Companies to take GST audit exam.

The audit is significant because this is the first time that GST returns and the accounts of companies will be scrutinised for compliance levels and the positions they had taken — whether they had interpreted tax provisions correctly and paid tax — after GST was introduced in July 2017. However, tax experts have called for the authorities to adopt a moderate approach during the reviews.

Companies are required to file two returns by December 31, following the financial year ended March, although for FY 18, the deadline was extended to June 30, 2019.

The returns are the GSTR-9, or the annual return, and GSTR 9C, or the annual reconciliation statement of GST returns with financial statements, certified by a chartered accountant.

The GSTR-9C is the GST audit report and is akin to the tax audit report. 

This will also be a test of how the GST audit certificates issued in the GSTR-9C format are utilised by the authorities and their significance in the whole audit process.

Initial process ought to be more liberal and the auditors should look to educate taxpayers if there is a compliance gap and avoid stringent penal actions.

According to an official statement, taxpayers who reported a mismatch between auto-populated data and the entries in their books of accounts or returns should report the data as per their books of accounts or returns filed.

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