Is CA audit mandatory under GST?

No. The mandatory GST audit by Chartered Accountants under Section 35(5) was abolished by the Finance Act 2021. It was replaced with a self-certified reconciliation statement (Form GSTR-9C) filed directly by the taxpayer.

What is the turnover limit for GSTR-9C self-certification?

Filing the self-certified reconciliation statement GSTR-9C is mandatory for registered taxpayers whose Aggregate Annual Turnover (AATO) exceeds ₹5 Crores in a financial year. Taxpayers with turnover up to ₹5 Crores are exempt.

What are the penalties for late filing of GST annual statements?

Late filing of the GSTR-9 annual return attracts a late fee of ₹200 per day (₹100 CGST + ₹100 SGST), subject to a maximum cap of 0.25% of the taxpayer's turnover in the state or union territory.

Can the GST department still audit businesses below ₹5 crore turnover?

Yes. The GST department retains the power to conduct departmental audits under Section 65 of the CGST Act, regardless of turnover. The ₹5 crore limit only applies to GSTR-9C self-certification, not to the department's own audit powers.

GST Audit Applicability & GSTR-9C Limit for FY 2026-27

When GST was launched in 2017, it included a mandatory audit requirement: businesses with annual turnover exceeding ₹2 crore were required to have their GST accounts audited by a Chartered Accountant or Cost Accountant and file a reconciliation statement (GSTR-9C) with the auditor's certification.

This changed significantly when the Finance Act 2021 abolished the mandatory CA audit under Section 35(5) of the CGST Act, replacing it with a self-certified reconciliation statement. Understanding the current applicability rules is essential for businesses planning their compliance strategy.

The End of Mandatory GST CA Audit

The Finance Act 2021 amended Section 35(5) and Section 44 of the CGST Act to remove the requirement for a CA/Cost Accountant to certify the annual reconciliation statement (GSTR-9C). The key changes were:

Section 35(5) deleted: The provision requiring annual accounts to be certified by a Chartered Accountant or Cost Accountant was removed.
Section 44 amended: GSTR-9C is now a self-certified reconciliation statement filed by the taxpayer themselves (not a CA).
Effective from FY 2021-22: The self-certification requirement applies from Financial Year 2021-22 onwards.

Current GSTR-9C Applicability Thresholds

Aggregate Annual Turnover (AATO)	GSTR-9 Required?	GSTR-9C Required?	CA Certification?
Up to ₹2 Crores	Optional	Exempt	Not Required
₹2 Crores to ₹5 Crores	Mandatory	Exempt	Not Required
Above ₹5 Crores	Mandatory	Mandatory (Self-Certified)	Not Required (since FY 2021-22)

GST Departmental Audits Under Section 65

The removal of mandatory CA certification does not mean businesses are free from tax scrutiny. The GST department retains full powers to conduct its own audits under Section 65 of the CGST Act — irrespective of the taxpayer's turnover.

Under Section 65, a proper officer can audit any registered taxpayer's records at any time. Such departmental audits can be conducted:

At the taxpayer's place of business or at the officer's office.
For any period — not just the current year (subject to limitation periods).
With a minimum notice period of 15 working days before the audit begins.

The audit must be completed within 3 months of commencement (extendable by 6 months with approval). If the officer identifies additional tax liability or ITC excess claims, a Show Cause Notice is issued under Section 73 or 74.

Special Audit Under Section 66

In complex cases where the proper officer believes that the taxpayer's accounts cannot be correctly verified without specialized expertise, a Special Audit under Section 66 may be ordered. Under this provision, the department can direct a Chartered Accountant or Cost Accountant (nominated by the Commissioner) to audit the taxpayer's accounts at the taxpayer's expense.

Section 66 audits are more intensive than regular departmental audits and are typically ordered when:

The declared ITC appears disproportionate to the business scale.
There are complex group company transactions that require specialized accounting expertise.
There are indicators of systematic tax evasion across multiple business units.

Pre-Audit Reconciliation Checklist for CAs

Even though CA audit certification is no longer mandatory for GSTR-9C, CAs preparing these reconciliations for clients must perform a comprehensive pre-filing review. Key reconciliation steps:

Turnover Reconciliation: Reconcile GSTR-9 sales figures against the company's audited P&L statement. Explain differences (unbilled revenue, advance accounting, trade discounts).
ITC Reconciliation: Match ITC claimed in GSTR-3B against books and against GSTR-2B. Any excess ITC must be reversed.
RCM Payments: Verify that all Reverse Charge Mechanism (RCM) payments have been made and the corresponding ITC claimed correctly.
HSN Code Accuracy: Ensure all HSN/SAC codes used in invoices are correct and consistent throughout the year.
Place of Supply: Verify that CGST+SGST vs. IGST determinations were correct for all sales, especially for multi-state businesses.

Maintaining Audit-Ready Purchase Records

In a GST departmental audit, the auditor's first request is typically access to your complete purchase register — every vendor invoice, HSN code, tax split, and GSTIN. If your purchase records contain data entry errors, the audit becomes extremely stressful with multiple rounds of clarifications.

TrulyInvoice maintains perfectly structured purchase records by reading vendor PDF invoices using layout-aware OCR. It validates each vendor's GSTIN against the live GSTN database, extracts HSN codes, and pushes accurately structured F9 purchase vouchers into Tally Prime. Your purchase register is then instantly available in a format that satisfies departmental audit requirements — with no manual transcription errors. TrulyInvoice operates at a flat subscription of plans starting at ₹399/month.

GST Audit Applicability and Turnover Limits Guide