GST Audit for Taxpayers Above 2 Crore Turnover

GST Audit is one of the measures by the government for proper implementation of GST. You have to do an audit if your annual turnover is above ₹ 2 crores in a financial year.

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Overview of GST Audit for Taxpayers Above 2 Crore Turnover

GST is a trust-based taxation system where the applicant can independently determine his tax liability and pay it without interference from the tax authorities.

The government has established a rigorous audit mechanism to test and confirm that the taxpayer complies with the requirements of the GST Act to ensure that the self-assessed GST returns are not misappropriated.

If, within the financial year, the revenue touches ₹ 2 Crores, the taxpayer is expected to get his records audited by a Chartered Accountant or Cost Accountant.

They are expected to include a copy of the annual reports and accounts and a properly certified summary document in Form GSTR 9C on or before 31 December. The GST audit limit is the same for all taxpayers registered, that is. no distinct GST audit limit is set for special category states or union territories.

Benefits of GST Audit

  • The actual place of supply such that the required taxes are levied and assessed properly (IGST, CGST, SGST) as incorrect and full payment of taxes is no excuse, and taxes must be paid appropriately by the respective suppliers
  • Properly specified and provided HSN Code Rate for the goods and services in exchange for GSTR 1
  • The exact date of SUPPLY will be known, so taxes are either paid (that is paying before due) or post-ordered (that is charging later than due) and as a result payable on time. This also leads to reduced interest rates (both on prepayment and post-payment) and fines (in situations of post-payment). For example, the tax liability on advance receipts received by consumers, etc
  • Any over-collected tax needs to be charged to the government because it would result in profiteering and, therefore, massive fines. Likewise, the manufacturer or retailer will incur some tax levy
  • Good & Service taxes are charged and collected at effective GST rates as the year has seen many adjustments in the tax levels of different products
  • Account records are held in compliance with the manner set forth under the ACT
  • The invoices were collected appropriately
  • Matching the GST returns for account books
  • GST electronic credit & cash register equal to the tax reflected in the accounts
  • Find if there is any not stated GST input tax credit. Eg: bank charges, sundry cost bills like printing & paperwork, etc

Types of GST Audits

The 2017 GST Act allows for three forms of Audit.

The Chartered Accountant or Tax Accountant Audit GST

According to Section 35(5) of the CGST Act of 2017, a cost accountant or a chartered accountant must conduct the initial examination. A copy of the audited yearly reports and a fully certified reconciliation statement must be included in Form GSTR-9C for each enrolled person whose gross revenue exceeds two crore rupees in a fiscal year.

GST Departmental Audit

Section 65(1) of the CGST Act, 2017, the second form is the regular audit; the GST law gives the audit authority to the Commissioner or to any officer allowed by him/her to conduct the audit of any registered individual at such frequency and in such a manner as may be required for that time.

GST-Special Audit

The Special Audit is the third type of audit, according to Section 66(1) of the CGST Act, 2017. Depending on the circumstances, a licensed individual may be compelled to have his documentation, such as account books, verified and audited by a chartered accountant or expense accountant at any point of inspection, examination, prosecution, or other litigation.

Procedure of GST Registration Through Vakilsearch

  • We collect you necessary documents
  • We help you get a secure GST Identification Number
  • We make it easy for you to get your GST from the comfort of your own home
  • We will File ITR Return and complete all other compliances as and when required.

Documents Required GST Audit

  • A sample copy of receipts or agreements etc
  • A written copy of the letters obtained from the administration about the representation
  • Duplicate copies of GST returns, tax-paid details, and also credit used or sales made, etc
  • An offer letter that includes the auditor and the management's scope and goals.
  • A letter of engagement and appointment
  • Audit plan details and the audit program
  • A full GST or GSTR-9C audit checklist
  • The relevant problems that were found through the evaluation and organisational control failures that were reported to management
  • It should be noted that the risk management method extended for high-risk and low-risk areas
  • Evidence obtained during the audit is necessary and relevant
  • All research papers have to be in electronic form like JPEG, PDF, CSV, Excel, JSON, etc.

The list above is not inclusive, so it is important to record all other required or essential documents.

Purpose of GST Audit Documentation

  • To show the audit was prepared and carried out in compliance with auditing practices
  • To support the engagement team in the successful preparation and execution of the GST Registration audit
  • To function as proof to demonstrate that the auditors have achieved the overall targets set by the auditors
  • To promote transparency and obligation for the job within the engagement team
  • To allow the reporting partner to ensure satisfactory completion of all planned works
  • To assist in the preparation and tracking of future audits
  • Foster a methodical approach
  • To allow external inspections and reviews per statutory legislative, regulatory, or other standards
  • To maintain records of matters relevant to the continuity of future audits.

Why Vakilsearch?

Regarding legal services, Vakilsearch is the go-to platform for many customers. Vakilsearch has done many GST audits for big businesses and individuals. Vakilsearch caters to each customer's needs during registration. Vakilsearch has a handful of legal experts who guide you in every step, which makes it less stressful when you want to start with the audit process.

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