Quick answer
What is a GST audit and who conducts it now?
A GST audit is a check of a registered person's records, returns and tax paid. Today it is done by GST officers under section 65 after an ADT-01 notice, by a CA or cost accountant nominated by the Commissioner in a section 66 special audit, or voluntarily by your own CA as an internal review.
- Compulsory CA GST audit ended on 1 August 2021
- Department audit: at least 15 working days' notice
- Department audit finishes in 3 months, extendable by 6
- Special audit report due in 90 days, extendable by 90
- Findings can lead to a demand under section 73, 74 or 74A
What are the types of GST audit in 2026?
There are three kinds of GST audit a Delhi business can face in 2026: the department audit under section 65, the special audit under section 66, and a voluntary GST audit or health check done by your own professional. The first two are statutory and start with a notice; the third is your choice.
The old turnover-based audit under section 35(5), where a CA certified GSTR-9C for businesses above ₹2 crore, was removed by Finance Act 2021. The annual reconciliation is now the self-certified GSTR 9C, required above ₹5 crore.
| Type | Who does it | How it starts | Time limit |
|---|---|---|---|
| Department audit (section 65) | GST officers authorised by the Commissioner | Notice in FORM GST ADT-01 | 3 months from commencement, plus up to 6 months |
| Special audit (section 66) | CA or cost accountant nominated by the Commissioner | Direction in FORM GST ADT-03 | Report in 90 days, plus up to 90 days |
| Voluntary GST audit or health check | Your own CA or GST professional | Your engagement letter | As agreed |
| Turnover audit (old section 35(5)) | Removed | Not applicable since 1 August 2021 | Not applicable |
Sources: section 65 and section 66 of the CGST Act (CBIC), checked November 2026.
How does a GST audit by the department work?
The department audit begins with an ADT-01 notice issued at least 15 working days before the audit. Officers then examine your books, either at your premises or in their office, and must finish within three months from commencement, which the Commissioner can extend by up to six months.
Commencement means the later of two dates: when you make the requested records available, or when the officers actually start at your place of business. Under Rule 101 the audit can cover a financial year, part of one, or several years. Officers check the correctness of turnover, exemptions and deductions, the rate applied, ITC availed and used, and refunds.
Before closing, the officer shares the discrepancies found and you can reply. Final findings come within 30 days in FORM GST ADT-02. If they show tax short paid or ITC wrongly taken, the officer may start proceedings under section 73, 74 or 74A, which is where a careful reply at the discrepancy stage matters most.
Need help with GST audit support? Talk to a chartered accountant in Delhi today. First call is free.
What is a GST special audit under section 66?
A special audit is ordered when an officer, not below Assistant Commissioner, believes during scrutiny, inquiry or investigation that value has been wrongly declared or ITC is outside normal limits. With the Commissioner's approval, you are directed to have your records audited by a CA or cost accountant whom the Commissioner nominates.
The nominated auditor reports within 90 days, which can be extended by another 90 days. The Commissioner fixes and pays the auditor's fee, not you. A special audit can be ordered even if your accounts were audited under another law, and you must be heard on any material from it before it is used against you. The direction comes in FORM GST ADT-03 and findings in ADT-04.
You cannot choose the special auditor. What you can do is have your own adviser organise the records, attend meetings and answer queries so the report reflects the full picture.
What do GST audit services include?
GST audit services from a private professional cover two kinds of work: a voluntary review that finds problems before the department does, and support during a department or special audit. Both aim to reduce the tax, interest and penalty that a finding can bring.
| Area checked | What is tested | Typical issue found |
|---|---|---|
| Outward supplies | Books vs GSTR-1, GSTR-1A and GSTR-3B | Other income or scrap sales not declared |
| Tax rates and HSN | Rate applied before and after 22 September 2025 | Old rate used on invoices after the rate change |
| Input tax credit | Purchase register vs GSTR-2B and section 17(5) | Blocked credits claimed, supplier not filed |
| ITC reversals | Rule 37 (180-day payment) and Rule 42/43 reversals | Unpaid supplier invoices still carrying ITC |
| Reverse charge | Legal fees, GTA, rent from unregistered persons | RCM not paid or ITC taken before payment |
| E-way bills and e-invoices | Matching with sales and stock | Bills generated for supplies not in returns |
| Refunds and exports | LUT, shipping bills, BRCs | Refund claimed on incomplete documents |
| Annual returns | GSTR-9 and 9C against audited accounts | Unexplained turnover gaps |
Documents needed for a GST audit
Keep three years of returns, books and supporting documents ready, organised by GSTIN and month. The ADT-01 notice lists what the officer wants, but most audits ask for the same core set.
