GST Audit (Section 65/66 & Internal GST Review)
The compulsory GST audit by a chartered accountant ended on 1 August 2021, but the department can still audit you under Section 65 or order a special audit under Section 66 of the CGST Act. Our GST health check reviews your returns, input tax credit and invoices first, so gaps are fixed before an officer finds them.
What it is
“GST audit” today means one of three things. The department may audit your records under Section 65 of the CGST Act. In harder cases, it may order a special audit by a chartered accountant or cost accountant under Section 66. Or you may ask a CA to review your GST position yourself, before the department does. That third one is an internal GST review, which we call a GST health check.
Up to FY 2019-20, larger businesses needed a GSTR-9C certified by a CA or cost accountant. The Finance Act, 2021 omitted that audit requirement from 1 August 2021. GSTR-9C is now self-certified, and only for turnover above ₹5 crore. The department’s own audit powers did not change.
Who it applies to
You have received Form ADT-01
A Section 65 audit starts with a notice at least 15 working days in advance. If one is on your desk, start the review this week.
Your annual return is coming up
A review before GSTR-9 (due 31 December) catches mismatches while a DRC-03 payment can still settle them.
You are raising money or selling
Buyers and lenders check GST exposure during due diligence. A review report answers their questions in advance.
Why it matters
Nobody else checks your numbers
No outside auditor signs your annual return any more. Every error stays in your returns until the department’s analytics flag it.
ITC time limits do not bend
Credit for a year must be claimed by 30 November of the following year or the annual return date, whichever is earlier. Missed credit is lost for good.
Fixing early costs less
Tax paid with interest before a notice costs far less than the same tax with penalty after a demand under Section 73, 74 or 74A. Picture a Faridabad trader whose supplier stopped filing returns in 2024: credit on those invoices is cheaper to reverse now than to defend later.
Documents required
Returns and portal data
- GSTR-1, GSTR-3B and GSTR-9 for the period
- GSTR-2B statements for each month
- E-way bill and e-invoice data, if applicable
- Electronic cash, credit and liability ledgers
Books and invoices
- Sales and purchase registers
- Audited financial statements
- Debit and credit notes
- Payment records to suppliers
For a departmental audit
- Form ADT-01 notice and the list of records sought
- Contracts for major supplies
- Earlier notices, replies and orders
- Reverse charge and export documents
How it works
Match books with GSTR-1 and GSTR-3B
We reconcile turnover in your books with GSTR-1 and GSTR-3B, month by month. Differences in tax paid are listed with the reason behind each one.
Test every rupee of input tax credit
We compare claimed ITC with GSTR-2B and check the 180-day payment rule, blocked credits under Section 17(5) and the 30 November time limit. In practice, this is where most of the money sits.
Check rates, reverse charge and invoices
We sample invoices for HSN and rate errors and check reverse charge. A manufacturer paying a goods transport agency, for example, often misses reverse charge for months. We also confirm e-invoicing and e-way bills where they apply.
Rank the issues and fix them
You get a written report ranking each issue by tax at stake. Where tax is short, we help you pay it through DRC-03 with interest, and correct what can still be corrected in returns.
Stand with you in the department’s audit
If a Section 65 or 66 audit follows, we prepare the records, attend with you and help with the reply to any notice that comes out of it.
Three kinds of GST audit compared
| Departmental audit (s.65) | Special audit (s.66) | GST health check | |
|---|---|---|---|
| Who starts it | Commissioner or an officer authorised by him | Officer not below Assistant Commissioner, with the Commissioner’s approval | You |
| Who does it | Department officers | CA or cost accountant nominated by the Commissioner | Your CA |
| Where | Your premises or the tax office | As directed | Mostly online, with an office visit if useful |
| Time limit | 3 months, extendable by up to 6 months | 90 days, extendable by 90 days | Agreed with you |
| Outcome | Findings within 30 days; demand under s.73/74 if tax is short | Report; hearing; demand under s.73/74 if tax is short | Private report and correction plan |
Timelines
15 working days’ notice
Section 65(3): you are told at least 15 working days before a departmental audit begins.
