Module 8: GST Audits and Assessments
1. What is a GST Audit?
A GST audit is an examination of the records, returns, and other documents maintained by a registered taxpayer to verify correctness of turnover declared, taxes paid, refund claimed, and ITC availed.
2. Types of GST Audits
There are primarily three types of GST audits:
A. Departmental Audit (Section 65)
- Conducted by the tax authorities.
- Notice is given at least 15 days in advance.
- Audit should be completed within 3 months (extendable by 6 months).
B. Special Audit (Section 66)
- Ordered by a GST officer if there is complexity in the case.
- Conducted by a Chartered Accountant or Cost Accountant nominated by the Commissioner.
- Applicable even if a regular audit is completed.
C. Audit by Taxpayer (Self-Audit) (Earlier applicable under GST law for turnover > ₹2 crore, but discontinued from FY 2020–21)
3. What is a GST Assessment?
Assessment under GST means determination of tax liability by the proper officer. Assessments are done in different scenarios where there is non-compliance, incorrect filing, or delay.
4. Types of GST Assessments
A. Provisional Assessment (Section 60)
- If the taxpayer is unable to determine the value or tax rate, he may request provisional assessment.
- Final assessment must be completed within 6 months.
B. Scrutiny Assessment (Rule 99)
- Officer scrutinizes returns for mismatches, errors, or irregularities.
- If issues are found, a notice is sent, and a proper explanation is required.
C. Best Judgment Assessment (Section 62)
- Done when a registered person fails to furnish returns, even after notice.
- Assessment is done by the officer based on available information.
D. Assessment of Unregistered Persons (Section 63)
- If a person liable to register fails to do so, assessment can be made to determine tax liability.
5. Documents Required for Audit/Assessment
- GST returns (GSTR-1, 3B, etc.)
- Invoices, debit/credit notes
- E-way bills, e-invoices
- Books of accounts and ledgers
- Reconciliation statements (with GSTR-2B, 9, 9C)
- Tax payment challans and ITC records
6. Common Reasons for GST Audit or Assessment
- Mismatch in returns (e.g., GSTR-3B vs GSTR-1 or GSTR-2B)
- High refund claims
- Ineligible ITC claims
- Not filing returns for consecutive months
- Turnover beyond threshold limits
7. How to Prepare for a GST Audit
| Task | Why It’s Important |
|---|---|
| Reconcile returns monthly | Avoid mismatches and ITC issues |
| Maintain invoice-wise records | Ensure traceability and transparency |
| Keep all documents digitally ready | Faster submission during scrutiny |
| Conduct internal GST health checks | Identify gaps before the department does |
| Respond promptly to notices | Avoid escalation and penalties |
8. Penalties for Non-Compliance
| Default | Penalty |
|---|---|
| Failure to maintain records | ₹25,000 under CGST + ₹25,000 under SGST |
| Incorrect or misleading information | Up to ₹10,000 or tax amount, whichever higher |
| Not responding to notices | Additional late fees, interest, and penalty |
Conclusion
Understanding GST audits and assessments is vital for ensuring long-term compliance and financial health. Instead of fearing audits, businesses should proactively prepare for them with proper documentation, reconciliation, and expert advice. This not only avoids penalties but also builds confidence in your compliance systems.
✅ What’s Next?
This concludes your GST for Beginners Course!
Up next, you can explore our Advanced GST Course to take your GST knowledge to the next level.
💼 Need Expert GST Support?
Facing GST audit or assessment notice? Let Verotus Finlegal Solutions LLP handle it for you.
📞 Call us: +91-7066336680
🌐 Visit: www.verotusllp.com
