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Audit under GST

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Meaning of Audit under GST

Section 2(13) of the GST Law defines Audit as the the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder 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 this Act or the rules made thereunder;

Types of Audit under GST

There are three types of audit prescribed in the GST Act(s) as explained below: 

(a) Audit by Chartered Accountant or a Cost Accountant:

 Every registered person whose turnover exceeds the prescribed limit, shall get his accounts audited by a chartered accountant or a cost accountant. (Section 35(5) of the CGST/SGST Act) 

(b) Audit by Department: 

The Commissioner or any officer of CGST or SGST or UTGST authorized by him by a general or specific order, may conduct audit of any registered person. The frequency and manner of audit will be prescribed in due course. (Section 65 of the CGST/SGST Act) 

(c) Special Audit: 

If at any stage of scrutiny, inquiry, investigations or any other proceedings, if department is of the opinion that the value has not been correctly declared or credit availed is not within the normal limits, department may order special audit by chartered accountant or cost accountant, nominated by department. (Section 66 of the CGST/SGST Act) 

Prior Intimation of Audit

The Registered person shall be given the prior intimation of the Audit by way of a Notice atleast 15 working days prior to conduct of audit.

Obligations of Taxable person on Receipt of Notice of Audit

The taxable person is required to: 

a) facilitate the verification of accounts/records available or requisitioned by the authorities, 

b) provide such information as the authorities may require for the conduct of the audit, and 

c) render assistance for timely completion of the audit.

Time Limit for Completion of Audit

The audit is required to be completed within 3 months from the date of Commencement of audit. The period is extendable for a further period of a maximum of 6 months by the Commissioner. Where the term ‘Commencement of audit’ is important because audit has to be completed within a given time frame in reference to this date of commencement. Commencement of audit means the later of the following: 

a) the date on which the records/accounts called for by the audit authorities are made available to them, or 

b) the actual institution of audit at the place of business of the taxpayer.

Action by the proper officer upon conclusion of the audit

The proper officer shall, on conclusion of audit, within 30 days inform the taxable person about his findings, reasons for findings and the taxable person’s rights and obligations in respect of such findings. 


Special Audit

Conditions for Special Audit

A Special Audit may be instituted in the following circumstances:

Where during scrutiny, inquiry, investigation or any other proceedings,any officer not below  the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue where

• the taxable value has not been correctly declared or

• the credit availed is not within the normal limits, 

he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a Chartered Accountant or a Cost Accountant as may be nominated by the Commissioner.

Time Limit for submitting Special Audit Report

The Chartered Accountant or Cost Accountant so nominated shall, within the period of 90 days or within the further extended period of 90 days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner.

Burden of the cost of Special Audit

The expenses for examination and audit including the remuneration payable to the Chartered Accountant or Cost Accountant will be determined and borne by the Commissioner.

Action taken by Tax Authorities after Special Audit

Where the special audit conducted results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74 of the CGST/SGST Act.