Several audits are conducted under the SGST and CGST acts to meet the Act's goals. GST requires taxpayers to assess their GST tax burden, file the suggested returns, and pay taxes following the GST audit checklist. The GST Act specifies a comprehensive audit system to ensure appropriate and accurate filing and taxpayer's tax liability.
Let's dive deeper into this.
Certain GST taxpayers are required to undergo a GST audit.
Several items must be checked, verified and ensured compliance by the auditor. These are summarised below:
The auditor must check that the GST tax liability interest computations are at 18% p.a. and that any late payments are deposited by the taxpayer within the due date.
RCM due taxes on supplies of goods or services through the 'Reverse Charge Mechanism' must be paid in cash. Ensure that the ITC for such reverse charges is used during the month it is claimed.
ITC must be appropriately bifurcated and recorded under the various purchase headings. For example, expenses must be divided into categories such as goods, bank charges, employee costs, capital goods, etc.
Under GST audit turnover legislation for FY 2023-24, the invoice date of supply and the payment date of supplies made can be no more than 180 days apart. If an invoice is not paid within 180 days, the Input Tax Credit (ITC) obtained will be reversed.
If a company has many branches, the intra-branch and inter-branch stock transfers must be reconciled across all branches.
The taxpayer and auditor must ensure that the returns made to the GST and Income Tax authorities on their turnover under the GST Act and the IT Acts are appropriately checked, reported and verified.
The GSTIN turnover is validated and verified on a PAN-India basis, demonstrating that all supplies comprise exempted services and goods made throughout India. During a GST audit, the same is confirmed in the GST turnover declared.
If your gross receipts and business sales are less than ₹2 crores in any fiscal year, you do not need an audit. However, if your annual turnover exceeds ₹5 crores, you must comply with the GST audit. It is essential to follow the GST audit checklist and the kinds of audits that are required.
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Any registered taxable person with an annual aggregate turnover of more than ₹2 crores during a fiscal year must have their books audited. A CWA (Cost and Work Accountant) or a CA (Chartered Accountant) can audit the qualifying taxpayer's accounts and records.
The GST audit turnover limit is ₹2 crores.