The Goods and Service Tax Act has brought about a dramatic change in the taxation system of India. GST has assured that the taxation system India become less complicated and transparent. In this article, we would be discussing the following:
- What is the prescribed limit of turnover limit under GST audit?
- Who will audit under GST?
- What is the penalty, if one fails to do audit?
- Return formats and forms under GST Audit
So, without any further delay, let’s get started!
What is the prescribed limit of turnover limit under GST audit?
As per the department, every registered GST dealer/ trader is required to get their accounts audited if the total turnover during a financial year exceeds INR 1 crore. The audit must be done either by a Chartered Accountant or a Cost Accountant.
Note: The prescribed amount of INR 1 Crore holds true for the current period, and MAY OR MAY NOT CHANGE in future. The department may change the figure from time to time, if required.
Who will audit under GST?
Audit under GST can be performed by two parties:
- Tax payer
- GST authority
Audit by tax payer
Audit by tax payer under GST is mandatory if the total turnover during a financial year exceeds INR 1 crore. Under this case, the tax payer needs to have his account audited by certified Cost Accountant or Chartered Accountant. Records in respect of invoices and other important documents needs to be preserved by the tax payers. The objective is to maintain compliance under the issued guidelines of GST.
Audit by tax authority
The Commissioner of SGST/ CGST may order any authorized officer to conduct a GST Audit on a tax payer. It is not necessary that every GST registered dealer will have his accounts audited. The frequency and selection of accounts is either done at random or the scrutiny department has sufficient grounds to believe that the submitted return is not true. Once the Commissioner wants to conduct an audit, he shall forward a notice to the auditee 15 days earlier from the date of commencement of audit. Audit shall take a period of 90 days/ 3 months and if there is a requirement, then the Commissioner may extent the period of audit for another 6 months.
Duty of the Auditee
Once an audit by tax authority is being conducted, it is the duty of the auditee to:
- Provide necessary information as demanded by the authority (documents/ invoices/ etc.)
- Offer correct information as demanded by the authority.
There can also be a case of Special Audit as ordered by the Commissioner where the audit would be carried by the Chartered Accountant or the Cost Accountant appointed by the Commissioner.
What is the penalty, if one fails to do audit?
People who have failed to get themselves audited as required by the GST Act are required to bear a penalty of INR 10, 000 or 10% of the taxable amount, whichever is higher. Additionally, taxable amount should also be added to the total payable amount. The case of tax evasion under GST penalties would be applicable here.
For example: If Mr. Arvind’s tax liability is INR 9000 and he has failed to get his account audited, then the total amount required to pay by him is à 10% of INR 9000 OR INR 10000 (whichever is higher) + INR 9000 (taxable amount) = INR 19, 000.
Return formats and forms under GST Audit
The GST returns should be filed by the tax payer himself in Form GSTR 9B in the prescribed manner. The form should also be accompanied by a reconciliation statement as given by the Chartered Accountant or Cost Accountant upon audit. The mode of form fill up and payment of taxation is online and should be done prior to 31 December 2017.