GST audit that holds up, every scrutiny.
GST audit is where the biggest indirect tax exposures compound silently. Under Section 44 of the CGST Act 2017, every registered taxpayer with aggregate turnover exceeding ₹2 crore (PAN-India) must file GSTR-9 by 31 December of the following FY. For turnover above ₹5 crore, GSTR-9C reconciliation statement (self-certified from FY 2020-21) is additionally required. FY 2025-26 deadline: 31 December 2026. Miss it: Section 47(2) late fee ₹50-₹200/day, capped at 0.04-0.5% of turnover. On top of statutory filings, Section 65 empowers the department to audit any taxpayer risk-based (FORM ADT-01, 15 working days notice, 3-month duration extendable +6). Section 66 triggers special audit by CA/CMA when value not correctly declared or credit exceeds normal (FORM ADT-03, 90-day report). Adverse findings → Section 73 SCN (10% penalty) or Section 74 SCN (100% penalty) via DRC-01, plus Section 50 interest at 18% p.a. (24% for wrongly-utilised ITC). The heart of every GST audit: 4-way reconciliation of GSTR-1 vs GSTR-3B vs GSTR-2B vs books.
- GSTR-9 preparation + filing (Section 44 CGST Act, 19 sections, 6 parts)
- GSTR-9C reconciliation + self-certification (turnover > ₹5 Cr)
- 12-month GSTR-1 vs GSTR-3B vs GSTR-2B vs books full reconciliation
- ITC reversal audit (Rule 42/43, blocked credits Sec 17(5))
- HSN summary Table 17/18 with rate-wise breakup
- Section 65/66 audit representation + response drafting
The GST audit framework in 2026
Two parallel obligations govern GST audit: self-filed annual returns (GSTR-9 + GSTR-9C) under Section 44, and department-initiated audits (Section 65 + Section 66) when risk parameters or scrutiny triggers apply.
Every registered taxpayer has audit-related obligations:
- Aggregate turnover > ₹2 crore (PAN-India) — GSTR-9 mandatory annually
- Turnover > ₹5 crore — GSTR-9C reconciliation additionally required (self-certified from FY 20-21)
- Any registered taxpayer — potential Section 65 departmental audit (risk-based)
- During scrutiny/inquiry — Section 66 special audit by CA/CMA nominated by Commissioner
Late fee under Section 47(2) — slab-based:
- Turnover ≤ ₹5 Cr: ₹50/day (₹25 CGST + ₹25 SGST), capped at 0.04% turnover
- ₹5-20 Cr: ₹100/day, capped at 0.04%
- > ₹20 Cr: ₹200/day, capped at 0.5% turnover
- No IGST late fee
Post-audit consequences under Section 73/74:
- Section 73 (normal) · Penalty 10% of tax or ₹10,000 · SCN within 3 years
- Section 74 (fraud) · Penalty 100% of tax · SCN within 5 years
- Section 50 interest · 18% p.a. standard, 24% p.a. on wrongly-utilised ITC
- Voluntary payment reduces penalty significantly
4-way reconciliation — the audit core:
- GSTR-1 vs GSTR-3B · Outward supplies + tax matching
- GSTR-2B vs GSTR-3B · ITC availed vs eligible (Sec 16(2)(aa) mandatory)
- GSTR-2B vs Purchase Register · Vendor GSTR-1 filed check
- Books vs GST returns · Revenue from Operations vs Taxable Turnover
GSTR-9/9C mandatory · Section 65 defence needed if you...
- You have aggregate turnover > ₹2 crore (PAN-India) — GSTR-9 mandatory under Section 44 CGST Act · miss 31 Dec deadline = late fee ₹50-₹200/day (turnover-slab-based) capped at 0.04-0.5% of turnover
- Your turnover exceeds ₹5 crore — GSTR-9C reconciliation statement also mandatory (self-certified from FY 2020-21) · matches audited financial statements against GST returns
- You received FORM GST ADT-01 audit notice under Section 65 — 15 working days notice, 3-month audit period (extendable +6 months), ADT-02 final report within 30 days · needs professional representation
- You have ITC mismatches / GSTR-1 vs GSTR-3B differences / high ITC-to-output ratio — risk-based selection for departmental audit · pre-audit reconciliation prevents Section 73/74 demands
- You want voluntary GSTR-9 filing even at < ₹2 Cr — signals compliance discipline · required for tenders + bank loans + investor due diligence · unlocks refunds
- You have multi-state operations across multiple GSTINs — each GSTIN files separate GSTR-9 · aggregate turnover computed PAN-level · complex reconciliation across states
Skip GST audit obligations if you...
- You have aggregate turnover ≤ ₹2 crore (PAN-India) for FY 2024-25 onwards — exempt from GSTR-9 (Notification 15/2025-CT) · voluntary filing permitted but not required
- You're a Composition Scheme taxpayer — file GSTR-4 annually instead · GSTR-9A was discontinued after FY 2018-19
- You're an Input Service Distributor (ISD), casual taxable person, or non-resident taxable person — exempt from GSTR-9 obligations
- You're a TDS deductor under Section 51 (government deductors) — file monthly GSTR-7 · no GSTR-9
- You're a TCS collector under Section 52 (e-commerce operators) — file GSTR-9B annually instead of GSTR-9
What full GST audit compliance actually delivers
Every benefit anchored to specific Sections of CGST Act 2017 · Section 44 annual return, Section 65/66 audits, Section 73/74 post-audit SCN, Section 50 interest, plus 4-way reconciliation core.
GSTR-9 · Annual Return (Section 44)
Under Section 44 of the CGST Act 2017, every registered taxpayer with aggregate turnover > ₹2 crore (PAN-India) must file GSTR-9 annually by 31 December of the following FY. For FY 2025-26, due date is 31 December 2026. Consolidates all outward supplies (GSTR-1), inward supplies (GSTR-2B), tax paid (GSTR-3B), input tax credit (ITC) reconciliation across the year. Form has 6 parts + 19 sections covering supplies, tax paid, ITC availed, demand and refunds, and HSN summary. Cannot be revised once filed. Late filing triggers Section 47(2) late fee: ₹50/day (up to ₹5 Cr), ₹100/day (₹5-20 Cr), ₹200/day (> ₹20 Cr), capped at 0.04-0.5% of turnover. Late GSTR-9 also disables refund claims and blocks scrutiny closure.
GSTR-9C · Reconciliation Statement
For taxpayers with aggregate turnover > ₹5 crore, GSTR-9C is additionally mandatory along with GSTR-9. Same due date (31 December). Since FY 2020-21, GSTR-9C is self-certified by the taxpayer — CA certification requirement was removed (Finance Act 2021). It reconciles the audited financial statements (Revenue from Operations under Companies Act) with the Taxable Turnover reported in GST returns. Any unreconciled difference must be explained. Also reconciles Input Tax Credit claimed (GSTR-3B) with purchase register + GSTR-2B. Missing GSTR-9C triggers Section 125 general penalty up to ₹25,000 plus scrutiny under Section 61 for reconciliation gaps. In practice, our clients get reconciliation memos ready by 15 November for smooth December filing.
