A GST audit intimation is not an accusation — it is the department exercising a routine power. But how those weeks go depends almost entirely on preparation done long before the letter arrived: reconciled returns, organised documents, and replies drafted with care. This guide explains the main types of GST verification, what auditors actually look for, and the preparation that turns an audit from a crisis into an inconvenience.
Know which proceeding you are in
- Scrutiny of returns (Section 61): the officer flags discrepancies in your filed returns (ASMT-10); you explain or pay — the lightest touch
- Departmental audit (Section 65): a formal audit of your books at your premises or the office, on 15 working days' notice (ADT-01), typically covering one or more financial years
- Special audit (Section 66): a CA/CMA nominated by the department where complexity or suspicion warrants
- Investigation/inspection (Section 67): search and seizure powers on 'reasons to believe' — a different animal; involve your professional immediately
Each has its own notice form, timeline and rights. Read the notice's section number first; it tells you the game being played.
What auditors actually check
The audit playbook is predictable because the leakages are: GSTR-3B vs GSTR-1 vs books — turnover declared consistently everywhere; ITC hygiene — credits claimed vs GSTR-2B, supplier payment within 180 days, blocked credits (Section 17(5)) wrongly availed, proportionate reversal for exempt supplies; RCM — freight, legal fees, imports, director payments where reverse charge applied but wasn't paid; classification and rate — especially where your products sit near a rate boundary; e-way bills vs invoices; and related-party and branch transactions valued correctly. Run this exact checklist on yourself annually and the audit finds what you already fixed.
Keep three reconciliations permanently current: books-to-GSTR-3B (monthly), GSTR-1-to-3B (monthly), and ITC-books-to-2B (monthly, with an ageing of unmatched credits). Ninety per cent of audit para value comes from these three gaps left unattended for years.
Prepare the document set before you need it
- Sales and purchase registers matching returns, year-wise
- All returns filed (GSTR-1, 3B, 9, 9C where applicable) with challans
- ITC register with invoice-level 2B matching and reversal workings
- E-way bill data, export documents (LUT, shipping bills, FIRC/BRC)
- Agreements for rent, job-work, related parties; fixed-asset register with ITC treatment
- Previous audit/assessment orders and their compliance
An assessee who produces documents in days signals a clean shop and shortens the audit; one who scrambles for months invites deeper digging.
Conducting yourself during the audit
Nominate one coordinator (your accountant or consultant) through whom every document and answer flows — casual verbal answers from staff become recorded observations. Provide exactly what is asked, in writing, with a covering list. Where you disagree with an observation, disagree early and in writing with law and invoices attached; audit paras that go unrebutted harden into demands. And where the auditor is right — a genuine missed RCM, an excess credit — paying with interest during audit (DRC-03) usually closes the issue far cheaper than litigating a show-cause later.
After the audit: findings to closure
The audit concludes with findings (ADT-02). Accepted issues: pay via DRC-03 and document closure. Disputed issues move to show-cause (Section 73/74 — the difference between 'ordinary' and 'fraud' proceedings matters enormously for penalty and limitation) and then adjudication and appeals. Deadlines in this chain are strict and jurisdictional — a missed reply date can forfeit strong merits. Calendar every date, reply to everything, and never ignore a notice hoping it ages out; unanswered notices become ex-parte orders and bank attachments.
How Aidwish helps
Aidwish prepares clients before the letter — the reconciliation trinity, annual self-audit and document binder — and manages live proceedings end to end: replies, officer coordination and closure strategy, alongside your CA where representation is needed.