Quick answer
A GST audit checks whether your returns, tax payments and input tax credit match the law. The tax department can audit a registered person under Section 65, a special audit can be ordered under Section 66, and returns can be scrutinised under Section 61. Audit-ready records and monthly reconciliation make the process quick and low-risk.
What changed after 2021?
The annual mandatory audit by a chartered accountant was replaced by a self-certified reconciliation statement for taxpayers above the specified turnover. This does not remove audits altogether; departmental audits, scrutiny and anomaly-based notices continue and increasingly rely on data analytics across GSTR-1, GSTR-3B, GSTR-2B, e-way bills and e-invoices.
Types of GST audit and review
- Departmental audit (Section 65): by tax officers, with advance intimation in Form GST ADT-01.
- Special audit (Section 66): by a nominated CA or cost accountant for complex cases.
- Scrutiny of returns (Section 61): a notice in Form ASMT-10 asking for an explanation of discrepancies.
- Voluntary GST health check: an internal review to find and fix errors early.
What triggers an audit or notice?
Typical triggers include mismatch between GSTR-1 and GSTR-3B, ITC claimed beyond GSTR-2B, wrong or missing e-way bills, high refund claims, sudden fall in tax paid, and disputes involving suppliers who do not file returns.
How to prepare
- Reconcile books with GSTR-1, GSTR-3B and GSTR-2B for every period.
- Keep invoices, credit notes, e-way bills and transport proofs organised.
- Maintain working papers for ITC reversals and RCM.
- Document exempt, nil-rated and non-GST supplies.
- Prepare explanations for large variances in tax and turnover.
Related service
See our GST audit support and notice reply service for help with audits, scrutiny and demand notices.