Section 65 · Audit by Tax Authorities
Section 65 of the CGST Act empowers the Commissioner or authorized officer to conduct departmental audit of any registered taxpayer — no statutory turnover threshold. Selection is risk-based: high ITC-to-output tax ratio, frequent GSTR-1 amendments, sudden turnover spikes without proportional tax, sector risk scores. Process: prior notice FORM GST ADT-01 (Rule 101(2)) at least 15 working days before audit start · audit at business premises or tax office · duration 3 months from commencement, extendable +6 months by Commissioner · findings in FORM GST ADT-02 within 30 days of completion. Section 65(6) gives statutory right to respond. If discrepancy found → Section 73 (10% penalty) or Section 74 (100% penalty) SCN with DRC-01.
Section 66 · Special Audit
Section 66 CGST Act allows the department to order special audit when — during scrutiny, inquiry, investigation, or any proceeding — an officer not below Assistant Commissioner rank (with Commissioner's prior approval) is of the opinion that value has not been correctly declared or credit availed exceeds normal limits. Trigger conditions: complex transactions, large ITC claims, sector-specific concerns. Notice in FORM GST ADT-03 (Rule 102). Audit conducted by CA or Cost Accountant nominated by the Commissioner (not taxpayer's choice). Report submitted within 90 days from receipt of notice (extendable +90 days). Findings in FORM GST ADT-04. Auditor's expenses + remuneration borne by Commissioner. Post-audit: Section 73/74 SCN.
12-Month Reconciliation · GSTR-1 / 3B / 2B / Books
The heart of GST audit is 4-way reconciliation across the entire FY. First: GSTR-1 vs GSTR-3B — outward supplies + tax liability must match. Common gap: sales invoiced but not reported in GSTR-3B tax head. Second: GSTR-2B vs GSTR-3B ITC — ITC availed must match auto-populated eligible ITC. Common gap: ITC claimed without corresponding GSTR-2B entry (post 2022 amendment = disallowed). Third: GSTR-2B vs Purchase Register — every purchase should map to a GSTR-2B entry. Common gap: vendor didn't file GSTR-1. Fourth: Books of accounts vs all GST returns — Revenue from Operations must reconcile with taxable turnover; ITC claimed must match books. We deliver reconciliation memos with GSTR-9/9C so audit-ready.
Section 73 / 74 · Post-Audit Response
When audit findings result in tax short paid, erroneously refunded, or ITC wrongly availed, the department issues show cause notice (SCN) via DRC-01 under Section 73 (normal cases) or Section 74 (fraud/suppression cases). Section 73: penalty 10% of tax or ₹10,000 whichever higher · SCN 3 months before 3-year limitation from due date · order within 3 years. Section 74: penalty 100% of tax · SCN 6 months before 5-year limitation · order within 5 years. Plus Section 50 interest at 18% p.a. (24% for ITC wrongly availed and utilised). Voluntary payment before SCN reduces penalty significantly — Section 73 no penalty, Section 74 15% penalty. Our post-audit response service drafts DRC-06 replies with case law + reconciliations to minimize exposure.
Coming soon: the GST audit cycle
Data extraction → 4-way reconciliation → form population → CA review → portal filing → Section 65 defence (if triggered). The complete cycle in 2 minutes.
3-stage GST audit lifecycle
Green = GSTR-9 preparation (October-December). Gold = Section 65 departmental audit if triggered (15-day notice + 3-9 month duration). Red = post-audit DRC-01 SCN response under Section 73/74.
Data Extraction
All 12 months' GSTR-1, GSTR-3B, GSTR-2B downloaded from GSTN portal. Trial balance, sales register, purchase register imported from Tally/Zoho/ERP.
4-Way Reconciliation
GSTR-1 vs GSTR-3B (outward + tax). GSTR-2B vs GSTR-3B (ITC availed). GSTR-2B vs purchase register (vendor filed). Books vs returns (Revenue from Ops vs Taxable Turnover).
Form Population
All 19 sections of GSTR-9 populated with reconciled data. Table 17 HSN summary outward (4-digit < ₹5 Cr / 6-digit ≥ ₹5 Cr). Table 18 inward HSN. Rule 42/43 reversals. Section 17(5) blocked credits.
CA Review
Two-tier CA review. Cross-check against previous year's trends. Any anomaly investigated. Client sign-off obtained.
Portal Filing
File GSTR-9 (and GSTR-9C if applicable) on GST portal well before 31 December deadline. Download acknowledgement. Archive all working papers for 5 years (Section 35 preservation).
Section 65 Defence
15 working days to prepare full document readiness pack. Audit representation on-site or virtual. Section 65(6) opportunity submissions. FORM GST ADT-02 findings review. DRC-01 SCN response if adverse.
GST audit obligations — 6 scenarios
Documents for GSTR-9 + Section 65 defence
GST returns + books + supporting records. Most clients share via secure portal or shared drive. Portal auto-downloads GSTR-1/3B/2B saves ~40% of data collection time. Books integration via Tally/Zoho/Busy for automated reconciliation.
GST Returns + Reconciliations
- All GSTR-1 filed for the FY (12 months)
- All GSTR-3B filed for the FY (12 months)
- GSTR-2B statements downloaded (auto-generated)
- GSTR-2A for historical reference (older FYs)
- ITC-04 for job work (if applicable)
- ITC reversal statements (Rule 42/43)
Books of Accounts + Financials
- Trial balance for the FY
- Audited Profit & Loss statement
- Audited Balance Sheet
- Sales register (rate-wise HSN-wise)
- Purchase register with ITC eligibility flags
- Fixed asset register with GST on capital goods
Supporting Records
- GSTIN + PAN + state registrations
- Aggregate turnover computation (PAN-level)
- HSN summary (Table 17 outward, Table 18 inward)
- Credit notes + debit notes issued
- Refund applications + status
- Any SCN/DRC-01 received during FY
Check your GST audit obligation + costs
Enter aggregate turnover, number of GSTINs, days late (if applicable), and short-tax exposure (if any). Auto-determines GSTR-9 / GSTR-9C obligation, computes our professional fee, late fees under Section 47(2), and Section 73/74 exposure estimates.
GSTR-9 vs GSTR-9C vs Section 65 Audit · Which applies to you?
