No business is currently required to undergo an independent GST audit by a chartered accountant (CA) or cost accountant (CMA) solely because its turnover crosses a threshold under central GST law. The former turnover-based requirement was removed from 1 August 2021. Registered persons whose aggregate turnover exceeds ₹5 crore in a financial year generally must file a self-certified GSTR-9C reconciliation statement, but that filing is not a GST audit. Tax authorities can still audit a registered person under section 65 or direct a case-specific special audit under section 66.
What the ₹5 crore threshold requires
Under Rule 80(3), a registered person whose aggregate turnover exceeds ₹5 crore in a financial year must furnish FORM GSTR-9C with the annual return, as applicable. CBIC Circular 246/03/2025-GST describes GSTR-9C as a self-certified reconciliation statement: it reconciles supplies reported in the annual return with the audited annual financial statement. The threshold triggers this reconciliation filing; it does not require an independent GST audit by a CA or CMA. CBIC Circular 246/03/2025-GST.
GSTR-9C and the annual return are related but distinct filings. Whether a particular taxpayer must file FORM GSTR-9, or qualifies for an applicable exemption, depends on the rules and notifications for that financial year and taxpayer category. Confirm those requirements for the relevant year before filing.
How to calculate aggregate turnover
For this threshold, aggregate turnover is calculated across India for all persons with the same PAN. It includes taxable and exempt supplies, exports, and inter-State supplies. It excludes GST (central, state, union-territory and integrated), compensation cess, and inward supplies on which the recipient pays tax under reverse charge. See the CGST Act definition of aggregate turnover in the CGST Act.
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Why older articles say GST audit was mandatory
Section 35(5) of the CGST Act formerly required certain registered persons above a prescribed turnover limit to obtain an audit by a CA or CMA. The Finance Act 2021 omitted that subsection with effect from 1 August 2021. Consequently, older guidance that says a business must obtain a GST audit simply because turnover exceeds ₹2 crore describes the former rule, not the current central GST position. CGST Act, as amended; CBIC Circular 246/03/2025-GST.
This change concerns the GST-specific audit requirement. It does not remove any separate statutory audit obligation that may apply to a company or other entity under its governing law. An audit of financial statements also does not turn the GSTR-9C reconciliation into an independent GST audit.
When tax authorities can audit a registered person
Section 65 allows the Commissioner or an authorised officer to select a registered person for a departmental audit. It is a tax-authority process, not an automatic consequence of crossing the ₹5 crore GSTR-9C threshold. An audit may cover a financial year or multiple financial years. CGST Act, section 65; CGST Rules.
Notice, records and findings
- The registered person must receive at least 15 working days’ notice before the audit.
- Officers may examine books, returns and supporting documents, including records relating to turnover, exemptions and deductions, tax rates, input tax credit and refunds.
- The taxpayer can respond to discrepancies. The officer must consider the reply before finalising findings, which are communicated in FORM GST ADT-02.
Time allowed for a section 65 audit
The statutory period to complete the audit is three months from commencement. The Commissioner may extend it, for reasons recorded in writing, by no more than a further six months. Commencement is the later of the date the called-for records are made available or the date the audit actually begins at the place of business. CGST Act, section 65.
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Section 66 provides for a special audit during scrutiny, inquiry, investigation or other proceedings. If an officer not below the rank of Assistant Commissioner considers the case’s nature and complexity and the interest of revenue warrant it, the officer may—with prior approval of the Commissioner—direct the registered person in writing to have records examined by a CA or CMA nominated by the Commissioner. This is a case-specific direction, not a turnover-based requirement. CGST Act, section 66.
The nominated professional must submit the report within 90 days. The Commissioner may allow a further period of up to 90 days if sufficient reason is shown. The direction is issued in FORM GST ADT-03 and findings are communicated in FORM GST ADT-04.
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Keep records whether or not an audit is underway
Registered persons have ongoing duties to preserve prescribed accounts and records; those duties are not limited to taxpayers selected for an audit. For electronic records, the rules require proper backup and production of requested records in readable form. On demand, the taxpayer must also provide audit-trail links and related record information. Consult the CGST Rules for the applicable recordkeeping requirements.
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| Process | Who initiates it | What it is | What triggers it |
|---|---|---|---|
| Former section 35(5) GST audit | Taxpayer under the former law | Independent audit by a CA or CMA | Former turnover rule; omitted with effect from 1 August 2021 |
| GSTR-9C | Taxpayer | Self-certified reconciliation statement filed with the annual return, as applicable | Aggregate turnover exceeding ₹5 crore in a financial year under the current central rule |
| Section 65 audit | Commissioner or authorised officer | Departmental audit of records | Tax authority selection; not an automatic turnover threshold |
| Section 66 special audit | Officer not below Assistant Commissioner rank, with prior Commissioner approval | Examination by a CA or CMA nominated by the Commissioner | Case-specific concerns about complexity and the interest of revenue during proceedings |
Central GST rules operate alongside state and union-territory GST provisions. For an actual filing or notice, check the rules, forms, notifications and taxpayer-specific facts applicable to the relevant financial year and jurisdiction. A CA, CMA or other qualified GST practitioner can assist with reconciliation or a response to an audit direction, but turnover alone does not make a CA/CMA GST audit mandatory.
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