Every registered business under the Goods and Services Tax (GST) regime is required not only to file monthly or quarterly returns but also to ensure proper reconciliation, accuracy, and audit of the data at the end of each financial year. GST audit and annual compliance are essential mechanisms that ensure the correctness of returns, proper utilization of input-tax credit, and transparency between taxpayers and the government.
The purpose of the annual compliance process is to confirm that all outward and inward supplies, tax liabilities, and credits claimed are correctly reported. For entities crossing specific turnover thresholds, GST audit provides an independent verification of records and returns filed during the year.
A GST audit is a detailed examination of a taxpayer’s books of accounts, returns, and other documents to verify the correctness of turnover declared, taxes paid, refunds claimed, and input-tax credit availed. The audit also ensures that the taxpayer has complied with all provisions of the GST Act and Rules.
GST audits and annual compliances are governed by:
Section 35(5) and Section 44 of the Central Goods and Services Tax (CGST) Act 2017
Rule 80 of the CGST Rules 2017
As per current law, the requirement for audit certification applies to taxpayers whose aggregate turnover exceeds ₹ 5 crore in a financial year.
| Type | Conducted by | Applicable When | Purpose |
|---|---|---|---|
| Turnover-based audit | Chartered Accountant / Cost Accountant appointed by taxpayer | Turnover > ₹ 5 crore | Reconciliation and verification of records |
| Departmental audit | Commissioner or authorised officer | At discretion of tax authorities | Verification of correctness of returns |
| Special audit | Chartered Accountant nominated by Commissioner | On direction under Section 66 | When tax officer suspects misclassification or suppression |
GSTR-9 is the consolidated summary of all monthly or quarterly filings made during the year. It includes details of outward and inward supplies, input-tax credit, taxes paid, and adjustments carried forward.
Applicability: All regular taxpayers with turnover above ₹ 2 crore.
Due Date: 31 December following the end of the financial year.
Penalty for Delay: ₹ 200 per day (₹ 100 CGST + ₹ 100 SGST) subject to 0.25 % of annual turnover.
GSTR-9C is the audit reconciliation statement that aligns data filed in GSTR-9 with the audited financial statements. It includes auditor certification confirming the accuracy of turnover, tax liability, and ITC.
Mandatory for: Turnover above ₹ 5 crore.
Purpose: To detect differences between GST data and financial books and report any additional liability.
Verification of Turnover:
Cross-checking sales reported in returns with audited financial statements, e-invoices, and e-way-bills.
Examination of Input-Tax Credit:
Validation of ITC claimed with purchase registers and GSTR-2B, ensuring reversals under Rule 42 / 43 are correctly made.
Tax Payment and Adjustments:
Confirmation that tax liability has been fully discharged through electronic ledgers.
Reconciliation of Taxes Paid and Payable:
Matching monthly returns (GSTR-3B) with annual statements.
Reporting of Additional Liabilities:
Declaration and payment of any shortfall using Form DRC-03.
GST registration certificate
GSTR-1, GSTR-3B, and GSTR-9 for the year
Audited financial statements
Trial balance and general ledger
Purchase and sales registers
Input-tax credit computation and reversals
E-way bill summaries
Bank statements and payment proofs
Expense schedules with tax segregation
Reconciliation statements between books and returns
Pre-Audit Review: Collect all GST returns, ledgers, and reconciliations.
Data Verification: Compare turnover and ITC between GST returns and books of accounts.
Audit Documentation: Prepare audit working papers for outward and inward supplies.
Reconciliation Statement Preparation: Draft GSTR-9C linking financials and GSTR-9.
Auditor Certification: Obtain certification from Chartered / Cost Accountant.
Submission to GST Portal: File both GSTR-9 and GSTR-9C online using DSC/EVC.
Payment of Discrepancies: Deposit any short tax through DRC-03 before filing.
Ensures data consistency across returns and books
Prevents future demand notices or audits by the department
Enhances creditworthiness for banks and partners
Identifies unclaimed or excess ITC
Builds long-term credibility as a compliant taxpayer
| Non-Compliance | Possible Action / Penalty |
|---|---|
| Non-filing of GSTR-9 / 9C | Late fee ₹ 200 per day up to 0.25 % of turnover |
| Under-reporting of liability | Demand notice under Section 73 / 74 |
| Mismatch in ITC or turnover | Scrutiny and interest @ 18 % p.a. |
| Non-cooperation during audit | Assessment based on best judgment |
Verify reconciliation between GSTR-1, GSTR-3B, and financials
Ensure ITC claimed is supported by valid tax invoices
Cross-check e-way-bill data with sales register
Report credit/debit notes accurately
Reverse ineligible ITC before filing GSTR-9
Retain all invoices and records for 72 months as required under law
| Form | Purpose | Due Date |
|---|---|---|
| GSTR-9 | Annual Return | 31 December following FY |
| GSTR-9C | Reconciliation Statement / Audit | 31 December following FY |
| DRC-03 | Additional tax payment (if any) | Before filing 9 / 9C |
Maintain consistent naming and numbering in invoices.
Update HSN and SAC codes properly.
Keep proof of export and SEZ transactions.
Track ITC on capital goods and reverse when required.
Reconcile advances, credit notes, and adjustments monthly.
A qualified GST consultant or Chartered Accountant ensures that:
All filings are accurate and compliant with law.
Reconciliations are performed without variance.
Audit queries are handled professionally.
Documentation is maintained for future reference.
Professional assistance minimises risk and provides confidence during departmental scrutiny.
Expertise in GST audits and annual reconciliations across industries.
End-to-end assistance — from data preparation to portal filing.
Detailed verification of turnover, ITC, and compliance records.
Transparent processes and timely completion before due dates.
Advisory support for notices, refunds, and litigation follow-up.
Rajasthan Filings ensures that every client meets the highest standards of GST compliance, reducing exposure to interest and penalties while maintaining flawless statutory records.
GST Audit and Annual Compliance represent the final stage of each financial year’s GST journey. They validate the integrity of every return filed and ensure harmony between financial statements and tax data.
Accurate and timely compliance not only fulfils a legal duty but also enhances business credibility, financial hygiene, and trustworthiness.
For seamless GST audits, reconciliations, and annual compliance support across India,
Rajasthan Filings provides professional expertise backed by accuracy, transparency, and accountability.
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