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Audit by Tax Authorities under GST [Section 65 of the CGST Act, 2017]

(1) Power with the Commissioner to Undertake Audit of any Registered Person [Section 65(1)]

The Commissioner or any officer authorized by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed.

(2) Option to conduct Audit at Place of Business or in Office of the Commissioner or Authorized Officer [Section 65(2)]

The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.

(3) Prior Intimation to the Registered Person to Conduct Audit at a Future Date [Section 65(3)]

The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.

(4) Time Limit for completion of Audit [Section 65(4)]

The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit:

Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.

Explanation.—For the purposes of this sub-section, the expression ‘commencement of audit” shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later.

(5) Duty of the Registered Person to Afford Necessary Facility, Information and Assistance to the Authorized Officer [Section 65(5)]

During the course of audit the authorized officer may require the registered person,—

(i) to afford him the necessary facility to verify the books of account or other documents as he may require;

(ii) to furnish such information as he may require and render assistance for timely completion of the audit.

(6) Communication of Findings of Audit, Rights Obligations of Registered Person on Completion of Audit [Section 65(6)]

On conclusion of audit, the proper officer shall, within thirty days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings.

(7) Initiation of Action under section 73 or 74 in certain cases [Section 65(7)]

Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74.

Some important FAQ’s on Audit by Tax Authority under GST released by CBEC on 3 1.3.2017

1. Whether any prior intimation is required before conducting the audit? [Question No. 14 of FAQ’s]

Ans. Yes, prior intimation is required and the taxable person should be informed at least 15 working days prior to conduct of audit.

2. What is the period within which the audit is to be completed? [Question No. 15 of FAQ’s]

Ans. The audit is required to be completed within 3 months from the date of commencement of audit. The period is extendable for a further period of a maximum of 6 months by the Commissioner.

3. What is meant by commencement of audit? [Question No. 16 of FAQ’s]

Ans. The term ‘commencement of audit’ is important because audit has to be completed within a given time frame in reference to this date of commencement. Commencement of audit means the later of the following:

(a) the date on which the records/accounts called for by the audit authorities are made available to them, or

(b) the actual institution of audit at the place of business of the taxpayer.

4. What are the obligations of the taxable person when he receives the notice of audit? [Question No. 17 of FAQ’s]

Ans. The taxable person is required to:

(a) facilitate the verification of accounts/records available or requisitioned by the authorities,

(b) provide such information as the authorities may require for the conduct of the audit, and

(c) render assistance for timely completion of the audit.

5. What would be the action by the proper officer upon conclusion of the audit? [Question No. 18 of FAQ’s]

Ans. The proper officer shall, on conclusion of audit, within 30 days inform the taxable person about his findings, reasons for findings and the taxable person’s rights and obligations in respect of such findings.

Scrutiny of GST Returns [Section 61 of the CGST Act, 2017] GST - Ready Reckoner in India Special Audit under GST [Section 66 of the CGST Act, 2017]

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