16 dimensions comparing GSTR-9 (annual return) vs GSTR-9C (reconciliation) vs Section 65 (departmental audit). Each is a distinct obligation with different triggers, thresholds, and consequences.
| Criteria | GSTR-9 (Annual Return) | GSTR-9C (Reconciliation) | Section 65 (Dept Audit) |
|---|---|---|---|
| Turnover threshold | > ₹2 crore (PAN-India) | > ₹5 crore (PAN-India) | No threshold · risk-based |
| Legal basis | Section 44 CGST Act | Section 44(2) + Rule 80(3) | Section 65 + Rule 101 |
| Frequency | Annual (once per FY) | Annual (once per FY) | When ordered (typically once) |
| Due date FY 2025-26 | 31 December 2026 | 31 December 2026 | As per ADT-01 (15 wd notice) |
| Initiated by | Taxpayer (self) | Taxpayer (self) | Commissioner (department) |
| Certification | Self-filed | Self-certified (from FY 20-21) | Departmental report (ADT-02) |
| Content coverage | All GST returns consolidation | Reconciliation books vs GST | Any/all books + returns |
| Time period | Full FY | Full FY | FY or part or multiple FYs |
| Where filed | GST portal (online) | GST portal (with GSTR-9) | Physical/office (departmental) |
| Late fee / penalty | ₹50-200/day · 0.04-0.5% cap | ₹25,000 (Section 125) | Section 73/74 post-audit |
| Revisions allowed | None (cannot revise) | None | Not applicable |
| Fee (our practice) | ₹12,000 flat + GST | ₹14,999 additional + GST | ₹26,000 per audit + GST |
| Our track record | 500+ filings clean | 150+ certifications clean | 30+ audits zero adverse |
| Standard turnaround | 15 working days | 25 working days | 2-3 months representation |
| Post-completion action | Filed acknowledgement | Filed with GSTR-9 | ADT-02 report review |
| IT Act 2025 impact | CGST Act unchanged | CGST Act unchanged | CGST Act unchanged |
India GST audit map · 6 frameworks in one chart
Every GST audit obligation categorised by law: GSTR-9 (Section 44 CGST Act, > ₹2 Cr), GSTR-9C (Section 44(2), > ₹5 Cr self-certified), Section 65 departmental audit (Rule 101), Section 66 special audit (Rule 102), Section 73/74 post-audit SCN, and 4-way reconciliation core. CGST Act 2017 unchanged by IT Act 2025.
Sign-up to filed GSTR-9 · The 60-day path
4 critical milestones. From data collection (Days 1-15) to portal filing (Days 45-60). Standard 15-day working timeline for GSTR-9 only, 25 days for GSTR-9 + 9C. All working papers archived for 5 years as required under Section 35.
Data collection + baseline reconciliation
Extract all 12 months' GSTR-1, GSTR-3B, GSTR-2B from GSTN portal. Import trial balance + sales register + purchase register from Tally/Zoho/ERP. Run baseline 4-way reconciliation (GSTR-1 vs 3B, 2B vs 3B, 2B vs purchase register, books vs returns). Identify obvious gaps.
Skipping 2B vs purchase register lets ITC mismatches propagate to GSTR-9Deep reconciliation + adjustment entries
Investigate every variance > ₹5,000. Book-side adjustments for missing invoices, wrongly-classified expenses. Return-side adjustments (via next month's GSTR-1/3B if within 3-year window). ITC reversal computation under Rule 42/43. Blocked credits under Section 17(5) identification. HSN summary preparation.
ITC reversal wrongly booked = 24% interest under Section 50(3)GSTR-9 draft + GSTR-9C reconciliation memo
Populate all 19 sections of GSTR-9 with reconciled data. Prepare Table 17 (HSN outward) and Table 18 (HSN inward). For > ₹5 Cr taxpayers: prepare GSTR-9C with Revenue from Operations vs Taxable Turnover reconciliation, ITC book vs GSTR-3B reconciliation, rate-wise breakup. Two-tier CA review.
Missing HSN summary Table 17 triggers system rejectionPortal filing + acknowledgement + audit trail
File GSTR-9 (and GSTR-9C if applicable) on GST portal well before 31 December deadline (target: 15 December for 16-day buffer). Download acknowledgement. Archive all reconciliation working papers for 5 years (Section 35 preservation). Prepare pre-audit file in case of Section 65 notice.
Filed but not download acknowledgement = no proof of filing in later disputes6 common GSTR-9 mistakes — and how to avoid them
#1 fatal: filing when not required (or vice versa). Costliest: ITC availed without GSTR-2B match. Trap: missing HSN Table 17 triggers portal rejection.
Missing ₹2 Cr threshold — filing when not required
The Notification 15/2025-CT (17 September 2025) permanently exempted taxpayers with aggregate turnover ≤ ₹2 crore from filing GSTR-9 for FY 2024-25 onwards. Many businesses continue to file unnecessarily, incurring ₹5,000-₹15,000 professional fees + time cost. Conversely, some businesses at ₹2.1 Cr (barely above threshold) assume they're exempt and miss filing — late fees of ₹50/day × 90 days = ₹4,500-₹15,000 depending on how far into next year they file.
GSTR-9 filed without reconciling GSTR-1 vs GSTR-3B
Common shortcut: copy-paste values from GSTR-3B into GSTR-9 Tables 4-5 (outward supplies) without cross-checking against GSTR-1. If GSTR-1 shows ₹12 Cr taxable but GSTR-3B tax liability was on ₹11 Cr, GSTR-9 reveals the ₹1 Cr gap in Table 9 (differential tax paid). Consequence: Section 73/74 SCN for short payment + interest 18% p.a. + penalty 10-100%. On ₹1 Cr @ 18% GST = ₹18L tax + interest + penalty = ₹35-45 lakh total exposure.
ITC availed without matching GSTR-2B entry
Post the 2022 amendment to Section 16(2)(aa) CGST Act, ITC can only be claimed if the corresponding invoice appears in GSTR-2B (auto-populated from vendor's GSTR-1). Businesses continue availing ITC from Purchase Register without checking GSTR-2B — vendor may not have filed GSTR-1, or the invoice may be delayed, or wrong GSTIN entered. GSTR-9 Table 8A vs 6B reveals this mismatch. On ITC of ₹15 lakh disallowed = ₹15L tax + 24% interest under Sec 50(3) for wrongly-utilised ITC + 100% penalty under Sec 74 if fraud alleged = ₹40+ lakh total exposure.
Missing HSN summary Table 17 (or wrong digit level)
Table 17 of GSTR-9 requires HSN summary of outward supplies at 4-digit level for turnover < ₹5 Cr and 6-digit level for turnover ≥ ₹5 Cr (Notification 78/2020-CT). Businesses using ERP with only 2-digit HSN in invoices cannot populate this. Result: GSTR-9 rejected by portal on submission or filed with inaccurate summary triggering Section 61 scrutiny. Table 18 (inward HSN) is optional but recommended — helps in future audit defence. Failure penalty under Section 125 up to ₹25,000 plus scrutiny escalation risk.
ITC reversal under Rule 42/43 ignored or miscalculated
Rule 42 requires ITC reversal proportionate to exempt turnover — formula: ITC × (exempt turnover / total turnover). Rule 43 requires similar reversal on capital goods over their useful life (60 months). Businesses with any exempt supplies (interest income, dividends, agriculture, exports without LUT, etc.) must compute. Common failure: reversal not done at all, or done on wrong base (input tax vs input tax credit availed). Detected in Section 65 audit or GSTR-9C: tax + 24% interest under Sec 50(3) + 100% penalty under Sec 74 if wrongly-utilised.
