BASICS OF GST AUDIT:
Every business entity having a turnover exceeding Rs. 20,00,000 (The threshold limit increases to 40 lakh in 32nd GST council meeting held on 10th of January,2019 at New Delhi which shall be operational from 1st of April 2019) in a financial year is required to be registered under the GST Act.
Turnover means the aggregate annual sales of the business after providing discounts. Every entity whose aggregate turnover of the business exceeds INR 20,00,000 (20 lakhs) in a financial year is mandatorily required to register under Goods and Services Tax. For North-eastern and hilly states including J&K (i.e. Arunachal Pradesh, Mizoram, Tripura, Himachal, Nagaland, Sikkim, Assam, Jammu & Kashmir, Manipur, Meghalaya, Pradesh and Uttarakhand), the limit is restricted to INR 10,00,000.
What is Audit under Goods and Service Tax (GST)?
Under section 2(13) of the CGST Act, an “audit” has been defined as an examination of records, returns and other relevant documents furnished or maintained by the person registered under the GST Acts or under any other law for the time being in force. GST audit is conducted to verify the correctness of taxes paid, turnover declared, input tax credit (ITC) availed and a refund claimed, and to assess the compliance of the registered person with the provisions of the Acts and the rules made thereunder.
Threshold Limit for GST Audit:
If the turnover of the registered person exceeds the prescribed limit i.e. rupees 2 crores in a financial year, then the registered person shall get his accounts audited by a (CA) Chartered Accountant or a (CMA) Cost & Management Accountant as per GST Rules.
The person registered under the GST Act, for facilitating the GST audit, shall keep and maintain his accounts to show the correct value in regards to:
- Outward supply of goods or services or both
- Stock of goods
- Production or manufacture of goods
- Inward supply of goods or services or both
- Books of accounts point can be added
- Input tax creditavailed
- Output tax payable and paid
What is Aggregate Turnover in GST?
The “aggregate turnover” is the aggregate value of all taxable supplies, exports of goods or/and services or both, exempt supplies and interstate supplies of persons having the same PAN, to be computed on all India basis. However, such taxable supplies do not include the value of inward supplies on which GST is being paid under reverse charge basis. The aggregate turnover also excludes Central tax, State tax, Union territory tax, Integrated tax and cess.
In other words, the total of the following shall be considered as an aggregate turnover:
- Value of all Taxable supplies of goods and services
- Value of all Inter-state supplies
- Value of all exempt supplies of goods and services
- Value of all export of goods or services or both
Turnover would, therefore, include the following:
- All taxable supplies other than supplies on which reverse charge is applicable.
- Supplies between two different entities (i.e. in different States or separate business vertical).
- Goods supplied to job worker on principal to principal basis.
- Export or zero rated supplies.
- Goods received from job worker on principal to principal basis.
- Supplies of agents/ job worker on behalf of the principal.
- Exempt supplies under GST: exempt via any notification, non-taxable supplies (like Diesel, Petrol, Liquor etc.)
- Taxes other than those under GST
However, the following items would be excluded from Turnover:
- Inward supplies on which taxes are paid under reverse charge
- Taxes and cess under Goods and Service Tax
- Goods supplied for or received back u/s 143 (job work)
- Interstate supply of services
- Transactions which are neither supply of goods or service.
- Supplies provided outside India or received outside India
What is Exempt Supplies?
As per section 2(47) exempt supply means any supply of goods or/and services or both which may be wholly exemption from tax under section 6 or under section 11 of the IGST Act or attract nil rate of tax, and includes non-taxable supply.
Due Date & Penal Provisions:
The due date for filing Annual Return financial year 2017-18 is 30st June 2019. And for GST Audit the Due date is 31st march 2019.
Hence, for the Financial year ended 31st March 2018, the due date for filing Annual Return is 30th June 2018.
Late fees for late filing of Annual return is Rs. 100 per day (Rs. 100 each under CGST Act & SGST Act), subject to the maximum of 0.25% of the turnover.
GST Audit Rectifications:
If the turnover of the registered person exceeds the prescribed limit i.e. Rs. 2 crore in a financial year then the registered person is required to get his books of Account audited under GST. The annual return is required to be filed electronically through Form GSTR 9, along with the audited statement of annual accounts, the reconciliation statement(GSTR 9C) and other documents as prescribed as per the GST law.
If any mistake/error is noticed in any filed returns during the financial year while auditing the books of accounts, the same can be rectified only in the annual return