GST Audit: Who Needs One, Department Audit Powers and the Annual Return Reconciliation

"GST audit" means three different things: a reconciliation statement you file yourself (GSTR-9C), an audit by the tax department under section 65, and a special audit by a chartered or cost accountant under section 66. The mandatory CA audit that used to apply by turnover was removed from 1 August 2021. GST rules change often, so check the current notifications before you rely on any figure.

Last reviewed: 17 October 2026. Facts checked. We opened the CGST Act text as hosted on cbic-gst.gov.in (a consolidated version dated 1 January 2022) for sections 44, 61, 65 and 66, and CBIC Circular 246/03/2025-GST dated 30 January 2025. The CBIC rule pages (taxinformation.cbic.gov.in) failed with a certificate error, so we did not open rules 80 or 101 directly. We did not check later amendments, so confirm the latest text.

The three meanings

1. Annual return and reconciliation

Section 44 of the Act says a registered person (with some listed exceptions) furnishes an annual return, which may include a self-certified reconciliation statement. The statement reconciles the value of supplies declared in the returns with the audited annual financial statements.

CBIC Circular 246/03/2025 explains how this works today:

• Before 1 August 2021, taxpayers over a lower turnover limit had their accounts audited under section 35(5) and filed a certified reconciliation.
• From 1 August 2021, the requirement to get accounts audited under section 35(5) was omitted.
• Under sub-rule (3) of rule 80, a taxpayer with aggregate turnover above five crore rupees in a financial year files a self-certified reconciliation in GSTR-9C with GSTR-9, by 31 December after the year ends.
• A GSTR-9C is required only if turnover exceeds the specified limit.
• Where GSTR-9C is required, the circular treats the annual return as GSTR-9 together with GSTR-9C.

So the answer to "GST audit turnover limit" is this. There is no mandatory CA audit today. The five crore figure is the limit for the self-certified GSTR-9C, as the circular states it. Notifications can change it. Our GSTR-9 and 9C audit checklist covers the working steps, and you can test applicability with the GSTR-9 and 9C applicability checker.

Your statutory auditor may still help, because the reconciliation starts from the audited financial statements. The certification is yours, though.

2. Departmental audit, section 65

Section 65 lets the Commissioner, or an officer he authorises, audit any registered person. The text has no turnover limit. Key points from the Act:

• The audit can be at your place of business or in the tax office.
• You must get notice at least fifteen working days before it starts.
• It must finish within three months of commencement. The Commissioner can extend it by up to six more months, with reasons in writing. Commencement is the later of the date the requested records are made available and the actual start of audit at your premises.
• The officer can ask for facilities to verify books, and for information and help.
• Within thirty days of concluding, the officer must tell you the findings, your rights and obligations and the reasons.
• If the audit finds unpaid or short-paid tax, an erroneous refund, or wrongly availed or utilised input tax credit, the officer may start action under sections 73 or 74. Later provisions may apply for recent years, which we did not open.

Rule 101 sets the form and manner. We did not open it, so check it for the notice form and audit period.

3. Special audit, section 66

An officer of at least Assistant Commissioner rank can, with the Commissioner's prior approval, direct a registered person to have records audited by a CA or cost accountant nominated by the Commissioner. The Act gives two conditions: in the officer's opinion the value has not been correctly declared, or the credit availed is not within normal limits.

• The auditor reports within ninety days. The officer can extend by a further ninety days.
• This applies even if your accounts were audited under another law.
• You must get a hearing on material gathered in the special audit before it is used against you.
• The Commissioner determines and pays the expenses, including the auditor's fee.

Checklist before an audit or reconciliation

• Reconcile the annual return with the audited financials before 31 December.
• Match GSTR-1, GSTR-3B and books for each month. See GST reconciliation do's and don'ts.
• Keep input tax credit evidence: invoices, GSTR-2B matches, payment proof.
• Keep a file of notices received and replies sent.
• If a section 65 notice arrives, diarise the fifteen working days and plan record production.

A working paper is available in the GST audit and 9C reconciliation template.

Frequently Asked Questions

Is a GST audit by a CA mandatory?

Not under the current text we opened. The circular says the requirement to get accounts audited under section 35(5) was omitted from 1 August 2021. Check for later changes.

What is the turnover limit for GSTR-9C?

CBIC Circular 246/03/2025 states aggregate turnover above five crore rupees in a financial year. Confirm it against current notifications.

Can the department audit a small taxpayer?

Section 65 refers to "any registered person" and sets no turnover limit.

How much notice does the department give?

At least fifteen working days before the audit, per section 65(3).

What is the difference between GST audit and scrutiny?

Scrutiny under section 61 is a review of your returns and related particulars, and the officer asks you to explain discrepancies. Audit under section 65 examines your records under a formal notice and process.

Related Articles

• GSTR-9 and 9C annual return audit checklist
• GST returns explained: GSTR-1, 3B and 9
• GST reconciliation do's and don'ts
• GSTR-9 and 9C applicability checker

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