Navigate the complexities of GST procedures with our detailed guide for FY 2025-26. Learn about audits, assessments, and advance rulings with specific examples and FAQs.
Audits
Assessments under GST
Demand and Recovery
Advance Rulings
FAQs on GST Procedures
GST audits ensure compliance with tax regulations. They can be conducted by registered dealers or tax authorities.
Audit by Registered Dealer
Dealers with an annual turnover exceeding ₹5 crore must undergo a GST audit.
Audit report in Form GSTR-9C must be filed by December 31 of the following year.
The audit includes a reconciliation statement and audited annual accounts.
Non-compliance may lead to penalties under Section 44 of the CGST Act.
Audit by GST Tax Authorities
Tax authorities can conduct audits to ensure compliance.
Authorities must provide at least 15 days' notice before the audit.
The audit must be completed within three months from the start date.
Findings are communicated to the taxpayer, who must respond within 30 days.
GST assessments determine the tax liability of a taxpayer.
Self Assessment
Taxpayers assess their own GST liability and file returns.
Monthly returns must be filed using Form GSTR-3B.
Annual return in Form GSTR-9 is due by December 31.
Interest at 18% per annum applies for late payment.
Provisional Assessment
Used when taxpayers face difficulty in determining the tax rate or value.
Application must be made in Form GST ASMT-01.
The provisional assessment order is issued within 90 days.
Final assessment must be completed within six months.
Scrutiny Assessment
Authorities scrutinize returns to verify correctness.
Notice in Form GST ASMT-10 is issued for discrepancies.
Taxpayers must respond within 30 days of notice.
Failure to respond may lead to further action.
Summary Assessment
Conducted when evidence suggests tax liability is at risk.
Order is issued in Form GST ASMT-16.
Taxpayer can request withdrawal of the order within 30 days.
The assessment is based on available evidence.
Best Judgement Assessment
Applied when a taxpayer fails to file returns.
Notice in Form GST ASMT-13 is issued.
Assessment is based on available information.
Taxpayer can appeal the assessment within 30 days.
Procedures for recovering unpaid GST.
Demand Notice
Issued when tax is unpaid or short-paid.
Notice is issued under Section 73 for non-fraud cases.
Section 74 applies to fraud cases with a penalty of 100%.
Taxpayer must respond within 30 days.
Recovery Process
Begins if the taxpayer fails to pay the demanded amount.
Recovery can include property attachment.
Bank accounts may be frozen to recover dues.
Interest at 18% per annum is charged on unpaid tax.
Appeals
Taxpayers can appeal against demand orders.
Appeal must be filed within three months of the order.
A pre-deposit of 10% of the disputed amount is required.
Appeals are filed with the GST Appellate Tribunal.
Example Calculation
Illustrating demand and recovery with a numerical example.
Suppose a taxpayer underpaid GST by ₹1 lakh.
Interest at 18% per annum results in ₹18,000 additional liability.
Total payable amount becomes ₹1.18 lakh.
Advance rulings provide clarity on tax liabilities.
Application Process
Taxpayers can apply for advance rulings to clarify tax positions.
Application is made in Form GST ARA-01.
A fee of ₹5,000 is applicable for each question.
Ruling is provided within 90 days.
Authority for Advance Rulings
Comprises a panel of officers to issue rulings.
Includes one central and one state tax officer.
Rulings are binding on the applicant and tax authorities.
Can be appealed to the Appellate Authority for Advance Rulings.
Scope of Advance Rulings
Covers specific questions related to GST.
Classification of goods and services.
Applicability of notifications and circulars.
Determination of time and value of supply.
Impact of Rulings
Rulings provide legal certainty to taxpayers.
Helps in avoiding future disputes.
Ensures compliance with GST laws.
Rulings are valid until the law changes.
What is the turnover threshold for mandatory GST audit?
For FY 2025-26, businesses with an annual turnover exceeding ₹5 crore must undergo a GST audit. This audit involves filing Form GSTR-9C along with the audited financial statements.
How is the interest on late GST payment calculated?
Interest on late GST payment is calculated at 18% per annum. For example, if a taxpayer delays payment of ₹1 lakh by one year, the interest would be ₹18,000.
Can a taxpayer appeal against a GST demand notice?
Yes, a taxpayer can appeal against a GST demand notice. The appeal must be filed within three months of receiving the notice, and a pre-deposit of 10% of the disputed amount is required.
What is the process for applying for an advance ruling?
To apply for an advance ruling, taxpayers must submit Form GST ARA-01 along with a fee of ₹5,000 per question. The ruling is typically issued within 90 days.
What is a provisional assessment under GST?
A provisional assessment is used when taxpayers face difficulty in determining the correct tax rate or value. An application is made in Form GST ASMT-01, and the assessment is finalized within six months.
What happens if a taxpayer does not respond to a scrutiny assessment notice?
If a taxpayer does not respond to a scrutiny assessment notice issued in Form GST ASMT-10 within 30 days, the authorities may proceed with further action, including issuing a demand notice.
What is the penalty for fraud under GST?
Under Section 74 of the CGST Act, if a taxpayer is found guilty of fraud, a penalty of 100% of the tax amount is levied in addition to the tax due.
How long does a GST audit by tax authorities take?
A GST audit by tax authorities must be completed within three months from the start date, although this period can be extended by an additional six months if necessary.
Are advance rulings binding on all taxpayers?
Advance rulings are binding only on the applicant and the jurisdictional tax authorities. They provide clarity on specific tax positions but are not universally applicable.
What is the deadline for filing the annual GST return?
The annual GST return, Form GSTR-9, must be filed by December 31 of the following financial year. Late filing may attract penalties and interest.