GST Audit for Government Company- What you should know?

What is a Government Company?

As per the Companies Act, 2013 a “Government Company” means any Company in which at least 51% of the paid-up capital shares are held by one of the following-

  1. Central Government
  2. Any State Government(s)
  3. Partly by the Central Government and partly by one or more State Governments
  4. It also includes a Company which can be the Subsidiary Company of that particular Government Company. These subsidiary company can be a Public Limited Company or a Private Limited Company.

Government Company | Conducting GST Audit in Government Companies

What are the requirements of GST Audit for Government Company?

Section 139 of the Companies Act, 2013 states that in case of Government Company, an auditor who is qualified is to be duly appointed by the Comptroller and Auditor General (C&AG) of India, in a particular financial year. This is to be done within 180 days of commencement of the fiscal year. The appointed auditor holds the office till the general meeting of the company is concluded.

We know that as per the provision of Section 35(5) of the Central Goods and Service Tax (CGST) Act, 2017, if the turnover of a person having Registration under GST exceedsthe prescribed limit of Rs. 2 Crore in a financial year, then that person or company has to get their accounts and financial statement audited. The person is then required to submit a copy of the audited documents and reconciliation statement under Section 44(2) of the Act. Under the section the registered person or company has to submit the following documents electronically-

  • The annual return
  • Audited annual accounts
  • Audited annual financial statement
  • Reconciliation statement that reconciles the value of supply that the taxpayer has declared and furnished in the financial year
  • Other prescribed documents and particulars

Also, as per the Rule 80(3) of the Central Goods and Service Tax (CGST) Rules, 2017 the registered person or taxpayer whose aggregate threshold is above Rs. 2 Crore, has to have GST Audit in the company as per the Section 35(5). They have to furnish annual accounts that have been audited properly and duly certified reconciliation statement in Form GSTR-9C. this form is to be submitted electronically in the common portal of the GST Department or it can be submitted through the facilitation centre that has been notified by the Tax Commissioner.

But recently through the Central Goods and Services Tax (Amendment) Bill, 2018, new provision has been inserted in the Section 35(5) which is stated as below-

“That nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”

We all know that under Section 139 of the Companies Act, 2013, the accounts of the Government Company requires to be audited by the Comptroller and Auditor General of India, so they are exempted from GST Audit Service requirement under Section 35(5) of CGST Act, 2017.

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Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or