Filing GSTR-9 without preserving working papers
Section 35 CGST Act requires preservation of records for 5 years from the due date of annual return. Many businesses file GSTR-9 and discard the reconciliation working papers, purchase registers, ITC computation sheets. When Section 65 audit notice (ADT-01) arrives 2-3 years later, they cannot reconstruct the workings — leading to presumptive disallowances by the officer. On ₹50 lakh ITC challenged without supporting = full disallowance + 24% interest + 100% penalty = ~₹1.5 crore exposure. Also required for Section 66 special audit and Section 73/74 SCN responses.
Pick your plan
Turnover ₹2-5 Cr? ₹12,000 GSTR-9 Only. Turnover > ₹5 Cr? ₹26,000 GSTR-9 + 9C (includes Section 65 defence). ADT-01 received? ₹50,000 Audit Defence Plan (full representation + DRC-06 reply).
- Full 12-month GSTR-1 vs GSTR-3B reconciliation
- ITC audit (Rule 42/43 reversals, Sec 17(5) blocks)
- GSTR-2B vs purchase register mapping
- Books vs returns 4-way reconciliation
- HSN summary Table 17/18 preparation
- GSTR-9 filing on GST portal
- Filed acknowledgement + working papers archive
- Pre-audit file for potential Section 65
- GSTR-9C additional at ₹14,999 · Multi-GSTIN at ₹4,999 per additional
- Everything in GSTR-9 Only Plan +
- GSTR-9C reconciliation statement
- Revenue from Operations vs Taxable Turnover
- ITC book vs GSTR-3B reconciliation
- Rate-wise breakup of outward supplies
- Reverse charge reconciliation
- Self-certification memo
- CA review + sign-off pack
- Section 65 audit representation (if triggered)
- Multi-GSTIN at ₹12,000 per additional · Section 66 special audit separately quoted
- FORM GST ADT-01 response drafting
- Full document readiness pack
- On-site or virtual audit representation
- Daily audit tracker + query response
- Section 65(6) opportunity submissions
- FORM GST ADT-02 findings review
- DRC-01 SCN response (Section 73/74)
- DRC-06 reply drafting with case law
- Voluntary payment strategy if beneficial
- Appeal to Appellate Authority (if needed)
- Section 66 special audit representation at ₹99,999 · Complex multi-year at case-by-case pricing
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GST audit desk
The Tax Paramarsh desk
"GST audit is where the biggest indirect tax exposures compound silently. A single unreconciled variance in GSTR-1 vs GSTR-3B — say ₹50 lakh sales invoiced but not reported in GSTR-3B tax head — cascades into Section 73/74 SCN 18 months later. On ₹50 lakh @ 18% GST = ₹9 lakh tax + 18% interest for 2 years = ₹3.24 lakh + 10% penalty = ₹90,000 under Section 73 = total ₹13.14 lakh exposure. If Section 74 alleged (fraud/suppression) = 24% interest for 3 years + 100% penalty = ₹22 lakh. And this is just ONE variance across 12 months. Under Section 44 CGST Act, GSTR-9 is mandatory for aggregate turnover above ₹2 crore PAN-India. Notification 15/2025-CT (17 September 2025) permanently exempted ≤ ₹2 Cr. For > ₹5 crore, GSTR-9C reconciliation is additionally required — self-certified since FY 2020-21 (Finance Act 2021 removed CA/CMA certification requirement). Both due 31 December of following FY. FY 2025-26 deadline: 31 December 2026. Miss = late fee ₹50-₹200/day depending on turnover slab, capped at 0.04-0.5%. Then there's Section 65 departmental audit — no threshold, risk-based selection. FORM GST ADT-01 arrives with 15 working days notice under Rule 101. 3 months duration, extendable +6 by Commissioner. Findings in FORM GST ADT-02 within 30 days. Section 66 special audit triggered during scrutiny/inquiry — officer above Assistant Commissioner rank with Commissioner's approval orders. Auditor: CA/CMA nominated by Commissioner (not your choice). 90-day report, extendable +90. Adverse findings → DRC-01 SCN under Section 73 or 74. Section 73 (non-fraud): 10% penalty, SCN within 3 years. Section 74 (fraud): 100% penalty, SCN within 5 years. Plus Section 50 interest at 18% p.a. (24% on wrongly-utilised ITC). Voluntary payment before SCN: Section 73 = no penalty, Section 74 = 15% penalty. Our reconciliation process eliminates such exposure at source. Monthly GSTR-1 vs GSTR-3B matching. GSTR-2B vs purchase register mapping. Rule 42/43 exempt supply reversal computation. Section 17(5) blocked credits identification. HSN summary Table 17/18. Two-tier CA review. Filing by 15 December (16-day buffer). All working papers archived 5 years for Section 35 compliance. When ADT-01 arrives, we're audit-ready in 10 days. Boring is the goal in GST audit."
What businesses say after our GST audit
Common questions
Straight answers on 2026 GST audit + GSTR-9 + GSTR-9C + Section 65/66 + Section 73/74. Still curious? WhatsApp us anything.
What is GSTR-9 and who must file it?
GSTR-9 is the annual return under GST, filed by every registered taxpayer whose aggregate turnover exceeds ₹2 crore (PAN-India) in a financial year. Filed once per FY by 31 December of the following year.
Legal basis:
- Section 44 of CGST Act 2017
- Rule 80 of CGST Rules 2017
- Notification 15/2025-CT (17 September 2025): exempted ≤ ₹2 Cr
Content — 6 parts, 19 sections:
- Part I: Basic details — GSTIN, legal name, trade name, FY
- Part II: Outward supplies — Tables 4-5 covering supplies during FY (Table 4: on which tax paid; Table 5: on which tax not paid)
- Part III: ITC — Tables 6-8 (Table 6: ITC availed; Table 7: reversals; Table 8: ITC as per GSTR-2A vs 3B reconciliation)
- Part IV: Tax paid — Tables 9-10 (rate-wise tax paid, differential tax if any)
- Part V: Demand and refunds — Tables 15-16
- Part VI: HSN summary — Table 17 (outward), Table 18 (inward)
Who is exempt:
- Aggregate turnover ≤ ₹2 crore (from FY 2024-25 onwards)
- Composition dealers (file GSTR-4)
- Input Service Distributors (ISDs)
- Casual taxable persons
- Non-resident taxable persons
- TDS deductors under Section 51 (file GSTR-7 monthly)
- TCS collectors under Section 52 (file GSTR-9B)
Due dates:
- FY 2024-25: 31 December 2025
- FY 2025-26: 31 December 2026
- Government may extend via CBIC notification
Late fee (Section 47(2), per Notification 07/2023):
- Turnover ≤ ₹5 Cr: ₹50/day (₹25 CGST + ₹25 SGST), capped at 0.04% of turnover
- ₹5-20 Cr: ₹100/day (₹50 CGST + ₹50 SGST), capped at 0.04% of turnover
- Above ₹20 Cr: ₹200/day (₹100 CGST + ₹100 SGST), capped at 0.5% of turnover
- No IGST late fee
Key rules:
- GSTR-9 cannot be revised once filed
- Any error must be corrected via subsequent monthly return amendments (subject to 3-year window from Rule 88C)
- Additional tax paid via GSTR-9 must be paid through DRC-03 with interest
- Consolidates all monthly returns for the FY
What is GSTR-9C and when is it required?