- Registration certificate and any amendments.
- Audited financial statements, tax audit report and trial balances.
- Sales and purchase registers, with HSN and rate.
- Filed GSTR-1, GSTR-1A, GSTR-3B, GSTR-9 and GSTR-9C.
- GSTR-2B downloads and the ITC reconciliation for each month.
- E-way bill and e-invoice reports.
- Stock records, especially for manufacturers and traders.
- Contracts for major supplies, job work challans and export documents.
- DRC-03 challans and earlier notices with replies.
A business whose books are kept monthly by an accounting team usually needs a few days to assemble this; one with backlog needs weeks.
How we handle a GST audit notice: step by step
When an ADT-01 notice arrives, use the 15 working days to reconcile before the officer does. Most adverse findings come from gaps you could have explained or corrected in advance.
- 1
Read the notice
Note the period covered, the documents asked for and whether the audit is at your premises or the office.
- 2
Run an internal reconciliation
Match books with returns, 2B and e-way bills for the audit period and list every gap.
- 3
Correct what is genuinely wrong
Pay short tax with interest through DRC-03 before findings, which usually reduces exposure.
- 4
Prepare an explanation file
Write short notes with evidence for differences that are not errors, such as timing or classification.
- 5
Attend and answer queries
Give records in an orderly way and reply in writing to each discrepancy the officer raises.
- 6
Review ADT-02 and next steps
Accept, pay or contest the findings; a contested demand moves to show cause and then to appeal.
What happens after GST audit findings?
After ADT-02, any tax short paid, wrongly refunded or ITC wrongly used can be demanded through proceedings under section 73, 74 or 74A, with interest and penalty. If you agree with a finding, paying early usually limits the penalty. If you do not, reply to the show cause notice with evidence.
An order passed after that notice can be challenged within three months through a GST appeal with a pre-deposit. For the reply stage, our GST notice reply service drafts and files the response.
GST audit for Delhi businesses: how CA in Delhi helps
Delhi taxpayers are assigned to either the Central GST or the Delhi GST administration, and either can send an audit notice. The process under the CGST and Delhi GST Acts is the same, so the preparation is too.
CA in Delhi passes GST audit enquiries to the listed firm or partner professional that handles GST audit and litigation work, and you confirm the scope and a fixed fee before any review starts. Send us the ADT-01 or ADT-03, your GSTINs and the period, and we reply with what is needed and a timeline. You can check the chartered accountant firms in Delhi we list, or visit the office if your business is near Netaji Subhash Place. For a professional close to your own office, see auditor near me.
Frequently asked questions
Is GST audit compulsory for turnover above ₹2 crore?
No longer. The turnover-based audit under section 35(5) was removed from 1 August 2021. Above ₹5 crore you file a self-certified GSTR-9C. A department audit or special audit can still be ordered at any turnover.
How are businesses selected for GST department audit?
Section 65 lets the Commissioner order audits by general or specific order. Selection is typically risk-based, using data such as return mismatches and ITC patterns. You will not be told why you were picked, only the period and records required.
Who pays for a GST special audit?
The department. Section 66(5) says the Commissioner determines and pays the expenses and remuneration of the nominated CA or cost accountant. Your own adviser's fee for supporting you during the audit is a separate cost.
Can the GST audit happen at the officer's office?
Yes. Section 65(2) allows the audit at your place of business or in the officer's office. Many audits now ask for records by email or upload first, with a visit only if needed.
What are GST audit services and why use them?
GST audit services are a professional review of your GST compliance, done on your instructions. They find mistakes such as blocked ITC or wrong rates while you can still fix them cheaply, and they prepare the explanation file if the department audits you later.
How long does a GST department audit take?
Three months from commencement, extendable by up to six months more with recorded reasons. Commencement is the later of when you provide the records and when officers begin at your premises.
Can I pay tax during the audit to avoid penalty?
Yes. Paying short tax with interest through DRC-03 and informing the officer, before a notice is issued, generally reduces the penalty exposure compared with paying after a demand. Your adviser should confirm the section that applies to your facts.
What is the difference between GST audit and GST assessment?
An audit is an examination of records under section 65 or 66. Assessment is the determination of tax liability. Audit findings feed into a show cause notice and a demand order, which is the assessment step that can be appealed.
Do you handle GST audits outside Delhi?
Yes, for GSTINs in Haryana, Uttar Pradesh and other states, most of the work is document review and written replies. Where an in-person meeting with officers is needed, the scope and travel are agreed in advance.