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Here is everything you should know about the Audit Process under GST

Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person to verify the correctness of turnover, tax paid, refund claimed and input tax credit availed by the taxpayer.

There are three types of audit under GST:

  1. Audit by CA or CMA:

As per the provisions of CGST Act,2017, every taxable person who is registered under GST and whose turnover is more than INR 2 crore during a financial year, shall get his accounts audited by a Chartered Accountant (CA) or a Cost and Management Accountant (CMA). The taxable person shall electronically file through the common GSTN portal an annual return in form GSTR-9B along with a copy of audited annual accounts, reconciliation statement and such other particulars as may be prescribed.

  • Audit by tax authorities:

A taxpayer may get his accounts audited by the Commissioner of CGST/SGST or any officer authorized by the Commissioner. In such a case, a notice in FORM GST ADT-01 shall be sent to the registered person to inform him about the audit. The notice must be sent to the taxpayer at least 15 days before the date of commencement of an audit.The audit shall be completed within 3 months from the date of commencement and the said period may be extended for further 6 months provided the reason for the extension of such period is recorded in writing. The registered person is informed about the findings of the audit, the reasons behind the findings and the rights and duties of the registered person by the tax authorities within 30 days in FORM GST ADT-02.

  • Special audit:

If at any time during the course of GST audit, the Commissioner or any other proper officer authorized by him, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, then he may after prior approval of the Commissioner may initiate special audit and direct the registered person to get his accounts and records audited by a chartered accountant or a cost accountant or such other person as may be nominated by the Commissioner. The nominated person must submit the audit report duly signed and certified by him within 90 days from the date he is nominated for conducting the special audit. The period of 90 days may be further extended by another 90 days for a genuine reason and all the expenses of the special audit shall be paid by the commissioner. The result of the special audit is communicated to the registered person audit in the form GST ADT-04.

It is the duty of every registered taxpayer to provide all such information and accounts to the auditor that assists the auditor to ensure him about the correctness of production and supply of goods, tax paid and credit availed etc. until the completion of the audit and helps the auditor to reach at a true and fair conclusion. If any error or omission is found in the accounts of the taxpayer, it can be rectified only in the annual return along with any payment due as an interest by the taxpayer.

Assessment under GST:

Assessment under GST means verification of tax liability as per provisions of CGST Act, 2017. It is divided into the following five types:

  1. Self-assessment- Tax liability is assessed by the registered taxable person himself.
  2.  Provisional assessment- Taxes to be payable by the assessee is determined by a proper officer.
  3. Scrutiny assessment- Under this process, a GST officer may on his own or if instructed by the authorities, can scrutinize the GST return filed by the taxpayer and related particulars to check the validity and verify its correctness and can ask for any explanation or additional documents.
  4. Summary assessment- A summary assessment is applicable when the assessing officer has suitable evidence that the tax liability of a person will adversely affect revenue.
  5.  Best judgments assessment- If a registered taxable person fails to furnish his return even after getting a notice under Section 46 or a taxable person who is liable to pay tax but has not obtained a GST registration yet or the registration of the person has been cancelled, then a GST officer to the best of his judgment can assess the tax liability of the person for the relevant tax periods and a show cause notice will be sent to the concerned person.

Demand and Recovery of GST tax:

The demand and recovery for the tax can be raised by the authorized officer of GST under the following situations:

  1. When the tax has been paid incorrectly.
  2. No tax has been paid by the assessee.
  3. When a taxpayer collects tax but does not deposit the same to the government
  4. When cgst or sgst was paid on an IGST applicable supply and vice versa.
  5. Incorrect refund or ITC is claimed by the registered dealer.

A show cause notice will be issued to the taxpayer by the proper officer and if demands are not paid even after the notice, the GST authority can start tax recovery proceedings.

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GST RFD-01 – Form for Refund and how to file it?


