Like ‘Tax Audit’ under Income Tax Act, in GST, there is also a provision for Statutory Audit under GST. As per Section 35(5) of CGST Act 2017, 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.
Rule 80(3) of CGST Rules 2017 has prescribed such limit as ‘Two Crore’ rupees. So, every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited by a Chartered Accountant or a Cost Accountant.
Responsibility to get the accounts audited and to submit audit report to GST department is held with such registered person. Such audit report shall be filed along with ‘Annual Return’ as mentioned in Section 44 of CGST Act, 2017.
Meaning of Audit
As per Section 2(13), “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 thereunder;
Components of Audit Report
- Copy of 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, and such other particulars as prescribed*
*Not prescribed yet
Form to file audit report
FORM-GSTR-9C has been prescribed for submission of Audit report. (Download full copy>>>CGST-49/2018)
Time Lines to submit Audit Report
As per Section 44 of CGST Act 2017, every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 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.
In other words, Audit report needs to be submitted by due date as prescribed for ‘Annual Return’. As per Section 44(1), Annual Return is required to be submitted on or before 31st day of December following the end of financial year. Hence, time limit for submission of Audit Report is 31st December of following the end of financial year to which such report belongs to.
Penalty for late filing of Audit Report
There is no specific penalty for late-filing of Audit Report. However, penalty for late filing of Annual Return has been provided so far under section 47(2) of CGST Act 2017. As the Audit report is required to be filed along with Annual return, so it can be establish that penalty leviable for annual return is equally leviable to Audit Report.
Section 47 provides that any registered person who fails to furnish the annual return by the due date, he shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent. of his turnover in the State or Union territory.
Along with late fee leviable under SGST Act, total penal fee per day becomes Rs 200/-, subject to maximum of 0.5% of turnover.
About Form GSTR-9C (Reconciliation Statement)
The Form contains two parts:
PART-A : Reconciliation Statement
PART-B : Auditor’s Certification
PART-A further comprises of following five points:-
Point 1. Basic Details
Point 2. Reconciliation of turnover declared in audited Annual Financial Statement with turnover declared in Annual Return (GSTR9)
Point 3. Reconciliation of tax paid
Point 4. Reconciliation of Input Tax Credit (ITC)
Point 5. Auditor’s recommendation on additional Liability due to non-reconciliation
In Point 5, an opportunity is provided to registered person to rectify any monetary mistake for short payment of tax or excess claim of any ITC where such errors will be reported by auditor and tax payer will pay tax accordingly.
In PART-B comprises certification part where two cases are provided out of which one is to be selected:-
1:- Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by the person who had conducted the audit.
2 :- Certification in cases where the reconciliation statement (FORM GSTR-9C) is drawn up by a person other than the person who had conducted the audit of the accounts.
