Audit under GST

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Audit under GST

Various measure have been taken by the government to ensure compliance of GST law and audit is one them. Audit conducted under GST law is the examination of records maintained by a taxable person to verify the correctness of information furnished, taxes discharged, refund claimed and input tax credit availed. It is a way to analyse the compliance of taxpayer with the provisions of the GST Act. The meaning of audit is given under section 2(13) of Central Goods and Services Tax Act, 2017. There are three types of audit as prescribed under GST.

  1. Audit by Chartered Accountants or Cost Accountants.
  2. Audit by Tax Authorities.
  1. Audit by Chartered Accountants “or” Cost Accountants :

GST Audit Limit: Every registered person, whose turnover during the financial year exceeds the prescribed “GST audit turnover limit” i.e., 2 crore rupees, shall get the accounts audited by a Chartered Accountant (CA) or a Cost and Management Accountant (CMA). Registered person who is required to get his accounts audited in accordance with section 35(5) shall submit electronically the Annual Return as per section 44 along with a copy of the audited statement of accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year. He shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in Form GSTR-9C along with annual return.
Every registered person, for facilitating the audit, shall keep and maintain his accounts to show the correct value in regards to:

  • Production or manufacture of goods.
  • Outward supply of goods or services or both.
  • Inward supply of goods or services or both.
  • Stock of goods.
  • Input tax credit availed.
  • Output tax payable and paid.
  • Books of accounts point can be added.

2. Audit by Tax Authorities:

The Commissioner or any officer authorised by him, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed in a general or a specific order (Section 65 of CGST Act). The officers may conduct audit at the place of business of the registered person or in their office. The registered person shall be informed by way of a notice of not less than fifteen working days before the conduct of audit in Form GST ADT-01. The audit shall be completed within a period of three months from the date of commencement of the audit and can be further extended by a period not exceeding six months, by the Commissioner if he has a reason to believe that the audit cannot be completed in the given duration.
During the course of audit, the authorised officer may require the registered person—

  • to provide him the necessary facility to verify the books of account or other documents as he may require
  • to furnish such information as he may require and render assistance for timely completion of the audit
  • On conclusion of audit, the proper officer will inform, the registered person, within 30 days, about the findings, his rights and obligations and the reasons for such findings in Form ADT

The officer along with his team will verify:

  • Documents on the basis of which the books of account are maintained and the returns and statements furnished under the provisions of the Act and the rules made there under
  • Correctness of the turnover
  • Exemptions and deductions claimed
  • Rate of tax applied in respect of the supply of goods or services or both
  • Input tax credit availed and utilised
  • Refund claimed
  • Other relevant issues

3. Special Audit :

In Special Audit the registered person can be directed to get his records including books of account examined and audited by a chartered accountant or a cost accountant during any stage of scrutiny, inquiry, investigation or any other proceedings; depending upon the complexity of the case.


  • During the scrutiny, inquiry, investigation or any other proceedings of a registered person, the Assistant Commissioner or any officer senior to him, having regard to the nature and complexity of the case and the interest of revenue, might be of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits.
  • In such cases, with the prior approval of the Commissioner, the Assistant Commissioner or any officer senior to him can direct the registered person in FORM GST ADT-03 to get his records including books of account examined and audited by a specified chartered accountant or a cost accountant. The chartered accountant or a cost accountant will be nominated by the Commissioner.
  • The chartered accountant or cost accountant so nominated has to submit a report of such audit within the period of ninety days, duly signed and certified by him to the Assistant Commissioner.
  • On an application made by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, the Assistant Commissioner can extend the said period by a further period of ninety days.
  • The provisions of special audit shall have effect even if the accounts of the registered person have been audited under any other provisions of the GST Act or any other law for the time being in force
  • The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit and which is proposed to be used in any proceedings against him under this Act or the rules made thereunder.
  • The expenses of the examination and audit of records, including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner.
  • On conclusion of the special audit, the registered person shall be informed of the findings of the Special Audit in GST special audit in FORM GST ADT-04.
  • Where the special audit results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the process of demand and recovery will be initiated against the registered person