3 months, then up to 6 more
Section 65(4): the audit must finish within three months of starting. The Commissioner may extend it by up to six months, with reasons in writing.
Findings within 30 days
Section 65(6): findings, with your rights and obligations, are shared in Form GST ADT-02 within 30 days of the audit ending. A special audit report is due in 90 days, extendable by 90, and its findings come in Form GST ADT-04.
What happens if the audit finds a gap
You get a demand notice
Short-paid tax or excess ITC leads to proceedings under Section 73 or 74 for periods up to FY 2023-24, and under Section 74A from FY 2024-25.
You pay interest at 18%
Section 50 interest at 18% a year runs on tax paid late, from the due date until payment.
A penalty sits on top
Here is the catch: penalty is extra. Non-fraud cases: 10% of tax or ₹10,000, whichever is higher. Fraud or suppression: a penalty equal to the tax.
Frequently asked questions
Is a GST audit by a CA still compulsory?
No. The Finance Act, 2021 omitted the CA audit requirement with effect from 1 August 2021. From FY 2020-21, businesses with turnover above ₹5 crore file a self-certified reconciliation statement in GSTR-9C with their annual return. A CA review is now voluntary, but many businesses still choose one before filing GSTR-9, because nobody else checks the numbers.
What is a departmental audit under Section 65?
It is an audit of your records by GST officers, authorised by the Commissioner. You get Form ADT-01 at least 15 working days before it starts. It can happen at your premises or in the tax office, and must be completed within three months, extendable by up to six months. Findings come in Form GST ADT-02 within 30 days of completion. With organised records, it is usually routine.
When can the department order a special audit?
Under Section 66, an officer not below Assistant Commissioner, with the Commissioner’s approval, can order one if your value is not correctly declared or the credit claimed is not within normal limits. A CA or cost accountant nominated by the Commissioner does it, reporting within 90 days, extendable by 90. The department pays the auditor, and you get a hearing on the findings.
What does a GST health check cover?
It covers four areas: books versus GSTR-1 and GSTR-3B, input tax credit versus GSTR-2B, tax rates and reverse charge, and compliance with e-invoicing and e-way bills. It usually looks at one or two financial years. You get a written report with each issue, the tax involved and the fix, so you can act on it before the annual return or an audit.
Can I still claim missed input tax credit?
Only within the time limit in Section 16(4). Credit for an invoice of a financial year must be claimed by 30 November of the following year, or the date you file the annual return, whichever is earlier. After that it is lost. A health check done by October gives you time to pick up eligible credit you missed during the year.
What is the 180-day rule for ITC?
If you do not pay your supplier within 180 days of the invoice date, the ITC on that invoice must be reversed, with interest. You can claim it again once you pay. Many businesses miss this on slow-paying accounts. In a health check we list unpaid invoices older than 180 days, so the reversal is clean and the reclaim is not forgotten.
Who needs to file GSTR-9C now?
Businesses with aggregate turnover above ₹5 crore file GSTR-9C, a self-certified reconciliation between the annual return and audited accounts. It is filed with GSTR-9 by 31 December. GSTR-9 itself is optional for turnover up to ₹2 crore from FY 2024-25 onwards. Above ₹5 crore, a health check gives you the 9C reconciliation almost ready-made.
What should I do after receiving Form ADT-01?
Start preparing the day it arrives. You have at least 15 working days before the audit begins. List the records sought, reconcile returns with books, and identify issues you can settle yourself by paying tax with interest through DRC-03. Then give the officers organised records and a single point of contact. Preparation usually keeps the audit short.
Is a GST health check the same as a tax audit under the Income-tax Act?
No. A tax audit under the Income-tax Act is a statutory audit with a prescribed report and due date, 21 October 2026 for this year’s audit cases. A GST health check is a voluntary review of GST compliance only. Both use the same books, so doing them together keeps your numbers consistent.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
There is no government fee for a health check or a departmental audit. Any tax found short is paid with interest at 18% a year under Section 50. Late fees apply only if GSTR-9 or GSTR-9C is filed after 31 December.
Ready to begin?
Send us your GSTIN and last year’s returns. We will show you where your GST risk sits before an officer does.