GST Audit in India

The process of verifying the correctness of reported turnover, taxes paid, refunds sought, and input tax credit (ITC) claimed is known as a GST audit. A GST Audit in Indiainvestigates a taxpayer's records, returns, and other paperwork holistically. To opt for the GST audit service, our firm is the best choice to investigate.

We, the Consultant for GST Audit in India is here to help you gain a thorough understanding of the GST audit process, its applicability requirements, the documents needed, the role of audit services and helps you to progress.

Types of GST audit:

Under the Goods and Services Tax (GST), GST audit is required to ensure compliance and accuracy in tax filings. There are various types of GST audit as mentioned below: -

1. Auditby tax authoritiesu/s 65: The Commissioner of CGST/SGST (or an authorized officer) has the authority to audit a taxpayer. The audit period may cover a full financial year, a portion of a financial year, or multiple financial years. A notice will be issued to the taxpayer in FORM GST ADT-01, giving at least 15 working days' notice. The audit must be completed within three months from the start date. However, the Commissioner can extend the audit period by an additional six months, provided there is a written justification for the extension.
2. Turnover-based Audit/Statutory Audit (Removed w.e.f. 1st August 2021): Every GST registered taxable person whose turnover during a financial year exceeds the prescribed limit of Rs.2 crore was subjected to a statutory audit under Section 35(5) of the Central Goods and Services Tax (CGST) Act*. Such businesses were to get their books of accounts audited by a chartered accountant or a cost accountant. 
3. Special Audit: A special audit is a concentrated review of financial accounts, company operations, or business procedures inside an entity. Special audits, unlike routine audits of general financial statements, concentrate specific areas of interest such possible fraud, compliance problems, or operational inefficiencies. As per section 66 of CGST act, a proper officer(not below the rank of Assistant Commissioner) at any stage of scrutiny, inquiry, or investigation may avail the services of a CA or CMA by considering the nature & complexity of the business if the authorized officer is of the opinion that there are discrepancies in value of supply furnished or amount of credit claimed.

Direction for Special audit is issued by proper officer in Form GST ADT-03

Understanding these audits is crucial to maintain accuracy and avoid penalties.LEGAL-N-TAX, your trusted firm in Delhi provides you a detailed information about GST audit and why it is important.

How we conduct GST Audit: -

The GST audit process encompasses several stages.These are mentioned below:

• Step 1: Initial Assessment and Review: LEGAL-N-TAX starts the audit procedure by first looking into GST reports and financial records for the company. This guides the preparation for a thorough audit and helps spot any areas of concern.
• Step 2: Data Reconciliation and Error Analysis: The second step is error analysis and data reconciliation. With the corporate financial statements, the team harmonizes the information from several GST returns—including GSTR-1, GSTR-3B, and GSTR-9. Before the audit advances, any mismatches or deviations are noted and fixed.
• Step 3: ITC Verification and Compliance Review: The third step Is ITC verification and compliance review. Weverify ITC claims in extensive detail to guarantee that the input tax credit has been used appropriately and is backed by suitable records. This stage lowers the possibility of ITC reversals and unwarranted tax obligations.
• Step 4: Certification and Reporting: Our CAs generates an extensive report with recommendations on how to lower business’s GST liability after finishing the audit. Submitted to the authorities to finish the compliance process, the certified audit report is Form GSTR-9C.

Documentation needed for Audit:

Documentation required should be accurate and comprehensive for a seamless GST audit.Below given is list of documents required for smooth GST audit.

• Financial statements:Audited balance sheet, profit and loss account, and cash flow statements comprise financial statements. We are here to consult you and helps you to get correct financial statements.
• GST returns:Copies of GSTR-1, GSTR-3B, and GSTR-9turned in during the fiscal year under GST returns.
• Purchase and Sales Registers: Comprehensive notes of every sales transaction and purchase.
• Input tax credit records:Documentation supporting ITC claims, including invoices and payment confirmations, and input tax credit records.
•  E-way bills created, and e-invoices sent within the audit period are noted.
• Communication with GST Authorities: Correspondence, copies of any notices, or orders received from GST authorities should be sent back to them. Keeping these records orderly guarantees compliance and helps the audit process to be smooth.

