Section 65 – Audit by Tax Authorities
Section 65 of CGST Act, 2017 – Audit by Tax Authorities
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Objective of Section 65
Section 65 empowers the tax authorities to conduct audit of registered persons to verify:
- Correctness of turnover declared
- Taxes paid
- Input tax credit availed
- Refund claimed
Audit ensures overall compliance with the GST law.
2. Statutory Provision – Section 65
Section 65(1):
The Commissioner or any officer authorised by him
may undertake audit of any registered person
for such period,
at such frequency
and in such manner as may be prescribed.
Section 65(2):
A notice shall be issued
at least 15 working days
prior to the conduct of audit
in such manner as may be prescribed.
Section 65(3):
The audit shall be completed
within a period of 3 months
from the date of commencement of audit:
- Extendable by another 6 months
Section 65(4):
The proper officer shall inform the registered person
of findings of audit
and his rights and obligations.
3. Who Can Be Audited?
Audit under Section 65 can be conducted for:
- Any registered person
- Regardless of turnover
- For one or multiple financial years
Selection is generally risk-based.
4. Authority Conducting Audit
Audit may be conducted by:
- Commissioner
- Proper officer authorised by Commissioner
Audit teams are usually separate from assessment officers.
5. Manner of Conduct of Audit (Rule 101)
Audit is conducted as per Rule 101 of CGST Rules.
- Notice in FORM GST ADT-01
- Audit may be conducted:
- At taxpayer’s place of business, or
- At tax office
Relevant Rule:
6. Commencement of Audit
Audit is deemed to commence on the later of:
- Date of records made available by taxpayer, or
- Date of actual visit to business premises
Time limits run from this date.
7. Rights and Obligations of Taxpayer
The registered person must:
- Provide records and documents
- Furnish information within stipulated time
- Extend cooperation during audit
The officer must:
- Conduct audit transparently
- Communicate findings clearly
- Follow principles of natural justice
8. Audit Findings and Communication
On completion of audit:
- Findings are communicated in FORM GST ADT-02
- Discrepancies, if any, are highlighted
If tax short-paid or ITC wrongly availed is noticed, further proceedings may be initiated.
9. Consequences of Audit
Based on audit findings:
- No action, if no discrepancy found
- Voluntary payment under Section 73(5)
- Demand proceedings under Section 73 or 74
- Special audit under Section 66 (in complex cases)
10. Audit vs Scrutiny
- Scrutiny (Section 61): Desk-based return verification
- Audit (Section 65): Detailed examination of records
Audit is far more comprehensive.
11. Practical Compliance Strategy
- Maintain reconciled books and returns
- Prepare ITC and turnover reconciliations in advance
- Respond in writing with supporting documents
- Avoid oral admissions
Proper audit handling reduces litigation risk.
12. Related Provisions
- Section 61 – Scrutiny of returns
- Section 66 – Special audit
- Section 73 – Demand (non-fraud)
- Rule 101 – Audit procedure
13. Professional Insight
Audit under Section 65 is not merely verification; it is a compliance stress-test. Well-prepared taxpayers treat audit as documentation exercise, not a battle.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Audit proceedings may result in demand, interest and penalty if discrepancies are established.
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