GST RFD-01 A form is introduced by GSTN for online processing of refund under GST.
Who can file the GST Refund Application?
The application for refund can be filed by any taxpayer in favor of whom the refund order has been issued.
2) Filing of GST refund Application by unregistered person:
An Unregistered person can file GST refund Application by his temporary login.
3) No separate application for refund of GST deposited under the CGST/SGST/IGST for a refund order:
If the refund order is the same for the CGST/SGST/IGST, a single refund application can be filed by an assesse.
4) Separate refund application for each order:
A single application form shall be filed for every separate order.
5) Time limit for filing of refund application:
A taxpayer can file the application for refund within 2 years from the date of communication of order.

How to file the application for refund?


GST refund application can be filed online on the GST portal.
Steps to file and submit the application for refund on account of Assessment/ Provisional assessment/ Appeal/ Any Other Order:
• Visit the official site of GST and log with your details.
• On the home page of the website, under the ‘services’ tab, select ‘refunds’ and click on application for refund.
• On the subsequent page that appears, select the option ‘On Account of Assessment/Provisional Assessment/Appeal/Any other order’ and click on ‘create’ option to move to the new page.
• A new page regarding the selection of various details to file the application will appear on the screen. Under the statutory order details tab, select the appropriate type of order from the drop-down menu and while selecting the option any other order, specify the order.
• Enter the Demand Number and order number in the Demand ID field and number order field respectively.
• Next, select the date of order and enter the name of the authority by whom the order was issued.
• Under the payment reference number tab, from the drop-down menu, select the type of debit entry as ‘cash’ or ‘ITC Ledger’.
• Enter the Debit Entry number and click on the ‘ADD’ option to save the details.
• After mentioning the above details, the person needs to provide the details in the section ‘details of refund amount to be claimed’ on the same page.
• Correct details must be filled in the appropriate columns by the person and the amounts so entered will be verified by the proper officer and any adjustment in the claimed recoverable amount may be made by the officer.
• Enter the bank account number in which you will like to get your refund amount deposited.
• Tick the declaration box and click on the preview button to view the details of refund before submitting it and if you do not wish to preview, click on ‘SAVE’ option to upload the details and click on ‘proceed’.
• On the next page, the option of back, file with DSC and file with EVC will appear. To go back to the previous page, select the back option and if you select the option ‘Submit with DSC’, you need to sign the application using a digital signature of the authorized signatory. If ‘Submit with EVC option’ is selected, an OTP will be sent to the registered mobile number and e-mail id of the authorized signatory. Enter the OTP to submit your application.
• An Application Reference Number (ARN) will be generated once the application is successfully filed and will be sent to the registered e-mail id and mobile number of the person and the filed application can be viewed anytime under ‘saved or filed applications’ tab on the GST portal.

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Penalty under GST law for non filing and related offences

The GST laws has clearly put out the rules and regulations that the taxpayer should follow, failing which he would have to pay the penalties. To avoid any sort of confusion the government has categorized the offences and Penalty under GST law to be laid on it.

What are the major offences

In total the government has come out with 21 offences related to the GST and penalty against it. However, the major ones are as follows: –

  • No registration under GST
  • Issuing the invoices using the GSTIN of another bona fide taxpayer.
  • Uploading fake financial documents, files or records with the sole purpose of evading taxes.
  • Dubious information while registering under GST
  • Fraudulent activity while getting the return
  • Not revealing sales for the evasion of tax
  • Ineligible taxpayers going for the composition scheme

Penalty under GST law

Penalty under GST law

Penalty under GST law for late filing

In case of late filing, the penalty mentioned as late fee is charged. The amount is set at Rs 100 per day as per the act. The penalty would be 100 under CGST and 100 under SGST making it total of 200/day. The ceiling is set at 5,000 INR and there is no late fee to be paid on IGST in case the filing is delayed. In addition to the late fee, the taxpayer also needs to paid interest at 18% per annum with time period stating from the next day of filing till the date on which payment has been made.

Penalty under GST law for not filing

A taxpayer who paid less than due or did not pay the tax at all will be charged 10% of the tax amount due to the minimum of Rs 10,000. The minimum penalty as per the law has been set at 10% of the tax unpaid.