GSTR-9C is the reconciliation statement under GST, filed along with GSTR-9 by taxpayers whose aggregate turnover exceeds ₹5 crore in a financial year.
Legal basis:
- Section 44(2) of CGST Act (initially, subsequently amended)
- Rule 80(3) of CGST Rules
- Finance Act 2021: removed CA/CMA certification requirement
- Now self-certified by the taxpayer
Content — Reconciliation of:
- Turnover reconciliation:
- Revenue from Operations (audited P&L under Companies Act) vs
- Aggregate Turnover reported in GSTR-9 (from GST returns)
- Explain every variance
- Rate-wise breakup:
- Total tax paid at each rate (5%, 12%, 18%, 28%)
- Reconciliation with GSTR-1 rate-wise summary
- ITC reconciliation:
- ITC availed in books vs ITC availed in GSTR-3B
- ITC reversals under Rule 42/43
- Blocked credits under Section 17(5)
- Reverse charge reconciliation:
- RCM on domestic supplies
- RCM on imports of services
- Reasons for un-reconciled differences (mandatory disclosure)
- Additional tax payable (if reconciliation reveals short-payment)
Who must file:
- Aggregate turnover > ₹5 crore (PAN-India, FY 2024-25 onwards)
- Multi-state operations: threshold at PAN level
- Filed separately for each GSTIN in the state
Who is exempt:
- Turnover ≤ ₹5 crore
- Same exemptions as GSTR-9 (composition, ISD, etc.)
Due dates:
- Same as GSTR-9: 31 December of following FY
- FY 2024-25: 31 December 2025
- FY 2025-26: 31 December 2026
Filing process:
- Prepare GSTR-9 first
- Prepare GSTR-9C reconciliation offline (Excel utility from GST portal)
- Generate JSON file from utility
- Upload JSON on GST portal
- Submit + file with DSC or EVC (as applicable)
Penalty:
- No specific late fee for GSTR-9C
- General penalty up to ₹25,000 under Section 125 may apply
- Missing GSTR-9C triggers Section 61 scrutiny notice for reconciliation gaps
Key changes from FY 2020-21 onwards:
- CA/CMA certification removed (was mandatory earlier)
- Self-certified by authorized signatory of taxpayer
- Reduced tables (some optional)
- Simplified reverse charge disclosure
What is the difference between GSTR-9C and Section 65 audit?
Key distinction: GSTR-9C is a self-filed reconciliation statement. Section 65 audit is a departmentally-initiated scrutiny process. They are entirely different.
GSTR-9C · Reconciliation Statement:
- Nature: Compliance filing (like GSTR-1 or GSTR-3B)
- Initiated by: Taxpayer (self)
- Threshold: Turnover > ₹5 crore
- Certification: Self-certified (from FY 2020-21)
- Frequency: Annual (once per FY)
- Due date: 31 December of following FY
- Legal basis: Section 44(2) CGST Act
- Content: Reconciliation between books and GST returns
- Penalty: Section 125 general penalty ₹25,000 if missed
Section 65 · Departmental Audit:
- Nature: Investigative scrutiny by department
- Initiated by: Commissioner or authorized officer
- Threshold: None — risk-based selection
- Certification: Departmental audit report (FORM GST ADT-02)
- Frequency: As ordered (typically once)
- Notice: FORM GST ADT-01, 15 working days advance
- Duration: 3 months from commencement (extendable +6 months)
- Legal basis: Section 65 CGST Act + Rule 101
- Content: Verification of turnover, tax rates, ITC, refunds against books
- Consequence: If adverse finding → Section 73/74 SCN
Note: The Supreme Court ruling in Bharati Airtel case (2021) and subsequent CBIC amendments removed the earlier "GST audit" concept where GSTR-9C required CA certification. Since FY 2020-21, GSTR-9C is self-certified. A GST audit under Section 65 or 66 is a separate, department-initiated process — far more intensive than the annual reconciliation.
When both apply:
- Taxpayer with > ₹5 Cr turnover files GSTR-9C annually (self-certified)
- Same taxpayer may also receive ADT-01 for Section 65 audit
- Both are independent obligations · one doesn't substitute the other
What are Section 65 and Section 66 GST audits?
Section 65 · Audit by Tax Authorities:
Provision: "The Commissioner or any officer authorised by him, by way of general or specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed."
- Legal basis: Section 65 CGST Act 2017 + Rule 101 CGST Rules
- Who conducts: Departmental officer (Commissioner or authorized)
- Threshold: None — risk-based selection
- Risk parameters:
- High ITC-to-output tax ratio
- Frequent GSTR-1 amendments
- Sudden turnover spikes without proportional tax
- GSTR-1 vs GSTR-3B mismatches (over threshold)
- Sector-specific risk scores (retail, real estate, etc.)
- Aged ITC balances
- Notice: FORM GST ADT-01 (Rule 101(2)), min 15 working days advance
- Notice content: Audit period, date, time, place, documents required
- Location: Business premises of registered person OR office of tax authority
- Period audited: One FY, part of FY, or multiple FYs (per Rule 101(1))
- Duration: 3 months from commencement, extendable +6 months by Commissioner
- Statutory right: Section 65(6) — opportunity to explain discrepancies before findings finalised
- Findings: FORM GST ADT-02 within 30 days of completion
- Post-audit: If adverse finding → Section 73 (normal, 10% penalty) or Section 74 (fraud, 100% penalty) SCN via DRC-01
Section 66 · Special Audit:
Provision: "If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion..."
- Legal basis: Section 66 CGST Act 2017 + Rule 102 CGST Rules
- Who orders: Officer not below Assistant Commissioner rank + Commissioner's prior approval
- Trigger conditions:
- During scrutiny, inquiry, investigation, or any proceeding
- Value not correctly declared
- Credit availed exceeds normal limits
- Complex transactions requiring expert examination
- Who conducts: Chartered Accountant or Cost Accountant nominated by Commissioner (not taxpayer's choice)
- Notice: FORM GST ADT-03 (Rule 102(1))
- Report submission: 90 days from receipt of notice, extendable +90 days
- Findings: FORM GST ADT-04
- Expenses: Including auditor's remuneration, borne by Commissioner (not taxpayer)
- Post-audit action: Section 73/74 SCN if adverse
Key differences Section 65 vs 66:
- Section 65: general audit by department officer · Section 66: special audit by external CA/CMA
- Section 65: 3 months duration · Section 66: 90 days for report
- Section 65: general applicability · Section 66: triggered during scrutiny/inquiry only
- Section 65: FORM ADT-01/02 · Section 66: FORM ADT-03/04
What does GSTR-9 filing cost and what does it include?
