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October 24, 2020

Know GST Audit and Annual Return Limit for FY 2019-20

by CA Shivam Jaiswal in GST, GST Circular Notification

Know GST Audit and Annual Return Limit for FY 2019-20

The GST regime though was initiated to collate indirect taxes and simplify their applicability, the GST law has its fair share of complexities. Issues like Non-payment / Short Payment of Output liability, Excess claim of Input Tax Credit (ITC) / Non-reversal of Input Claim, failure (willingly/unwillingly) to correctly read, understand, check the applicability, and applying the provisions such as Place of Supply, Time of Supply, taxability of goods & services, payment of respective taxes (IGST, CGST, SGST), matching of Electronic Cash & Credit ledger with the books, etc can have huge financial impacts on the taxpayers. Many of such errors can result in payment of Interest & Penalties under the GST Act and can burn deep pockets for the business houses.

Audits, however can largely reduce or remove such errors and thus save the taxpayers from Interest and penalty burdens. Audit under GST means inspection of returns, records and other documents furnished by the taxpayer. GST Audit is carried out to check whether the turnover, taxes paid, ITC refund claimed and ITC availed mentioned in his annual report are true and fair or not. Moreover, a GST audit also helps in evaluating whether the taxpayer is compliant with the GST provisions.

The Types of Audit under GST are as follows:

  • Turnover based audit – It is carried out when the aggregate turnover of the taxpayer exceeds the prescribed limit by a CA (Chartered Accountant) or CWA (Cost and Work Accountant) appointed by the taxpayer
  • General Audit – It is carried out after the order is passed by the commissioner by a CGST or SGST commissioner or any other person authorized by them. However, it is important to give 15 days prior notice.
  • Special Audit – It is carried out after the order is passed by the deputy or assistant commissioner after the prior approval of GST commissioner by a CA or CWA appointed by the commissioner

What is the GST audit limit for turnover based audit?

Section 35(5) of CGST Act, 2017 states that “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 and shall submit a copy of the audited annual accounts, the reconciliation statement under section 44(2) and such other documents in such form and manner as may be prescribed.

Any registered taxable person whose annual aggregate turnover exceeds Rs 5 Crore during a financial year needs to get their accounts audited. The eligible taxpayer can get their records and account audited either by a CA or a CWA.

However, all registered taxpayers must file annual returns at the end of each financial year irrespective of the annual turnover.

It shall be noted that the audit under GST is carried out state-wise. This is the reason why a separate GST audit is done for each unique registration under the same Permanent Account Number (PAN).

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For whom is the above limit not applicable?

The above limit shall not apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

How is aggregate turnover under GST computed?

Aggregate Turnover under GST = Value of all taxable supplies whether inter-state or intra-state + exempt supplies + supplies made outside India (export supply)

However, such taxable supplies do not include the value of inward supplies on which GST is paid under reverse charge basis. The aggregate turnover in whole also does not include Central tax, State tax, Union territory tax, Integrated tax and cess also.

The calculation of turnover is required to be PAN based which means all the taxpayers registered under the GST Act, having turnover more than Rs 5 Crores are required to get the GST audited for all financial years.

What form is required to be submitted for audit under GST?

For the financial year 2018-2019 and 2019-2020, every registered person whose aggregate turnover exceeds Rs 5 crore shall get his accounts audited as specified under section 35(5) and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C for the said financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

Who is required to file GST Annual Return or GSTR-9?

GST Annual return is filed in Form GSTR-9. It contains the detailed summary of outward supply, taxes paid thereon, input tax credits claimed, taxes paid and refund claimed in the financial year. For FY 2018-19, Form GSTR 9 is mandatory for turnover more than Rs 2 crores.

Who are not required to file GST Annual Return?

All taxpayers/taxable persons registered under GST must file their GSTR 9. However, the following are not required to file GSTR 9:

  • Taxpayers opting composition scheme (They must file GSTR-9A)
  • Casual Taxable Person
  • Input service distributors
  • Non-resident taxable persons
  • Persons paying TDS under section 51 of CGST Act.

Requirement of GSTR 9 and 9C for FY 2018-19 and FY 2019-20 are as follows:

Aggregate TurnoverAre they required to file GSTR 9Are they required to file GSTR 9C
Turnover less than 2 croresNoNo
Turnover more than 2 crores up to 5 croresYesNo
Turnover exceeding 5 croresYesYes

What is the due date for filing GSTR 9 and GSTR 9C?

After obtaining due clearances from the Election Commission in view of the Model Code of Conduct, Government has extended due date for furnishing Annual Return in GSTR-9 and GSTR 9C for 2018-19 from 30.09.2020 to 31.10.2020.

The government had in May extended the last date for filing annual GST return for financial year 2018-19 by three months till September 2020.

The due date for filing GST Annual Return (GSTR-9) and GST Audit (GSTR-9C) for FY 2019-20 is 31st December, 2020

NOTIFICATION

G.S.R……(E).— In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby makes the following amendment in the notification of Government of India in the Ministry of Finance, (Department of Revenue), No. 47/2019 – Central Tax dated the 9th October, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 770(E), dated the 9th October, 2019, namely: –
In the said notification in the opening paragraph, for the words and figures ―financial years 2017-18 and 2018-19‖, the words and figures ―financial years 2017-18, 2018-19 and 2019- 20 shall be substituted.

Note: The principal notification No. 47/2019 – Central Tax, dated the 9th October, 2019 was published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 770(E), dated the 9th October, 2019.

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