Accounts To Be Maintained Under Goods and Services Tax Law
Under the new GST regime, businesses are required to maintain various accounts for the purpose of Audit as well as for ready verification by an authorised GST Authority.
A taxable person is required to maintain accounts along with all invoices, bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward supply etc.
Also GST accounts and records must be kept at every related place of business mentioned in the certificate of registration.
Records to be maintained – Sections 35 of CGST Act
All taxable persons under GST are required to maintain the following records at their principal place of business:
Account/Records | Information Required |
Register of Goods Produced/manufacture | Account should contain detail of goods manufactured in a factory or production house (in case of a manufacturer). |
Purchase Register | All the purchases made within a tax period for manufacturing of goods or provision of services. |
Sales Register | Account of all the sales made within a tax period. |
Stock Register | This register should contain stock of inventory available at any given point of time. |
Input Tax Credit (ITC) Availed | This register should maintain the details of Input Tax Credit availed for a given tax period. |
Output Tax Liability | This register should maintain the details of GST liability outstanding to be adjusted against input credit or paid out directly. |
Output Tax Paid | It shall contains the the details of GST paid for a particular tax period |
Other Records Specified | Government can further specify by way of a notification, additional records and accounts to be maintained |
Audit under GST
Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose of audit is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to check whether the compliances are with the provisions of GST.
The government has taken various measures for proper implementation of GST and audit is one amongst them.
Types of GST Audit
There are three types of audit under GST:
- Turnover based audit – Section 35(5) of CGST Act
Who is required to conduct audit: Every registered taxable person whose aggregate turnover exceeds Rs 2 Crore by sale of goods or services in a financial year is required to get the accounts audited.
Who conducts audit: Audit is conducted by chartered or cost accountant.
Reports to be submitted electronically:
- Annual returns,
- Copy of Audited Statement of Account,
- Reconciliation Statement that reconciles the value of supplies furnished in the annual return with the audited financial statements
Note: In case an organization or an entity has multiple branches registered under GST in different states or union territories, the total aggregate turnover of all such branches is taken together for calculating the threshold limit of Rs. 2 crores. Therefore, if the total turnover of all the branches exceeds Rs. 2 crores, then the GST audit is applicable to each of these branches, irrespective of whether the turnover of a particular branch is less than the threshold.
- Audit by tax authorities – Section 65 of CGST Act
Who conduct Audit: Under this, the audit is undertaken by the Commissioner of CGST/SGST or any officer authorized by him. However, the frequency and manner of audit shall prescribe later.
Prior requirements: In such Audit, a notice atleast 15 days prior to initiate the audit is served.
Time limit of completion of Audit: It is generally completed within 3 months from the date of commencement of audit and can be extended to six months by the Commissioner with due reasons.
Action by officer: On conclusion of an audit, the findings, reasons and the taxable person’s rights and obligations are informed by the officer to the taxable person within 30 days audit.
If the audit results in detection of unpaid/short paid tax or wrong refund or wrong input tax credit availed, then demand and recovery actions will be initiated.
- Special audit – Section 66 of CGST Act
Who conduct Special audit: This audit is conducted by a chartered accountant as per the instructions are given by the GST Officer who is not lower than the rank of Assistant Commissioner.
Note: It can be conducted even if the taxpayer’s books have already been audited before.
When special audit is initiated: The Assistant Commissioner may initiate the special audit, considering the nature and complexity of the case and interest of revenue. If the officer finds out that you have not declared the values correctly or availed wrong input tax credit, then the special audit can be initiated.
Prior requirements: An order of Deputy/Assistant Commissioner with prior approval of Commissioner is required.
Time limit of completion of Audit: The auditor is required to submit the report within 90 days. However, it may be further extended by the tax officer for 90 days with due reasons.
Action by officer: The taxable person will be given an opportunity of being heard in findings of the special audit.
If the audit results in detection of unpaid/short paid tax or wrong refund or input tax credit wrongly availed then demand and recovery actions will be initiated.
Qualification of GST Auditor & Eligibility
- Only a Chartered Accountant or a Cost Accountant can perform a GST Audit under section 35.
- An internal auditor cannot be appointed as a GST Auditor.
- The GST Act does not allow a GST practitioner to undertake the audit. However, a Chartered Accountant need not be registered as a GST practitioner for the purpose of performing audit functions and issuing the Audit Report.
Forms for Annual return and GST Audit
Type of taxpayer | Form to be filed |
Whether or not applicable to GST Audit | |
A Regular taxpayer filing GSTR 1 and GSTR 3B | GSTR-9 |
A Taxpayer under Composition Scheme | GSTR-9A |
An E-commerce operator | GSTR-9B |
Applicable for GST Audit | |
Taxpayers whose turnover exceeds Rs. 2 crores in FY | GSTR-9C |
Penalty for not submitting GST Audit report:
There is no specific provision. Hence, as per section 125 of CGST Act, 2017 it is subject to a general penalty up to Rs 25,000.
What are the Documents required for registration under section 12A?
An application in Form 10A for registration of charitable or religious trust or institution shall be furnished electronically under digital signature (DSC) to the Commissioner of Income Tax along with the following documents.
Along with the form 10A application, the following documents must be attached by the taxpayer:
- Where the trust is created, or the institution is established, under an instrument, self-certified copy of the instrument creating the trust or establishing the institution;
- Where the trust is created, or the institution is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution;
- Self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
- Self-certified copy of the documents evidencing adoption or modification of the objects, if any;
- Where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up;
- Note on the activities of the trust or institution;
- Self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be; and
- Self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA,as the case may be, if any.
Cancellation of Registration of a Trust or Institution under Section 12AA(3)
As per section 12AA, the registration once granted to a trust or institution shall remain in force till it is cancelled by the Principal Commissioner or Commissioner.
However, the Principal Commissioner or Commissioner can pass an order in writing for cancelling the registration under the following two circumstances:,
- The activities of a trust or institution are not genuine, or;
- The activities are not being carried out in accordance with the objects of the trust or institution.
If any of the above or both conditions are met, the Principal Commissioner/ Commissioner be empowered to cancel the registration.
However, no order under section 12AA(3) shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.
Further, as per Section 12AA(4), the power of cancellation of registration has been extended the powers of Principal Commissioner/Commissioner to cancel registration under section 12AA(3) are severely restricted.
There have been cases where the income is not properly applied for charitable purposes or has been diverted for benefit of certain interested persons and these institutions continue to enjoy the beneficial regime of exemption.
Therefore, in order to rationalise the provisions relating to cancellation of registration of a trust, section 12AA(4) was introduced to provide that where a trust or an institution has been granted registration, and subsequently it is noticed that its activities are being carried out in such a manner that,
- its income does not ensure for the benefit of general public;
- it is for benefit of any particular religious community or caste;
- any income or property of the trust is applied for benefit of specified persons like author of trust, trustees, etc.; or
- its funds are invested in prohibited modes,
then the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution.
However, registration shall not be cancelled under section 12AA(4) if such trust or institution proves that there was a reasonable cause for the activities to be carried out in the above manner.
For any professional guidance or trust registration related queries
Consult EAdvisors.
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