Our transparent pricing:
- GSTR-9 Only Plan: ₹12,000 flat + 18% GST — for turnover ₹2-5 Cr, single GSTIN
- GSTR-9 + 9C Plan: ₹26,000 flat + 18% GST — for turnover > ₹5 Cr, single GSTIN (includes both filings)
- Audit Defence Plan: ₹50,000 per audit + 18% GST — Section 65 representation, DRC-01 SCN response, DRC-06 reply
- Multi-GSTIN: ₹4,999 additional per GSTIN (GSTR-9 only), ₹12,000 additional per GSTIN (GSTR-9 + 9C)
What's included in GSTR-9 Only Plan (₹12,000):
- Data extraction — all 12 months' GSTR-1, GSTR-3B, GSTR-2B from portal
- Baseline reconciliation — GSTR-1 vs GSTR-3B outward + tax matching
- ITC reconciliation — GSTR-2B vs GSTR-3B ITC availed
- Purchase register mapping — every purchase to GSTR-2B entry
- Books vs returns — trial balance / P&L vs taxable turnover
- Rule 42/43 reversal computation for exempt supplies
- Section 17(5) blocked credits identification
- HSN Summary Table 17 (outward) — mandatory 4-digit for < ₹5 Cr, 6-digit for ≥ ₹5 Cr
- HSN Summary Table 18 (inward) — recommended
- Draft GSTR-9 — all 19 sections populated
- Two-tier CA review before filing
- Filing on GST portal — before 31 December deadline (target 15-20 December)
- Acknowledgement archive + reconciliation working papers preserved 5 years
- Pre-audit file — ready in case of Section 65 ADT-01
What's additional in GSTR-9 + 9C Plan (₹26,000):
- All of GSTR-9 Only, plus:
- GSTR-9C reconciliation statement preparation
- Revenue from Operations vs Taxable Turnover reconciliation (audited P&L vs GST)
- Rate-wise breakup at 5%, 12%, 18%, 28%
- ITC book vs GSTR-3B reconciliation
- Reverse charge reconciliation (domestic + import of services)
- Reasons for un-reconciled differences (mandatory disclosures)
- Self-certification memo for authorized signatory
- DRC-03 payment processing if additional tax revealed
- Section 65 audit representation (if ADT-01 received) — included
What's in Audit Defence Plan (₹50,000):
- FORM GST ADT-01 response drafting within 5 days
- Full document readiness pack — organized by ADT-01 requirement
- On-site or virtual audit representation — full audit period
- Daily audit tracker + real-time query response
- Section 65(6) opportunity submissions — written explanations
- FORM GST ADT-02 findings review + rebuttal preparation
- DRC-01 SCN response under Section 73/74
- DRC-06 reply drafting with case law + reconciliations
- Voluntary payment strategy if beneficial (Section 73: no penalty; Section 74: 15% reduced)
- Appeal to Appellate Authority if adverse order (separate quote for higher forums)
Cost comparison:
- DIY GSTR-9: risky, mistakes cost 10-50x professional fee
- Local CA: ₹5,000-₹15,000 typically, may skip deep reconciliation
- Big 4 firms: ₹50,000-₹2 lakh, overkill for < ₹25 Cr turnover
- Our practice: ₹12,000-₹26,000 plus GST, 500+ filings clean
What are the late fees and penalties for missing GSTR-9?
GSTR-9 late fees under Section 47(2), CGST Act 2017:
Per Notification 07/2023-Central Tax (31 March 2023), slab-based late fees apply:
- Aggregate turnover ≤ ₹5 crore:
- Late fee: ₹50 per day (₹25 CGST + ₹25 SGST)
- Maximum cap: 0.04% of turnover in state/UT (0.02% each Act)
- Aggregate turnover ₹5-20 crore:
- Late fee: ₹100 per day (₹50 CGST + ₹50 SGST)
- Maximum cap: 0.04% of turnover
- Aggregate turnover > ₹20 crore:
- Late fee: ₹200 per day (₹100 CGST + ₹100 SGST)
- Maximum cap: 0.5% of turnover
- No IGST late fee applicable
Real examples:
- ₹3 Cr turnover, 60 days late: 60 × ₹50 = ₹3,000 (well below 0.04% cap of ₹1,200 × 2 acts = ₹2,400... capped at ₹2,400)
- ₹12 Cr turnover, 90 days late: 90 × ₹100 = ₹9,000 (0.04% × ₹12 Cr = ₹48,000 max)
- ₹50 Cr turnover, 120 days late: 120 × ₹200 = ₹24,000 (0.5% × ₹50 Cr = ₹25 lakh max — so full ₹24,000)
GSTR-9C penalties:
- No specific late fee under law
- Section 125 general penalty up to ₹25,000 may be levied for non-compliance
- Missing GSTR-9C triggers Section 61 scrutiny notice — the department flags the taxpayer as non-compliant
Beyond late fees — indirect costs of missing GSTR-9:
- ITC reconciliation gets stuck — the ITC claimed cannot be conclusively validated without GSTR-9
- Refunds get delayed — proper officers hesitate to process refunds without GSTR-9
- Bank loan applications delayed — most banks require GSTR-9 for past 2-3 years
- Government tenders disqualification — most tender qualifications require GSTR-9
- Section 65 audit risk increases — non-filers are on the radar
- Section 73/74 SCN for suspected short payment
- Investor due diligence red flag — startups raising equity fail DD
- Bharat Bill Payment System (BBPS) restrictions — non-compliant taxpayers restricted
Waivers historically granted:
- CBIC Notification 07/2023: waiver of late fees in excess of ₹20,000 (₹10,000 each CGST + SGST) for delayed GSTR-9 for FY 2017-18 to 2021-22 if filed 1 April - 30 June 2023
- No general waiver expected for FY 2024-25 onwards
Amnesty schemes (past):
- Section 128A relief: pay tax + interest, penalty waived — for FY 17-18 to FY 19-20 SCNs
- Deadline for availing was 31 March 2025 · no such scheme currently open
Are GSTR-9 professional fees tax deductible?
Yes — 100% deductible under Section 37(1) of the Income Tax Act 1961.
- Our professional fee (₹12,000 or ₹26,000 or ₹50,000) is an ordinary revenue business expense
- 18% GST on our fee: fully creditable as ITC (if GSTR-9-filing taxpayer is GST-registered — which they must be)
- Late fees, however, under Section 47(2) are NOT deductible (penal in nature)
- Interest under Section 50 on delayed tax payment: partially deductible (compensatory portion)
Effective post-tax cost — GSTR-9 + 9C Plan:
- Professional fee: ₹26,000
- GST @ 18%: ₹4,500 (fully recoverable as ITC)
- Total invoice: ₹29,499
- ITC recoverable: ₹4,500
- Net cash outflow: ₹26,000
- Post-tax cost at 30% bracket: ₹17,499 net
Comparison with alternatives:
- DIY: "Free" but risk of ₹25K-₹5L in Section 73/74 exposures for reconciliation gaps
- Junior accountant time: 40-60 hours × ₹500/hr = ₹20K-₹30K + still needs CA review
- Big 4 firms: ₹50K-₹2L, overkill unless multi-crore complexity
- Our practice: ₹26,000 with 500+ filings track record, effective ₹17,499 post-tax
What are Section 73 vs Section 74 penalties post-audit?
