It can be desk audit or field audit
• A registered person may be required to respond and act accordingly
• If the audit is intended to be conducted at the registered person’s business premises, then the visit of the audit party should be recorded in the log book.
• The list of documents to be submitted should be mentioned in Form GST ADT-01
• Usually a standard bulk list is included in ADT-01 and hence the registered person has to submit only the documents applicable to him
• Double check all submissions before sending them to the department. Co-operate with departmental authorities and provide information as requested 
• Do not give any additional/abbreviated information. If additional time is required for submission of certain documents, it may be requested with a written request citing the reasons
• Ensure all communications with the department are in writing. Avoid verbal conversation with department officials
• Insist on written communication as well. Various interactions with the department may be: 1. Sending documents 2. Asking for additional time 3. 
• REPLY TO AUDIT OBJECTIONS If there is any genuine liability which has escaped payment due to inadvertent error, discharge it with interest before issuing a show cause notice.
•  If tax and interest are paid before show cause notice is issued, penalty is not payable as per section 73(5) and 73(6) of CGST Act. 
• Hence payment of tax and interest before SCN leads to saving of penalty and interest
•  The above payment should be made in DRC-03, the time limit for making adjustments in returns has expired 
• Any voluntary payment has to be made by opting for ‘Section 73(5)’. After making the payment, it should be communicated to the officer in writing
• Write a draft reply to the audit points raised with reference to relevant regulations, circulars, case laws etc. so as to increase the chances of the matter not reaching the stage of show cause notice.
•  Good replies with legal backing can drop points at the audit stage itself, avoiding huge litigation costs.
• It is suggested to take professional advice and support for answering departmental letters
• If the departmental audit has been completed without any demand, confirmation of the same should be obtained from the department. A letter should be obtained from the department stating that the audit is over and there is no liability
• If no information is received from the department, it is suggested to write to the department and get confirmation from the department that the audit has been completed and there is no further liability.

conclusion

It is important for businesses to prepare for a smooth GST audit process to ensure compliance and effectively mitigate risks. By implementing the strategies outlined in this guide, such as organizing documentation and conducting internal audits, businesses can streamline the audit process and demonstrate transparency to auditors. With expert guidance from Vakilsearch, businesses can confidently navigate GST audits, ensure compliance and minimize potential liabilities. To benefit from GST input credits, ensure you apply GST registration promptly.