Different Types of Audit Under GST​

The Goods and Services Tax (GST) regime in India has transformed how businesses function, bringing transparency, efficiency, and consistency to the tax system. The audit process is an important component of GST compliance since it guarantees that firms follow the government’s laws and regulations. Businesses may face many types of audits under GST, based on their turnover, kind of activities, and other criteria. In this blog, we’ll explore the different types of audits under GST and their significance.

1. GST Audit by a Chartered Accountant or Cost Accountant (Section 35(5))

This is one of the most common types of audits under GST. As per Section 35(5) of the CGST Act, every registered taxpayer whose aggregate turnover exceeds the prescribed limit (currently ₹2 crores in a financial year) is required to get their accounts audited by a Chartered Accountant (CA) or a Cost Accountant (CMA).

Key Features:

• The auditor examines the taxpayer’s records, including invoices, returns, and other documents, to ensure compliance with GST laws.
• The taxpayer must submit the audited annual returns (GSTR-9C) along with the reconciliation statement.
• This audit ensures accuracy in the filing of returns and helps identify discrepancies, if any.

2. Departmental Audit (Section 65)

A departmental audit is conducted by the GST authorities to verify the accuracy of the taxpayer’s records and compliance with GST provisions. This type of audit is initiated by the Commissioner or an authorized officer and is usually conducted at the taxpayer’s place of business.

Key Features:

• The taxpayer is given a 15-day notice before the audit begins.
• The audit must be completed within 3 months unless extended by the Commissioner.
• The officer examines books of accounts, documents, and other records to ensure proper tax payment and compliance.
• If discrepancies are found, the officer may initiate further action, such as demand notices or penalties.

3. Special Audit (Section 66)

A special audit is conducted when the GST authorities suspect irregularities or discrepancies in a taxpayer’s records. This type of audit is ordered by a Deputy Commissioner or higher authority, and it is conducted by a CA or CMA nominated by the Commissioner.

Key Features:

• The special audit can be initiated even if the taxpayer has already undergone a regular audit.
• The taxpayer is required to provide all necessary documents and records to the auditor.
• The audit must be completed within 90 days, with a possible extension of another 90 days.
• The findings of the special audit can lead to further investigation or legal action.

4. Investigation Audit

An investigation audit is conducted by the Directorate General of GST Intelligence (DGGI) or other investigative agencies when there is suspicion of tax evasion, fraud, or non-compliance. This type of audit is more extensive and detailed than a regular audit.

Key Features:

• It is usually initiated based on intelligence inputs or specific complaints.
• The audit may involve raids, searches, and seizures of documents and records.
• The findings of an investigation audit can lead to severe penalties, prosecution, or even imprisonment in cases of serious non-compliance.

5. Input Tax Credit (ITC) Audit

The Input Tax Credit (ITC) audit focuses specifically on verifying the accuracy of ITC claims made by the taxpayer. This audit ensures that the taxpayer has correctly availed and utilized ITC following GST laws.

Key Features:

• The auditor checks whether the ITC claimed matches the invoices uploaded by suppliers.
• Discrepancies in ITC claims can lead to reversals, penalties, or interest charges.
• This audit is often part of a broader GST audit but can also be conducted separately.

6. Turnover-Based Audit

Under GST, businesses with a turnover above a certain threshold (e.g., ₹5 crores) may be subject to a turnover-based audit. This audit ensures that large businesses are complying with GST laws and filing accurate returns.

Key Features:

• The audit focuses on high-value transactions and compliance with GST provisions.
• It is often conducted by the GST department or an external auditor.

Why Are GST Audits Important?

Audits under GST serve multiple purposes:

• Ensuring Compliance: Audits help ensure that businesses are complying with GST laws and filing accurate returns.
• Detecting Fraud: Audits help identify cases of tax evasion, fraud, or non-compliance.
• Building Trust: Regular audits build trust between taxpayers and the government, fostering a transparent tax ecosystem.
• Avoiding Penalties: By identifying and rectifying discrepancies, audits help businesses avoid penalties and legal action.

Tips for Businesses to Prepare for GST Audits

Stay Updated: Keep yourself updated with the latest GST rules and regulations to avoid non-compliance.

Maintain Proper Records: Ensure that all invoices, receipts, and other documents are properly maintained and easily accessible.

Reconcile Data: Regularly reconcile your books of accounts with the GST returns filed.

Conduct Internal Audits: Periodic internal audits can help identify and rectify issues before an official audit.

Seek Professional Help: Engage a CA or CMA to ensure compliance and prepare for audits.

Audit Under GST​! Get Expert Support from AKPR

Handling the complexity of GST audits may be difficult for businesses. With frequent regulatory changes and strict compliance standards, it is critical to have a reliable expert on your side. A GST audit guarantees that your company follows tax requirements, reducing risks and potential fines.

AKPR Chartered Accountant Firm offers complete GST audit services to assist firms in staying compliant while increasing tax efficiency. Our skilled staff provides accuracy, honesty, and timely reporting, allowing you to confidently focus on expanding your business.

Why Choose AKPR for Your GST Audit?

• ✅ Experienced Professionals: Our team comprises seasoned Chartered Accountants with deep expertise in GST laws and regulations.
• ✅ Comprehensive Audit Support: We conduct detailed GST audits, ensuring compliance with all tax provisions and identifying potential risks.
• ✅ Error-Free Filings: Minimize discrepancies and avoid penalties with our meticulous audit process.
• ✅ Customized Solutions: Tailored audit strategies to suit your business needs, whether you’re a startup, SME, or a large enterprise.
• ✅Timely & Hassle-Free Compliance: Stay ahead of deadlines with our proactive audit support.

Let our experts handle your GST audit while you focus on what matters most—growing your business!