• Notification Date: 08-01-2022
• Notification No: N/A

ICAI releases new order for the Government to revive Audit and Certification provisions regarding GST Annual Returns

According to the report, the Institute of Chartered Accountants of India (ICAI) has asked the government to revive audit and certification rules concerning the GST annual returns. The Institution claims that this new provision will help identify and sort out the issues related to compliance.

ICAI said, “Doing away with the audit will lead to large-scale disruption of compliance resulting in demand notices and the taxpayers will be burdened with tax, interest, and penalties that could have been avoided had there been a system of audit to identify the lapses in time. Litigation would also increase due to errors that would be left unresolved until the departmental audit is conducted.”

ICAI has also added that a GST audit performed by a chartered accountant is beneficial for sorting out the issues related to taxpayer compliance and it helps in filling in the leakages in revenue. ICAI has suggested withdrawing the amendments that have been made to the Central GST Act. According to ICAI, annual accounts are required to be audited and reconciliation statements certified by a chartered accountant are required to be introduced in law.

In accounting and GST law, the revenue is recognized differently. Financial statements are formed on the ‘accrual system’. On the other hand, a different ‘time of supply’ based system of tax payment is followed by GST. The financial statements are also prepared differently. The statements are prepared based on the nature of the entity. The financial statements vary according to the basis of applicable standards.

As ICAI has commented, the reconciliation statement is required to be certified by an expert chartered accountant. The person must be equally efficient in accounting as well as GST law. The values of supplies that have been declared in the return for the financial year are to be mentioned in this financial statement and reconciled with the help of it. The taxpayers will be responsible for furnishing the exact and accurate details related to the annual returns by this self-certified statement. With this new initiative, the business would be conducted more easily and voluntary compliance will be encouraged. The change will be applicable for the Financial Year 2021 and beyond.