What is GST Audit?

GST Audit means the process of reviewing a taxpayer's GST records, returns, books of accounts and other relevant documents to verify whether the GST liability, Input Tax Credit (ITC), turnover and other GST compliances have been correctly reported.

However, there is an important change in the law:

GST Annual Audit by CA/CMA – No Longer Mandatory

Earlier, under Section 35(5) of the CGST Act, specified taxpayers were required to get their accounts audited by a Chartered Accountant or Cost Accountant and submit a reconciliation statement in GSTR-9C.

This mandatory GST audit requirement was removed from FY 2020-21 onwards.

Today, GSTR-9C is a self-certified reconciliation statement, wherever applicable. It is not a certificate issued by a CA/CMA.

When is GST Audit / GSTR-9C Applicable?

Under Section 44 of the CGST Act, read with the relevant rules and notifications, a taxpayer whose aggregate turnover exceeds ₹5 Crore in a financial year is required to furnish GSTR-9C along with the annual return, subject to the applicable provisions for that financial year.

In Simple Words

GST Audit today is best understood as a detailed reconciliation and compliance review of GST records, rather than the old mandatory annual CA/CMA audit under Section 35(5).

Example

If a taxpayer has:

• Turnover: ₹3.50 Crore → GSTR-9C generally not applicable
• Turnover: ₹5.20 Crore → GSTR-9C applicable
• Turnover: ₹10 Crore → GSTR-9C applicable

The turnover is considered on an aggregate turnover basis, subject to the GST provisions.

What is Covered in GST Audit / GST Reconciliation?

A detailed GST review generally compares:

Books of Accounts ↔ GSTR-1 ↔ GSTR-3B ↔ GSTR-2B ↔ E-Invoice ↔ E-Way Bill

Important areas include:

1. Sales reconciliation
2. Purchase reconciliation
3. Output GST liability
4. Input Tax Credit reconciliation
5. GSTR-1 vs GSTR-3B
6. Books vs GST returns
7. GSTR-2B vs books
8. Credit notes and debit notes
9. RCM liability
10. E-invoice reconciliation
11. E-way bill reconciliation
12. ITC reversals
13. Blocked ITC under Section 17(5)
14. GST rate and HSN/SAC verification
15. Export and LUT transactions
16. Exempt/nil-rated supplies
17. Advances
18. Inter-state transactions
19. Unbilled revenue / revenue reconciliation
20. Other GST compliance issues

Who Can Do GST Audit?

This depends on what is meant by "GST Audit."

1. Statutory GSTR-9C Reconciliation

Since GSTR-9C is now self-certified, it is not mandatory for a CA or CMA to certify it.

The taxpayer can prepare and submit the reconciliation statement as prescribed.

2. GST Health Check / GST Review

A taxpayer can voluntarily appoint a:

• Chartered Accountant (CA)
• GST professional
• Tax consultant
• Internal audit team
• Qualified accounting professional

to conduct a detailed GST review.

A CA can provide an independent professional review covering books, GST returns, ITC, tax liability and reconciliation.