The earlier indirect tax laws restricted audit by a chartered accountant to State VAT and Central State Tax laws of certain states. Likewise, Special Audit was suggested in the Central Excise and Service Tax. This took place only in cases where there was a doubt regarding undervaluation or excessive credit by the taxpayer.
These cases leading to audit by Chartered Accountants apply to the current GST law as well. Thus, the focus of the GST regime on self assessment brings along multiple challenges. These challenges in the new GST law makes taxpayers prone to errors. This further leads to unintentional drain of the government’s revenue.
So, the numerous compliances and the challenging tax laws in India make auditing of records necessary under various laws. GST too necessitates audit beyond certain turnover limits by tax professionals.
So let’s understand the meaning of GST audit, types of audit and persons who are required to get their accounts audited under GST.
Persons Liable For GST
Registered persons with an aggregate turnover exceeding the prescribed GST audit limit of Rs 2 Crore during a financial year are liable for GST Audit. These persons must get their accounts audited by a Chartered Accountant or a Cost Accountant.
Now, the term Aggregate Turnover is defined in section 2(6) as “All India PAN based turnover for a particular financial year”. This includes:
The above supplies of transfers forming a part of the Aggregate Turnover are exclusive of GST and Compensation CESS.
Further, the turnover limit of Rs 2 Crore is same for the registered tax persons across all States and UTs. Thus, no separate turnover limit is defined for Special Category States for GST Audit. In addition to this, each State GST Act provides appropriate provisions regarding GST Audit. Therefore, the GST Audit is undertaken state-wise. Further, separate audit is undertaken for each of the unique registrations under the same PAN.