Handling a Section 65 GST Audit: Reconciliation, Records and the Reply to an Observation
This article gives a practical approach to a departmental audit of a registered person under Section 65 of the CGST Act, 2017, which generally begins with Form GST ADT-01.
The audit is a review of compliance and of the records that support it. Because the department can compare data from several sources quickly, regular reconciliation through the year is more useful than preparation begun only after the audit intimation arrives.
Where audit attention usually falls
Section 65 empowers the department to audit a registered person. The areas that commonly draw attention are:
- turnover;
- input tax credit;
- reverse charge;
- classification and rate of tax;
- exempt supplies;
- e-invoices and e-way bills;
- refunds and exports.