There are specific categories for which the government has set penalty under GST law with jail term. These are as follows: –

Tax Amount100-200 lakhs200-500 lakhsAbove 500 lakh
Jail TermUp to 1 yearUp to 3 yearsUp to 5 years
FineYesYesYes

Search and sequestration under GST

If the joint commissioner of CGST/SGST has come around the possibility that a tax payer might be evading the tax, suppressed the transaction or have claimed inappropriate input tax credit then he can authorize any other officer of the same department to search the places of business of the taxpayer who is under the radar.

Arrest Under GST

In case the officials believe that a taxpayer has some offence which falls under their purview, then the offender can be arrested after being informed about the reason for which he is being arrested. The arrested person should appear within 24 hours before the magistrate in case of cognizable offence.

Appeals by the taxpayer

The government has vested the power to appeal with the taxpayer who has been alleged of committing an offence. The first appeal should go to the Appellate Authority and in case the individual is not satisfied, he can knock the doors of National Appellate Tribunal, then to High court and finally Supreme Court as the need arises.

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What is Advance Ruling in GST and Procedure to Apply

What Is Advance Ruling In GST And Procedure To Apply

Advance Tax Ruling is the interpretation of the tax laws in written and tax authorities issue these rulings to the corporations and individuals who are seeking more clarity on tax matters. Understanding every provisions of a tax law is not everyone’s cup of tea and therefore when an individual finds himself incapable of understanding about certain provision, advance ruling in GST comes into the picture.

The Purpose of advance ruling is to enable an applicant in planning his activities that would come under the purview of GST. The individual also gets to know his tax liability as the ruling given by the Authority for Advance ruling is binding on the applicant as well as Government authorities. Individuals who are looking for advance ruling can do so without incurring high cost.

Why Advance Ruling?

It offers a view of tax liability well in advance in connection to a future activity to be performed by the applicant.

Advance Ruling can also be used to interest the Foreign Direct Investment as the big investors would always like to know about their future tax liability

Curbs the possibility of litigation and legal disputes

Helps in making right decision in timely manner.

Time Period for the Applicability

There is not time limitation for which the Advance Ruling should stay valid. Instead, it can remain valid till the period when the law, circumstance and the facts are in favor of the original advance ruling which has not changed.

However, in case the AAR or AAAR finds out that the ruling was obtained by the applicant through force or fraud, it can be held as ab initio void. Same goes if the Advance Ruling was obtained by misrepresenting the fact or nor disclosing the important facts. If such a situation arises, all the provision of the CGST/SGST Act would be applicable on the applicant as if advance ruling was never made. Declaring the Advance Ruling void can only be done after the hearing of the applicant.

Procedure for Registration of Advance Ruling

  1. Click the ‘Home’ ab on the GST Portal https://www.gst.gov.in/
  2. Fill in the general Details as shown below:-

 

Advance Ruling Home Page

Advance Ruling Home Page

 

  1. In the Verify OTP page, enter the Mobile OTP and Email OTP and click the PROCEED button.

AR OTP Page

AR OTP Page

On successfully entering the OTPs, a message tab would appear like this:-

OTP Confirmation

OPT confirmation

4. After the ID is created, click the ServicesPayment > Create Challan The Create Challan page is displayed. In the GSTIN/Other ID field, enter the ID created for the Advance Ruling

Enter the captcha text and click the PROCEED button.

Challan Window

Challan Window

  1. There would be a FEES column in the challan page, enter the amount of Rs 5000/- for both CGST and SGST.

Select Mode of payment and click the GENERATE CHALLAN Button

An OTP will be sent to the mobile phone number

Challan Fee

Challan Fee

  1. Enter the OTP in the OTP Authentication box and click the PROCEEDbutton

  1. Once the OTP is successfully entered, Challan would be generated

Then click MAKE PAYMENT button

After the Payment is done, it can be tracked in the Services > Payment > Track Payment Status command.

payment status window

payment status window

  1. After making the payment, click the Downloads > Offline Tools > GST ARA 01 – Application for Advance Ruling command.

Advance Ruling

Advance Ruling

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