The GST audit framework has undergone a fundamental shift since 2017. The statutory audit under Section 35(5) was discontinued from 1st August 2021 and replaced by self-certified GSTR-9C. The departmental audit under Section 65 and the special audit under Section 66 remain in force. Understanding the differences between these audit types is essential for compliance planning.
This article explains the scope, applicability, and objectives of each audit type.
Statutory Audit Under Section 35(5): Discontinued
The statutory audit required a Chartered Accountant or Cost Accountant to audit the taxpayer's accounts and submit a reconciliation statement in GSTR-9C. This requirement was discontinued from 1st August 2021. GSTR-9C is now self-certified by the taxpayer.
Departmental Audit Under Section 65
The departmental audit is conducted by GST officers. It can cover any registered taxpayer, regardless of turnover. The audit is initiated by the department and follows the process outlined in Section 65. The audit must be completed within three months, extendable by six months. The final audit report is issued in Form GST ADT-02 .
Special Audit Under Section 66
A special audit is ordered by the Assistant or Deputy Commissioner and conducted by a CA or CMA nominated by the Commissioner. It is ordered in complex cases where the officer believes that the taxpayer has not correctly declared tax liability. The audit must be completed within 90 days, extendable by a further 90 days.
Key Differences
| Feature | Statutory Audit (Discontinued) | Departmental Audit (Section 65) | Special Audit (Section 66) |
|---|---|---|---|
| Applicability | Turnover above ₹5 crore | Any registered person | Complex cases |
| Who conducts | CA/CMA appointed by taxpayer | GST officers | CA/CMA nominated by Commissioner |
| Trigger | Annual, mandatory | Department-initiated | Officer-initiated |
| Current status | Discontinued (Aug 2021) | Active | Active |
Conclusion
The GST audit landscape has shifted from mandatory statutory audit to self-certified reconciliation, with departmental and special audits remaining as enforcement tools. Taxpayers must understand the current framework and prepare accordingly.
At Anuj Desai & Associates, we provide expert advisory services on all types of GST audits. Our team can help you prepare for departmental audits and respond to special audits.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.