VAT Audit

• Vat Auditors are expected to check the books at periodical intervals and educate dealers. Very elaborate book keeping requirements are laid out in GVAT Laws. VAT being invoice based system very strict regulations regarding VAT invoices are also laid down. Heavy penalties are imposed for non maintenance of books of accounts.

• Under the VAT scheme there should be complete reliance on the accounts and the information provided by the dealer. As such the Chartered Accountants who have got the expertise of accounting and auditing can audit the accounts and verify the information.

• Under the VAT regime, major thrust is to be laid on ‘Self Assessment’, therefore audit of the accounts and report thereon required to be submitted by the dealer assumes significance. The VAT Authorities are to rely heavily on the information provided by the dealer and as such it is important that the information which is filed with the authorities be authenticated and audited by a qualified competent person.

• The Auditors on their part enforces the compliance of the accounting standards and auditing procedures through its regulatory and disciplinary mechanism.

• Under the GVAT, every dealer, registered or unregistered, liable to pay tax and if his turnover of Sales or Purchases exceeds of rupees 1 Crore in any year, than his accounts in respect of such year audited by an accountant (i.e. Practicing Chartered Accountants or Cost Accountants or Legal Practitioner or Sales Tax Practitioner) within SIX MONTHS from the end of that year.

• A copy of such audit report will required to be furnished by such dealer to the Commissioner within 30 days from the date of obtaining audit report.

• In case of any failure to furnish the copy of the report within the time prescribed, the Commissioner may, after giving a reasonable opportunity, impose in addition to the tax payable, sum by way of penalty maximum of Rs. 10,000/-.