Proposed Abolition of GST Audit – Is it good or bad for the taxpayers?

In the Finance Bill 2021, the Government has proposed to omit the requirement for the GST Audit under section 35(5). The main object for the abolition of GST Audit is the reduction of compliance burden over the registered person. However the taxable person whose turnover is over and above the threshold limit shall have to file the GST Annual Return.

Now in this context, the point of the Government in reducing the compliance burden is not justified as there has to be a maker and checker for the taxpayers and also if there is no checking regarding the GST related records and documents, then there shall be “Revenue Leakage” for the Government.

The Chartered Accountant and Cost Accountant while conducting the GST Audit verifies each and every aspect related to the Goods and Services Tax. Whether it is related to the Outward supplies, reconciliation of ITC availed with the GSTR 2A. Each and every aspect is covered thoroughly in the GST Audit. Also it leads to the tax collection to the Government as the Accounts have been audited thoroughly from GST point of view. And this is the main reason that the GST Audit takes more time as compared to the Income Tax Audit.

For the same reason, the Professionals seek extension for conducting the GST Audit in the proper manner. But the Government in this Finance Bill 2021 has proposed to abolish the GST Audit which will impact the GST related compliances of the Taxpayers.

The ICAI has requested the Government to re-consider the proposed abolition of the GST Audit and hope that the Government should re-consider the same.