• Notification Date: 11-07-2023
• Notification No: N/A

GST: Karnataka Department issues Circular on Instructions for Effective GST Audit

The Karnataka GST Department has issued a circular on instructions for effective Goods and Services Tax (GST) Audit on 13th June 2023. According to the circular, the primary responsibility of the department is to ensure that the annual revenue from GST and other commercial taxes, as projected by the Government using relevant economic indicators, is promptly received by the public treasury. This ensures that the allocated budget for expenditure is adequately funded. 

Further, conducting an effective GST Audit involves a methodical evaluation of taxpayers’ records, returns, and documents, among other things. This process helps uncover any undisclosed liabilities that may have arisen due to errors, omissions, or intentional deception. To enhance the effectiveness of the audit, it is beneficial to conduct on-site visits to the auditee’s business premises. This allows for a deeper understanding of the establishment, its business practices, and a comprehensive review of internal controls. 

Since the audit proceedings under Section 65 of the Karnataka Goods and Services Tax Act 2017 are subject to time constraints, it is important for the audit officer or team to expedite the verification processes of the auditee’s books of account and other relevant documents at their office. This is done after conducting a preliminary desk review and assessing the audit risks, ultimately ensuring the desired results of an efficient audit. The GST Council has established an All-India Coordination Committee responsible for selecting themes for Thematic Audit. The Commissioner of Commercial Taxes (Karnataka) is among the members of this committee. 

As a result, a State Level Coordination Committee of officers has been formed, as mentioned in the communication dated 05-05-2023 with reference No. Adcom (A, I&C)/PA/CR-03/2023-24. 

The committee is mandated to collaborate with all the Directorate Generals of State Taxes and identify themes and cases for audit based on the provided Standard Operating Procedure (SOP). Also, regarding the audit monitoring committee, it shall be composed of the Joint Commissioner (Divisional Head), two officers from the Audit wing of DGSTO and one officer from internal Audit in each division. The committee has constituted immediately in each DGSTO and intimated to the office of Adcom (A, I &C) within 3 days from the date of issue of this circular, i.e., 13th June 2023.