GST Audit in India: Complete Guide

What is GST Audit?

A GST Audit is a thorough examination of a business’s records, returns, and other documents maintained under GST to verify:

• Correctness of turnover declared
• Taxes paid
• Refunds claimed
• Input Tax Credit (ITC) availed and utilised
  It ensures compliance with the provisions of the Goods and Services Tax law.

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Applicability of GST Audit

GST Audit is applicable in the following cases:

1. Departmental Audit – Conducted by GST authorities under Section 65.
2. Special Audit – Ordered by the GST Commissioner under Section 66, carried out by a Chartered Accountant/Cost Accountant nominated by the department.
3. Turnover-based Self-Audit – Although the mandatory annual audit threshold under Section 35(5) was removed from FY 2020-21, businesses must still reconcile and self-verify data through GSTR-9C.

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Types of GST Audit

Type	Conducted by	When Applicable
Turnover-based Audit (Self-Audit)	Taxpayer / CA	Before 2020–21, mandatory if turnover > ₹2 crore; now, voluntary reconciliation recommended
Departmental Audit	GST Authorities	Selected by Commissioner
Special Audit	CA/CMA appointed by Commissioner	If complexity in valuation, credit, or input-output ratio is suspected

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Key GST Audit Forms

Form	Purpose
GSTR-9	Annual Return
GSTR-9C	Reconciliation Statement certified by CA/CMA
ADT-01	Departmental audit intimation
ADT-02	Departmental audit report

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Documents Required for GST Audit

• GST returns (GSTR-1, GSTR-3B, GSTR-9)
• Purchase & sales registers
• E-way bills
• Input Tax Credit (ITC) ledger
• Output tax liability register
• Reconciliation statements between books & returns
• Tax invoices, credit notes, debit notes
• Stock register

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Process of GST Audit

1. Preparation of Books – Ensure proper records are maintained.
2. Reconciliation – Match turnover, tax liability, ITC with GST returns.
3. Verification of Compliance – Check timely filing, payment of taxes, and reversal of ineligible ITC.
4. Filing Annual Return – File GSTR-9 along with GSTR-9C if applicable.
5. Audit by Authorities – If selected for departmental/special audit, provide all requested documents.
6. Rectification – Pay tax, interest, and penalties if discrepancies are found.

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Penalties for Non-Compliance

• Late filing of GSTR-9: ₹200 per day (₹100 CGST + ₹100 SGST), subject to maximum of 0.25% of turnover.
• Incorrect ITC claim or underpayment of tax: Interest @18% p.a. + penalty (10% of tax due or ₹10,000, whichever is higher).
• For willful misstatement: Penalty up to 100% of tax evaded.

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Benefits of GST Audit

• Ensures accurate tax compliance
• Avoids penalties and litigation
• Improves internal controls and record-keeping
• Enhances credibility with tax authorities
• Identifies areas for cost savings through ITC optimisation

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