GSTR 9C: Audit under GST - Applicability & Procedure

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What is the audit under GST and its types?

As per section 2(13) audit” means an examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder;

Let's understand the meaning of audit in simple language, audit is

  • Examination of
    1. Records
    2. Returns
    3. And other documents
  • Maintained or furnished under GST law or any other law
  • By the registered person
  • To verify the correctness
    1. Turnover declared
    2. Taxes paid
    3. Refund claimed
    4. Input tax credit availed
  • To assess the compliance with provision of Act

What are the different types of audit under GST?

Audit under GST can be categorised into these three categories

1. Turnover Based Audit

Which section covers turnover based audit ? Section 35(5) of CGST Act
When it is required ? Registered person whose turnover exceeds Rs. 2 crore, the taxpayer is required to get his accounts audited
Who can conduct this audit ? Chartered Accountant or Cost Accountant (appointed by taxpayer)
What is the time limit to complete the audit ? 31st December of the subsequent fiscal year
Other points  Reporting is required in Form-9C

2. General Audit

Which section covers general audit ? Section 65 & Rule 101
When it is required ? By specific order of commissioner or any officer authorised by him by 15 days prior notice
Who can conduct this audit ? Commissioner of CGST/SGST or  any Officer authorized by him
What is the time limit to complete the audit ? Audit shall be completed within 3 months (Further extension of 6 months may be given)
Other points Findings of audit shall be reported in Form GST ADT-02

3. Special Audit

Which section covers special audit? Section 66
When it is required ? Assistant commissioner in case of scrutiny, enquiry, investigation or any other proceedings may direct for special audit with prior approval of commissioner
Who can conduct this audit ? Chartered Accountant or Cost Accountant  (nominated by commissioner)
What is the time limit to complete the audit ? Audit shall be completed within 90  days (Further extension of 90 days may be given)
Other points
  • A registered person shall be given an opportunity of being heard before any proceedings under this act.
  • Findings of audit shall be reported in Form GST ADT-04

Who are required to get their accounts audited under Turnover based Audit ?

Each registered person is required to get his accounts audited whose turnover during a financial year exceeds Rs. 2 crore by a chartered accountant or cost accountant.

After reading this, one may come up with so many confusions like whether turnover has to be considered branch wise or PAN based Whether exempt supplies also included in the calculation of turnover and so on

Let’s understand "What is the meaning of Turnover "

The definition of turnover is not defined anywhere under GST law however the meaning of Aggregate Turnover is given under section 2(6) which define the turnover as follows :

Includes:
  • Aggregate value of all taxable supplies
  • Exempt supplies
  • Export of goods or services or both
  • Interstate supplies

of persons having the same PAN, to be computed on all India basis

Excludes:
  • Inward supplies on which tax is payable by a person on reverse charge basis
  • Tax charged is also excluded like centra tax, state tax etc

In the absence of any definition of turnover in the Act, and specific reference of the term ‘aggregate turnover’ gives indication that turnover to be considered at all India level.


What are the key points under GST audit ?

1. Which documents are required to be submitted under GST Audit?

  • Annual Return u/s 44(1)
  • Audited Annual Accounts
  • Reconciliation statement to be furnished in the GSTR-9C
  • Such other particulars as may be prescribed

2. What is the need of Reconciliation statement ?

The need of reconciliation statement arises as the annual return is prepared based on transactions reported during the year in various return wherein supply of all nature required to be reported, whereas the books of accounts maintained based on seperate principles.

There may be many transactions which may take place in Annual return but not in the books of accounts like treatment of trade discount, credit notes, unadjusted advances, unbilled revenue etc. hence the reason to bring reconciliation statement is to find out the differences and reasons for such differences.

Reconciliation statement

3. What is the due date of GST Audit ?

The due date of furnishing GST Audit Report is 31 December, 2019 of subsequent fiscal year.
However, the due date of furnishing GST Audit Report for F.Y. 2017-18 is 30 November, 2019 which was extended from 31st August, 2019
Previously the due date was 30th June, 2019 which was extended from 31st December, 2018.

4. What is the penalty of non-compliance under GST Audit ?

There is no specific penalty given for non-compliance of provisions of GST Audit however general penalty may be imposed in case of non-compliance of Rs.25,000/- given under section 125 of CGST and SGST Act.


What is the difference between GSTR 9 & GSTR-9C ?

GSTR-9 GSTR-9C
GSTR 9 is a form for GST Annual Return. GSTR-9C is a form for GST Audit.
GSTR-9 was mandatory for all registered taxpayers. However, in 37th GST council meeting, filing of GST annual return became optional for taxpayers whose turnover is upto Rs. 2 crore.  GSTR-9C is required to be filled by taxpayers whose aggregate turnover exceeds Rs. 2 crore in a financial year.
This is consolidation of GST returns. This is a reconciliation & certification from the auditor.
It is not required to be certified by a CA or Cost Accountant It is required to be certified by a CA or cost accountant.
No documents/annexures are required to be submitted along with GSTR-9. Audited financial statements are required to be submitted along with GSTR-9C.
Penalty  Rs. 200/- per day or 0.25% of total turnover (whichever is lower) There is no specific provision given for penalty but general penalty u/s 125 of Rs. 25,000/- may be levied.

What is the structure of GSTR-9C

The reconciliation statement is divided in two parts :

  • Part A : It is the reconciliation statement
  • Part B : Is is the certification by a chartered Accountant or cost accountant

Part A : It is further subdivided in 5 parts

Part I : seeks basic details about the registered person like FY, GSTIN, legal name, trade name. It is also required to mention whether registered person is liable to be audited under any other Act.

Part II : This part requires the reconciliation of turnover declared in audited financial statement with turnover declared in Annual Return. There may be so many reasons for such differences.

Part III : This part deals with reconciliation of taxes paid

Part IV :Reconciliation of Input Tax Credits as per books of account and ITC as declared in the Annual Return

Part V : This part requires the auditor to recommend additional liability arising due to non-reconciliation. The additional liability has been mentioned separately under various categories of rates of tax, input tax credits, interest, late fees, penalty, any other amount not included in the GSTR-9, erroneous refund to be paid back and outstanding demands to be settled.

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Frequently Asked Questions (FAQs)

Q- Where to Download GSTR 9C Offline Utility?

GSTR-9C can be downloaded from www.gst.gov.in, from offline tools under download tab.


Q- What are the documents to be enclosed along with GSTR 9C?

Audited financial statements are required to be enclosed along with audit report in Form GSTR-9C.


Q- Should the Form GSTR 9 and Form GSTR 9C get filed separately?

Yes, Form GSRT-9 & GSTR 9C needs to be filled separately.GSTR-9C is certified and digitally signed by a CA or Cost Accountant.


Q- Is it required for a Chartered Accountant to be registered as a GST practitioner to get certified the Form GSTR 9C?

No, it is not mandatory for Chartered Accountant to be registered as a GST practitioner to certify GSTR-9C


Q- Could the late fee be waived off in Genuine and special cases?

As of now, there is no such notification issued by the government but in future Government may waive off the late fee by issue a notification.


Q- Will a Registered Taxpayer who has exclusively exempted supply of goods or services exceeding Rs. 2 crores, would require to fill the GSTR 9C form?

The definition of Turnover is very vast. It includes exempt supplies as well hence in the above case,GSTR-9C is required to be filled

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.