GST Procedure

GST Procedures consist of four key actions:

• Audits
• Assessments
• Demand and Recovery
• Advance Ruling

As per Section 2(13) of the GST Act, an audit means checking the records and documents of a business for authenticity. It verifies turnover, GST paid, refunds availed, and compliance with GST rules.

Why is audit required?

• GST is based on self-assessment where taxpayers calculate their own liability.
• Since self-assessment may lead to errors or fraud, audits are conducted to verify correctness.

Types of GST Audits

• Compulsory Audit by CA/CMA – Businesses with turnover above ₹2 crore must get accounts audited and furnish Form GSTR-9C.
• Departmental Audit – Conducted by the Commissioner or authorized officer anytime.
• Special Audit – Ordered in complex cases; carried out by a CA or CMA.

Audit by Registered Dealer

• Up to FY 2019-20, businesses with turnover above ₹2 crore had to get their accounts audited.
• From FY 2020-21, mandatory audit in Form GSTR-9C was removed and replaced with self-certification of the reconciliation statement.

Audit by GST Authorities

• General Audit – Done by officer or commissioner.
• Special Audit – Ordered in complex cases involving revenue impact.

Assessment means determining GST liability by examining books of accounts.

Types of Assessment under GST

1. Self-assessment – Businesses calculate their own liability and file returns.

Provisional assessment – When value or tax rate is uncertain.

Application filed with reasons and documents.

Officer allows provisional payment within 90 days.

Security deposit/bond up to 25% required.

Final assessment order passed within 6 months (extendable up to 5 years).

Interest @18% payable on additional liability; refund with interest if excess tax paid.

Scrutiny assessment – Officer scrutinizes returns for discrepancies.

• If discrepancies found, assessee must reply within 30 days.

• If unresolved, further audit/inspection/assessment may be ordered.

1. Summary assessment – Done quickly to protect revenue in urgent cases with approval of higher authorities.

2. Best judgment assessment –

• Non-filing of returns – Officer issues notice; if ignored, liability is calculated based on available records.
• Unregistered person – Officer determines liability of unregistered taxpayers.

Applicable in cases where:

• Tax paid is incorrect.
• No tax is paid.
• Wrong refund claimed.
• Incorrect Input Tax Credit claimed.
• Tax collected but not deposited.
• Wrong payment of CGST/SGST instead of IGST or vice versa.

In such cases, the officer:

• Issues notice stating reasons.
• Raises demand for tax and penalty.
• Initiates recovery proceedings if payment is not made.

Advance Ruling provides clarity on tax matters before undertaking a transaction. It helps businesses reduce disputes and litigation.

• It is a written decision by tax authorities on queries regarding the supply of goods or services.
• It ensures businesses comply with GST rules with certainty.

Understanding GST procedures is important to avoid mistakes in calculation and filing. However, filing GST returns can still be complex. Tax Pal Solutions offers expert help for GST filing, compliance, and accurate tax calculation.