Navigating the complexities of GST audits can be challenging. For this professional audit services and consultants are required. LEGAL-N-TAX ADVISORYLLP, professional consultant in Delhi helps to mitigate these challenges.

Common challenges faced in GST audit:

1. Data Mismatches: Inconsistencies between financial records and GST filings may result in investigation and fines.
2. Time Restraints: Tax authorities frequently put businesses under pressure by demanding responses to notices within a short timeframe.
3. Time limit of SCN:There is no statutory time limit for the issuance of SCN after the conclusion of the audit. But there is an upper limit of 3 years or 5 years from the due date of filing the annual return under Sec. 73 or Sec. 74 of the CGST Act before which a particular FY is required to be closed by the department.

Keeping the proceedings open may be strategically in the interest of the taxpayer.

1. Non-Compliance with E-Way Bill Rules: There may be fines for failing to create or carry e-way bills for the transportation of goods.
2. Technological Challenges:Problems with the GST platform, such as uploading returns, may hinder compliance.

Our firm is there to help you deal with these challenges and ensure a smooth GST audit without any obstacles.

Striking cases of GST audit:

1. M/S Raj Kamal and Company vs. The Union of India and 5 Ors (June 9, 2023). Here, the Guwahati High Court looks at a GST audit done under Section 65 of the CGST Act. The petitioner disputed the audit’s validity, asking about the tax authorities’ jurisdiction and procedural compliance. Emphasizing the need to follow established processes and the taxpayer’s duty to follow audit standards, the court supported the legitimacy of the audit.
2. Sun craft Energy Pvt. Ltd. Vs. Assistant Commissioner. Ruling on the receipt of Input Tax Credit (ITC) in situations when GSTR-2A and GSTR-3B filings diverge, the Calcutta High Court,the court decided that, even if differences result from the seller’s defects, purchasers who meet the requirements stated in Section 16(2) of the CGST and SGST Acts are entitled to assert ITC. This decision emphasizes the safeguarding of bona fide buyers in ITC applications.

 Why To Choose Legal N Tax For Gst Audit?

Engaging Legal N Tax firm of expert consultant for GST Audit in Delhiand India offers several advantages. As a leading,CA firm our teams try their best to help you in GST Audit in Delhi or India. We provide:

• GST Law and Compliance Expertise:Legal-N-Tax employs seasoned Chartered Accountants and GST advisors with a thorough understanding of GST laws. They keep current with changing tax laws and compliance criteria, so your company follows all statutory duties.
• Comprehensive GST audit services:Weoffers comprehensive GST audit services that encompass all aspects of compliance.

1. The process includes a review of the obtained input tax credit (ITC) and the corresponding GSTR-2A/2B reconciliation.
2. The assessment of the adherence to the anti-profiteering rule is also conducted.
3. The task involves identifying and rectifying any discrepancies in the submitted returns.

• Error Detection and Corrections:Legal-N-Tax carefully looks over your GST data to find and correct discrepancies, including GSTR-1, GSTR-3B, and GSTR-9 mismatches. For Ex.

1. Wrong grouping of products and services.
2. The ITC has not been reconciled with the purchase registers. Finding and fixing such mistakes guarantees compliance and helps to reduce the possibility of penalties.

• Timely Filing and Documentation:We helps companies prepare and file Form GSTR-9 (Annual Return), which involves thorough documentation and timely report submission. Form GSTR-9C (Reconciliation Statement and Certification) guarantees accurate record maintenance and submission within the designated deadlines.
• Understanding of Local Regulations:Our CAsare well-versed in state-specific GST provisions and compliance requirements. They can better engage with the laws.

If you want to know more about our firm, you can visit our website:https://www.legalntaxindia.com/for detailed information.