What is GST Audit & when it is required
GST Audit:-GST Audit involves examination of records, books of accounts, returns and other related documents maintained by registered person. Audit ensure correctness of turnover declared , Taxes paid , ITC availed or input tax credit claimed and any other compliances required to be check by authorized expert.
GST is also a trust based tax compliance where registered taxpayer himself assess his tax liability and paid them to government so to just ensuring these things government want to check by which they can ensure that the compliance are done in good manner government took many initiative and GST Audit is one of them.
Types of GST Audits:-GST Audit is mainly three Types
- Turnover Based Audit:-If the turnover of registered person exceed rupee 2 Crore (Now it is 5 crore for the FY 18-19) then registered person required to get GST Audit done by Cost and Management Accountant (CMA) or Chartered Accountant (CA)
- General Audit:-This audit is not a regular audit and it is done only if commissioner gives an order for the audit and 15 days prior information to be given by commissioner for the audit and it is perform by the officer authorized by the commissioner
- Special Audit:- This audit is done by only after the order of deputy/Assistant commissioner with prior approval of commissioner and it is perform by the Cost and management Accountant (CMA) or Chartered accountants (CA) who nominated by the Commissioner
Now, here we discuss only the Turnover based audit that is audit u/s 35(5) of CGST Act.
If the annual turnover for the financial year crossed the threshold limit of rupee 2 crore than registered person are liable for GST audit and it is performed by CMA or CA.
Meaning of Financial Year: Every year commencing from 1 April and ending with 31 March is the financial year, but for the FY 17-18 and it is commencing from 1 July 2017 to 31st March 2018.
Meaning of Annual turnover:-calculation of annual turnover includes:-
- Value of all taxable supplies (Inter and intra states both)
- Exempt supplies
- Export supplies of all goods and service
For the purpose of turnover, calculation must be done on PAN based, means once the turnover under same PAN is more than 2 crore than all the business entity registered under the same pan are required to get GST audit done, even for their individual registration of branches or locations have no transactions.
Following are the items which is included or excluded while calculating annual turnover:-
List of items which are included while calculating the threshold limit for the GST Audit
- All outward supplies (whether inter or intra state)
- Supplies between business vertical (intra business)
- Good supplies or received from job worker on principal basis
- Export/Zero rated transactions
- Value of all exempt supplies
- All taxes other than GST i.e. Entertainment taxes on movie tickets
List of items which are not included while calculating the threshold limit for the GST Audit
- Inward supplies (Liable under RCM)
- All taxes under GST i.e. CGST, SGST, IGST, CESS etc.
- Good received back from job worker
- Activities which are neither supply of Goods nor service
Author: - CMA Praveen Kumar Tiwari
Websites: - https://www.mycorporation.in/