If a Section 65 or 66 audit reveals tax short-paid, erroneously refunded, or ITC wrongly availed, the department issues a Show Cause Notice (SCN) via FORM GST DRC-01 under Section 73 or 74:
Section 73 · Non-Fraud Cases:
- When: normal case of underpayment (no fraud, no suppression of facts)
- Penalty: 10% of tax or ₹10,000, whichever is higher
- Plus interest at 18% p.a. under Section 50 from date tax was due
- SCN issued: at least 3 months before the 3-year limitation from the due date of annual return
- Order to be passed: within 3 years from due date of annual return
- Voluntary payment before SCN: No penalty, only tax + interest
- Voluntary payment within 30 days of SCN: No penalty, only tax + interest
- Waived penalties available under Section 128A amnesty (past schemes)
Section 74 · Fraud/Suppression Cases:
- When: fraud, wilful misstatement, or suppression of facts to evade tax
- Penalty: 100% of tax
- Plus interest at 18% p.a. (or 24% for wrongly-utilised ITC)
- SCN issued: at least 6 months before the 5-year limitation from due date of annual return
- Order to be passed: within 5 years from due date of annual return
- Voluntary payment before SCN: Penalty reduced to 15% of tax
- Voluntary payment within 30 days of SCN: Penalty reduced to 25% of tax
- After 30 days of SCN but before order: Penalty 50% of tax
- Full 100% only if disputed till final order
Section 50 Interest:
- Standard rate: 18% p.a. on tax not paid or short-paid
- Enhanced rate: 24% p.a. on ITC wrongly availed AND utilised
- Interest computed from date tax was due till date of payment
Real-world example — ₹10 lakh tax short-paid revealed in Section 65 audit:
- Section 73 case (normal):
- Tax: ₹10,00,000
- Interest (18% for 2 years): ₹3,60,000
- Penalty (10% of tax): ₹1,00,000
- Total: ₹14,60,000
- Section 73 with voluntary payment before SCN:
- Tax: ₹10,00,000
- Interest: ₹3,60,000
- Penalty: ₹0
- Total: ₹13,60,000 (saved ₹1 lakh)
- Section 74 case (fraud):
- Tax: ₹10,00,000
- Interest (24% for 3 years wrongly-utilised ITC): ₹7,20,000
- Penalty (100% of tax): ₹10,00,000
- Total: ₹27,20,000 (172% of tax amount)
- Section 74 with voluntary payment before SCN:
- Tax: ₹10,00,000
- Interest: ₹7,20,000
- Penalty (15% of tax): ₹1,50,000
- Total: ₹18,70,000 (saved ₹8.5 lakh)
DRC-06 reply strategy:
- Analyze SCN factual + legal grounds
- Identify weak links (limitation, jurisdictional, factual errors)
- Reconcile with GSTR-1, GSTR-3B, GSTR-2B, books
- Cite case law (Bharati Airtel, Union of India v Bharti Airtel, etc.)
- Voluntary payment strategy if merits weak
- Personal hearing representation
- Order review + appeal to Appellate Authority if adverse
When is GSTR-9 due for FY 2025-26 and how long does filing take?
GSTR-9 due dates:
- FY 2024-25: 31 December 2025 (already passed)
- FY 2025-26: 31 December 2026
- FY 2026-27: 31 December 2027 (next cycle)
- Government may extend via CBIC notification (has happened multiple times historically)
Recommended filing timeline (our practice — target 15-20 December):
- 15 October: Start data extraction (portal enabled for GSTR-9 filing typically October)
- 15 November: Complete reconciliations, draft ready
- 1 December: Client review + CA sign-off
- 10-15 December: File on GST portal (15-day buffer before 31 Dec)
- 15-20 December: Acknowledgement received + working papers archived
Timeline breakdown by phase (15 working days total):
- Days 1-3: Data collection
- Download all 12 months' GSTR-1 JSON from GST portal
- Download all 12 months' GSTR-3B
- Download all 12 months' GSTR-2B
- Import trial balance, sales register, purchase register from Tally/Zoho
- Days 3-7: Baseline reconciliation
- GSTR-1 vs GSTR-3B tax liability matching
- GSTR-2B vs GSTR-3B ITC availed matching
- Books turnover vs GST turnover
- Rate-wise summary preparation
- Days 7-10: Deep reconciliation
- Investigate every variance > ₹5,000
- Missing invoice tracing
- Rule 42/43 reversal computation
- Section 17(5) blocked credit identification
- Reverse charge reconciliation
- Days 10-13: Form population
- Populate all 19 sections of GSTR-9
- Table 17 HSN summary outward
- Table 18 HSN summary inward
- Draft ready for review
- Days 13-15: Review + filing
- Two-tier CA review
- Client sign-off
- File on GST portal
- Download acknowledgement
Timeline for GSTR-9 + 9C (25 working days total):
- All of GSTR-9 above (15 days), plus:
- Days 15-20: GSTR-9C preparation
- Revenue from Operations reconciliation
- ITC book vs GSTR-3B reconciliation
- Rate-wise breakup
- Reverse charge details
- Un-reconciled differences documentation
- Days 20-25: Review + filing
- Self-certification memo
- Filing via Excel utility (JSON upload)
Timeline for Section 65 Audit Defence (2-3 months):
- Days 1-5: ADT-01 response drafting
- Days 5-15: Full document readiness pack
- Days 15-75: Audit representation (typically 60 days of active engagement)
- Days 75-90: ADT-02 findings review + rebuttal
- If SCN issued: Additional 30-45 days for DRC-06 reply
What if my aggregate turnover crosses ₹2 Cr or ₹5 Cr mid-year?
