The mandatory audit provisions released by the Government will only add to the cost of and time taken for compliance, according to tax experts.
Under the rules, every registered taxpayer with an annual turnover of more than Rs. 2 crore has to get his or her accounts audited by a chartered accountant or a cost accountant and provide explanations for any discrepancy between the returns filed under GST and the audited financial statements.
Format released
“Before today’s (Sunday) 16th meeting of the GST Council, the Government has released the format of the mandatory GST audit report,” Harpreet Singh, Partner, Indirect Tax, KPMG in India said.
“The GST law mandates that audit is to be undertaken each year by an independent chartered accountant or a company secretary. The main purpose of the Audit appears to be detailed reconciliation of the GST returns with the audited financial statements.”
“While I have not had the time to go over the entire format, at first glance, it looks fairly long and extensive. This just adds to the pain of companies already struggling to get GST ready,” a tax expert told The Hindu on the condition of anonymity.
“Every registered person whose aggregate turnover during a financial year exceeds Rs. 2 crore shall get his accounts audited as specified… and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified… electronically through the Common Portal either directly or through a Facilitation Centre notified by the Commissioner,” the GST legislation says.
12 annexures
“The format is fairly long with 12 different annexures reconciling each and every transaction as reported in the GST return with the financials,” Mr. Singh added.
“One question that is unanswered is whether the Government is expecting reconciliation with the state-wise audited financial statements? As a matter of practice, no company prepares state-wise audited financial statements, and hence this could be a new compliance challenge.”
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