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GST Audit

GST audits are sometimes necessary to keep track of and examine whether the correct GST is being paid and the refund obtained, especially for certain taxpayer groups. There will be a GST audit due date and the concerned person must file it before the given date. The GST audit limit under the present declared GST Rules is more than Rs 2 crore. If you would like to know more about the GST audit, you must read the following guide.

What is a GST audit?

The term “audit” in the context of GST refers to the examination of the taxpayer’s returns, records, and other documentation. The purpose of a GST audit is to determine whether the turnover, taxes paid, ITC refund claimed, and ITC availed in his annual report are accurate and fair. A GST audit also aids in determining whether or not the taxpayer complies with the GST laws.

Who can do a GST audit?

A GST Audit u/s 35 can only be performed by a Chartered Accountant or a Cost Accountant. An internal auditor cannot be designated as a GST Auditor at the same time. A GST practitioner is not permitted to conduct the audit under the GST Act. Only a practicing Chartered Accountant or Cost Accountant or an employee of a firm of Chartered Accountants or Cost Accountants has the authority to audit. As a result, to issue the Audit Report, a Chartered Accountant must not be registered as a GST practitioner.

How to do a GST audit?

The procedure used for GST audit includes Audits, Assessment, Demand and Recovery, and Advance Ruling. Let us now see what each process is.


The review of records kept by a registered dealer is referred to as a GST audit. The goal is to evaluate the accuracy of the information declared, as well as the taxes paid, and to assess GST compliance. This will include different types of audits.


The determination of GST liability is referred to as GST assessment. There are five different types of GST assessments: self-assessment, provisional assessment, scrutiny assessment, summary assessment, and best judgment assessment.  

Self-evaluation is the term that means every registered taxable person must evaluate and file a return for each tax period under GST. Provisional assessment is done if a registered dealer is unable to estimate the value of products or the rate of tax, he might request a provisional assessment from the officer. The proper officer has the authority to let the assessee pay tax on a provisional basis at a rate or value that he specifies.

The scrutiny evaluation implies that a GST officer can examine the return to ensure that it is complete and accurate. Any disparities in the returns will be investigated by the officer, who will ask for answers.

When the assessing officer finds sufficient grounds to believe that any delay in proving a tax liability will affect the revenue, he or she will conduct a summary assessment. He can pass the summary assessment with the additional/joint commissioner’s consent to defend the revenue’s interests. Best Judgment assessment includes assessment of non-filers of returns and assessment of unregistered persons.

Different types of GST audit

There are three different types of GST audit and the details regarding these three can be found below.

  1. Normal Audit

In a normal audit, every registered person whose turnover exceeds the stipulated threshold during a financial year shall have his books audited by a chartered accountant or cost accountant and give a copy of the audited annual accounts, according to section 35(5) of the CGST Act 2017.

  1. Audit by Tax Authorities

This type of GST audit is carried out by the Commissioner of CGST/SGST or any other GST Officer authorized by the Commissioner. Later on, the frequency and format of a GST audit can be established. A notice will be provided to the auditee at least 15 days before the start of the audit, and the audit must be completed within three months of the start date. 

  1. Special Audit

If the GST Officer of not less than the rank of Assistant Commissioner declares that the values have not been disclosed accurately and/or credits availed are not within the regular limitations, a chartered accountant performs this type of GST audit. The commissioner appoints a CA or CMA to conduct a GST audit.

Within ninety days of passing such an order, the officer shall provide such a directive in Form GST ADT-03 to the registered dealer, directing him to have his records, including his books of accounts, inspected and audited by a professional CA or CMA.

How to generate GST audit report?

GST reports can be generated online. Use the following guidelines to create the GST audit report.

  1. Select ‘Returns Dashboard’ from the GST Portal after logging in.
  2. Select the appropriate Fiscal Year and Tax Period.
  3. Select Prepare Offline from the drop-down menu.
  4. Using the upload option, upload the JSON created using the offline tool.
  5. The JSON file that was uploaded would be checked and processed.
  6. If one or more details in the uploaded JSON file fail to pass validation, an error file (returns Date>R9CGSTIN>error Report. JSON) will be generated, with the status of the uploaded JSON file set to ‘Processed with Error.’
  7. The taxpayer must share this erroneous file with the auditor so that the error can be corrected and the document re-signed.
  8. Using the ‘Access GSTR-9C JSON Error file downloaded from GST Portal’ option in the offline tool, the auditor should open the error file. All records with errors should be supplied in their worksheets, with the errors described in the column ‘GST Portal Validation error(s)’ for the records with problems.
  9. After making any necessary corrections, sign the statement using DSC, generate the JSON file, and give it to the taxpayer for uploading to the GST portal.
  10. The taxpayer must preview the form and file GSTR-9C after the data has been successfully uploaded to the GST system.

What is mandatory in the GST audit checklist

Below you can find the mandatory GST audit checklist which will be of great help to you.

  1. Verifying GSTR 3B with GSTR 1 & GSTR 2A

Under this section, two different points need to be covered. They are:

  1. Accurate ITC 

In some circumstances, it is discovered that taxpayers are attempting to alter the data to obtain an excessive Input Tax Credit (ITC). As a result, the taxpayer must reconcile GSTR 3B with GSTR 2A to ensure that no Input Tax Credit is claimed in excess (ITC). If a taxpayer claims an ITC over what is allowed, he or she must pay interest and penalties as determined by the IRS.

  1. Amendment in GSTR

If the GST auditor discovers a discrepancy between GSTR 3B and GSTR 2A, the auditor must direct management to alter the invoices at the summary level in GSTR 1 by filing GSTR-1A.

  1. Check the Invoice Format

If the invoice format changes, the GST auditor might advise management to make the necessary changes to the invoice structure or format. There have been numerous instances where the taxpayer used a different invoice structure. Keeping this in mind, the government has implemented e-Invoicing, which maintains the same invoice schema throughout.

  1. Input Tax Credit reversal for non-payment

To reverse the ITC for non-payment, the taxpayer must keep the following criterion in mind during the audit: There must be no more than 180 days between the invoice date and the payment date.

  1. Reconciling e-way bills with invoices

The auditor can detect if the taxpayer made any false entries in the records by reconciling the e-Way Bills data with invoices. Non-motorized vehicles, on the other hand, are sometimes used to move products. The creation of an e-way bill is not required in these situations. As a result, the auditor must evaluate all invoice-level data as well.

FAQs about GST Audit

  1. What is the deadline for starting a special audit under the GST?

The auditor will have 90 days to produce the report. At the taxable person’s or auditor’s request, the tax officer may extend this period for another 90 days.

  1. Who will be responsible for the costs of the special audit?

The Commissioner will determine and pay the costs of the inspection and audit, including the auditor’s fee.

  1. How will the special audit’s findings be handled?

In the conclusions of the special audit, the taxable person will be allowed to be heard. If the audit uncovers unpaid/underpaid taxes, incorrect refunds, or incorrectly claimed input tax credits, demand and collection procedures will be taken.