Aggregate turnover is computed at PAN level for the entire financial year (1 April to 31 March):
- Turnover from all GSTINs under the same PAN
- Taxable supplies + exempt supplies + export supplies
- Excludes: inward reverse-charge supplies + GST cess
Threshold determination:
- The threshold is checked at year-end (31 March)
- Not at any interim point
- Once threshold is crossed, GSTR-9/9C obligation kicks in for that FY
Scenario 1 — Crossing ₹2 Cr threshold:
- Business had ₹1.8 Cr in FY 2024-25 (below ₹2 Cr) → GSTR-9 optional
- Business has ₹2.5 Cr in FY 2025-26 (above ₹2 Cr) → GSTR-9 mandatory by 31 December 2026
- No pro-rata calculation · full FY obligation
Scenario 2 — Crossing ₹5 Cr threshold:
- Business had ₹4.8 Cr in FY 2024-25 → GSTR-9 mandatory, GSTR-9C optional
- Business has ₹6.2 Cr in FY 2025-26 → Both GSTR-9 AND GSTR-9C mandatory by 31 December 2026
- Prepare for enhanced reconciliation from Q4 onwards
Scenario 3 — Multi-GSTIN operations:
- Business has ₹1.4 Cr in Delhi GSTIN + ₹1.5 Cr in Karnataka GSTIN + ₹0.6 Cr in Maharashtra GSTIN
- Aggregate: ₹3.5 Cr (above ₹2 Cr)
- ALL 3 GSTINs must file GSTR-9, even the ₹0.6 Cr Maharashtra GSTIN
- Each GSTIN files separately with its state-specific data
Scenario 4 — Falling below threshold:
- Business had ₹2.5 Cr in FY 2024-25 (filed GSTR-9)
- Business has ₹1.8 Cr in FY 2025-26 (below ₹2 Cr)
- GSTR-9 for FY 2025-26 not mandatory (voluntary filing permitted)
- Prior year's GSTR-9 remains on record
Scenario 5 — Composition scheme opt-in mid-year:
- Regular taxpayer for Apr-Sep, composition dealer for Oct-Mar
- Files GSTR-9 for regular period + GSTR-4 for composition period
- Both filings required, but simplified
Proactive threshold monitoring (our practice):
- Quarterly turnover computation for all clients
- Alerts sent 30 days before quarterly threshold crossing
- Filing readiness activated as soon as ₹2 Cr / ₹5 Cr crossed
- By 31 October, reconciliation started for potential year-end filers
When can the department issue Section 65 audit notice? Any limitation?
Section 65 audit notice (FORM GST ADT-01) — When can it be issued?
- No specific limitation period for issuance of ADT-01
- Can be issued anytime for any audit period (single FY, part of FY, or multiple FYs)
- Rule 101(1) permits audit of "one FY, part of a financial year, or multiple financial years"
- Practical limit: Department typically audits within 3-5 years of the relevant FY (aligning with Section 73/74 limitation)
Notice period:
- Minimum 15 working days advance notice (Rule 101(2))
- Notice must contain: date of commencement, place of audit, documents required, period covered
- Extension requests by taxpayer allowed on reasonable grounds
Audit duration:
- Standard: 3 months from commencement
- Extension: additional 6 months by Commissioner with recorded reasons
- Total max: 9 months
- Delays beyond this = audit deemed concluded (though rarely happens in practice)
Common trigger for ADT-01:
- Risk-based selection by AI/analytics:
- High ITC-to-output tax ratio (> 50%)
- ITC availed but no corresponding GSTR-2B (post 2022 amendment)
- Frequent GSTR-1 amendments (indicates data inaccuracy)
- Sudden turnover spikes without proportional tax
- GSTR-1 vs GSTR-3B mismatches over ₹1 lakh
- Sector-specific risk:
- Real estate — high land ITC issues
- Retail — fake invoice risks
- Manufacturing — inter-state ITC issues
- Services exports — LUT + refund complexity
- E-commerce — TCS reconciliation gaps
- Prior scrutiny findings:
- Section 61 scrutiny notice earlier → escalation
- DRC-01 notices not adequately responded
- Prior Section 65/66 adverse findings
- Complaint or informer input:
- Vendor complaint of ITC mismatch
- Whistleblower / competitor complaint
Section 74 fraud/suppression cases — extended limitation:
- Section 74 SCN can be issued within 5 years from due date of annual return
- So for FY 2020-21 (GSTR-9 due 31 Dec 2021), Section 74 SCN can be issued till 31 December 2026
- Section 65 audit for such old periods still permissible
Section 73 non-fraud cases:
- SCN within 3 years from due date of annual return
- For FY 2022-23 (GSTR-9 due 31 Dec 2023), Section 73 SCN till 31 December 2026
3-year hard-lock (from July 2025):
- CBIC notification: GSTR-1 and GSTR-3B cannot be filed after 3 years from due date
- Affects late compliance for FY 17-18 onwards
- Does NOT prevent Section 65/66 audits or Section 73/74 SCNs
How does the IT Act 2025 affect GST audit obligations?
Short answer: IT Act 2025 does NOT affect GST audit obligations.
Why:
- GST is governed by the CGST Act 2017 + SGST Acts + IGST Act 2017
- Income Tax Act 2025 is a completely separate legislation replacing the Income Tax Act 1961
- GST provisions (Section 44 GSTR-9, Section 65 audit, Section 66 special audit, Section 73/74 penalties) remain unchanged
- GSTR-9C reconciliation still required for > ₹5 Cr turnover
- Section 47(2) late fees unchanged
What DOES change from 1 April 2026 under IT Act 2025 (relevant to GST context):
- Section 44AB tax audit → Section 63 — Income Tax audit provisions renumbered
- Form 3CD → Form 26 — Tax audit report renumbered
- Section 40A(3) → Section 34 — Cash payment disallowance renumbered
- These affect Income Tax audit under IT Act, not GST audit
Intersection points between GST and Income Tax:
- Turnover reconciliation: Both GSTR-9C and Form 3CD (Form 26 from 2026) require reconciliation of book turnover with respective law's turnover
- Cash payment disallowance: Section 40A(3) [Section 34 from 2026] IT Act disallows cash payments > ₹10K — but only IT deduction, not GST ITC
- Section 269SS/269T: IT Act cash loans > ₹20K = penalty — unrelated to GST
- Section 44AB [Section 63]: IT tax audit threshold — separate from GST audit
For your business — dual audit compliance:
- Turnover > ₹2 Cr: GSTR-9 required annually (CGST Act)
- Turnover > ₹5 Cr: GSTR-9 + GSTR-9C required annually (CGST Act)
- Turnover > ₹1 Cr (business) / ₹10 Cr (5% cash rule) / ₹50 Lakh (professional) / ₹75 Lakh (enhanced): Section 44AB [Section 63] tax audit required (IT Act)
- Both audits are independent — one doesn't substitute the other
Key differences at a glance:
- GST audit (Section 65/66): Departmental / risk-based · No threshold · Focus: GST returns vs books
- GSTR-9C: Self-filed reconciliation · > ₹5 Cr threshold · Focus: GST return reconciliation
- Section 44AB IT audit [Section 63 from 2026]: Mandatory annual · Threshold-based · Focus: Books completeness + Section 32/40A(3)/269SS compliance
Our integrated advisory approach:
- Single point of contact for GST + IT audit obligations
- Turnover threshold monitoring: quarterly for both GST + IT
- Reconciliation memos cross-referenced (GST turnover vs Form 3CD Column 40)
- Deadline calendar: 30 September (IT audit + ITR audit cases), 31 October (ITR audit cases), 31 December (GSTR-9/9C)
- Coordinated CA sign-off on both audits
Let's make your GST audit boring.
WhatsApp us your aggregate turnover + number of GSTINs + audit status. Free 4-way reconciliation audit + GSTR-9/9C obligation check + Section 65 risk assessment. GSTR-9 Only ₹12,000. GSTR-9 + 9C ₹26,000. Audit Defence ₹50,000 per audit. Zero adverse Section 65 findings across 30+ audits — starts on day one.