Who can conduct audit of taxpayers?
There are three types of audit prescribed in the GST Act(s) as explained below:
- Audit by Chartered Accountant or a Cost Accountant: Every registered person whose turnover exceeds Rs. Two crore, shall get his accounts audited by a chartered accountant or a cost accountant. (Section 35(5) of the CGST/SGST Act)
- Audit by Department: The Commissioner or any officer of CGST or SGST or UTGST authorized by him by a general or specific order, may conduct audit of any registered person. The frequency and manner of audit will be prescribed in due course. (Section 65 of the CGST/SGST Act)
- Special Audit: If at any stage of scrutiny, inquiry, investigations or any other proceedings, if department is of the opinion that the value has not been correctly declared or credit availed is not with in the normal limits, department may order special audit by chartered accountant or cost accountant, nominated by department. (Section 66 of the CGST/SGST Act)
Whether any prior intimation is required before conducting the audit?
Yes, prior intimation is required and the taxable person should be informed at least 15 working days prior to conduct of audit.
What is the period within which the audit is to be completed?
The audit is required to be completed within 3 months from the date of commencement of audit. The period is extendable for a further period of a maximum of 6 months by the Commissioner.
What is meant by commencement of audit?
The term ‘commencement of audit’ is important because audit has to be completed within a given time frame in reference to this date of commencement. Commencement of audit means the later of the following:
- The date on which the records/accounts called for by the audit authorities are made available to them, or
- the actual institution of audit at the place of business of the taxpayer.
What are the obligations of the taxable person when he receives the notice of audit?
The taxable person is required to:
- facilitate the verification of accounts/records available or requisitioned by the authorities,
- provide such information as the authorities may require for the conduct of the audit, and
- Render assistance for timely completion of the audit.
What would be the action by the proper officer upon conclusion of the audit?
The proper officer shall, on conclusion of audit, within 30 days inform the taxable person about his findings, reasons for findings and the taxable person’s rights and obligations in respect of such findings.
Under what circumstances can a special audit be instituted?
A special audit can be instituted in limited circumstances where during scrutiny, investigation, etc. it comes to the notice that a case is complex or the revenue stake is high. This power is given in section 66 of CGST /SGST Act.
Who can serve the notice of communication for special audit?
The Assistant / Deputy Commissioner is to serve the communication for special audit only after prior approval of the Commissioner.
Who will do the special audit?
A Chartered Accountant or a Cost Accountant so nominated by the Commissioner may undertake the audit
What is the time limit to submit the audit report?
The auditor will have to submit the report within 90 days or within the further extended period of 90 days.
Who will bear the cost of special audit?
The expenses for examination and audit including the remuneration payable to the auditor will be determined and borne by the Commissioner.
What action the tax authorities may take after the special audit?
Based on the findings / observations of the special audit, action can be initiated under Section 73 or Section 74 of the CGST/SGST Act.