GST Audit and Annual Returns

Need for GST Audit:

GST Audit will apply every year for those GST registered business (GSTIN) having turnover more than Rs 2 crores, by the sale of goods or services in the financial year.

Audit under GST involves examination of records, returns and other documents maintained by a GST registered person. It also ensures correctness of turnover declared, taxes paid, refund claimed, input tax credit availed and assess other such compliances under GST Act to be checked by an authorized expert.

GST is a trust-based taxation regime wherein a taxpayer is required to self-assess his tax liability, pay taxes and file returns. Thus, to ensure whether the taxpayer has correctly self -assessed his tax liability a robust audit mechanism is a must. Various measures are taken by the government for proper implementation of GST and audit is one amongst them.

  • Turnover based Audit – Performed by Chartered Accountant or Cost Accountant appointed by the taxpayer if the Turnover exceeds 2 crores the taxpayer has to get his accounts & records audited.
  • Special Audit – Performed by A Chartered Accountant or Cost Accountant, nominated by Commissioner on order of Deputy/Assistant Commissioner with prior approval of Commissioner.
  • Aggregate turnover = Value of all taxable (inter-state and intra-state) supplies + exempt supplies + export supplies of all goods and services.
  • The total turnover must be PAN-based, which means that once the turnover under the PAN is more than Rs. 2 crores all business entities registered under GST for that PAN will be liable for GST audit for a financial year.

GST Annual Return (GSTR 9):

Filing of GSTR 9 for the businesses with an annual turnover less than Rs. 2 crores has been made optional for FY 2018-19.

GSTR 9C – Reconciliation Statement:

Every registered person whose turnover during a financial year exceeds the prescribed limit of Rupees 5 crores  shall get his accounts audited by a chartered accountant or a cost accountant.

GSTR-9C is a statement of  reconciliation between:

  • the Annual Returns in GSTR-9 filed for a FY;  and
  • the figures as per the audited annual Financial Statements of the taxpayer.

For businesses with an annual turnover of less than Rs 5 crore, filing of GSTR-9C for FY 2018-19 to be waived off.

Persons who are not required to file GSTR 9:

All the registered taxable persons under GST must file GSTR 9 . However, the following persons are not required to file GSTR 9:

  • Casual Taxable Person.
  • Input service distributors.
  • Non-resident taxable persons.
  • Persons paying TDS under section 51 of GST Act.