Auidt under GST: person covered and annual return to be furnished
Meaning of Audit in GST:
The definition of Audit given in Section 2(13) of Central Goods and Services Tax Act, 2017(CGST Act) as “audit means the 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 there under.”
As per Rule 80(3) of the CGST Rules “every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of the audited annual accounts and a reconciliation statement, duly certified, in GSTR 9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner”.
Thus, the entire compliance of GST law has to be confirmed in GST audit.
What are the outcomes of GST audit:
According to section 35(5) “every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall Submit:
- A copy of the audited annual accounts,
- The reconciliation statement under sub-section (2) of section 44 and
- Such other documents in such form and manner as may be prescribed”.
According to section 44(2) “every registered person who is required to get his accounts audited in accordance with section 35(5) shall furnish, electronically:
- The annual return under sub-section (1) along with
- A copy of the audited annual accounts and
- A reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and
- Such other particulars as may be prescribed”.
Whether for the first financial year, i.e., 2017-18, aggregate turnover of 9 months shall be taken for considering the application of audit provision to the auditee?
For the financial year 2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the expression financial year.
Therefore, in the absence of clarification from government, also to avoid any cases of default, it is reasonable to understand that to reckon the turnover limits prescribed for audit i.e., Rs. 2 crores one has to reckon the turnovers for the whole of the financial year which would also include the first quarter of the financial year 2017-18.
What are the documents required to be furnished annually after audit being carried out?
- Annual Return;
- Copy of the audited annual accounts;
- Reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement in FORM GSTR 9C, duly certified;
- Such other particulars, as may be prescribed