VAT Audit, a process of checking the total paid tax by
audit officers. Tax is collected from dealer/manufacturer or any importer which
is levied by government. According to rules & guidelines provided by sales
tax department, the officers issue a notice to the selected 10-20 percent
dealers with respect to region. The dealers need to respond to the notice
in a defined period or else has to face the actions taken by the officers. A
financial audit may show that the financial records must be agree with the basic
and important documents. There are different reasons and situations that may
cause false result such as taxable sales are nowhere recorded, invoice receipts
are duplicate or forged, products/goods have been taken from stock and not
recorded, given discounts may reduce the taxable value incorrectly.
Motive of auditing is to bring the non performing asset
into account and raise the tax revenue in government treasury. For this purpose
some important legal formalities are required such as correct registration of
the dealer, maintaining the accounting records, documents of business
activities and other risk factors posed by the dealer are taken into
consideration. Authorised auditors has to conduct the investigation according
to the strict rules and instructions given by the department. Also has to treat
the dealer in a kind way and also has to gain the personal information and
assuring the dealer about it being confidential. If the auditor fails to
get co-operation or dealer not giving proper information or any unusual issues
arised from the dealer’s side, the auditor has to report the scenario of the
case to the investigation section.
As we know, the VAT Audit is broadly classified into
three main categories i.e., general, refund and specific audit. In general
audit a broad coverage of around five years tax payments of VAT dealers is
declared. In case of urgent references late registrations, cancellation of
registration or emergency situation specific audit is carried out. While
performing audit a proper plan and program need to set up along with arranging
an appointment with dealer, doing mock drills to successfully carry out
the audit without revealing the confidential information in public. In specific
time period. The allotment for audits depends upon the annual tax, paid by the
VAT dealer. For example, the payable tax of Rs 10 lakhs & more
should required only 5 days for auditing and Rs 2 lakhs-10 lakhs should
require 3 days and annual tax payable below 2 lakhs should not extend more than
two days. The officers according to grade are initially allotted number
of audit visit per month, say like deputy commissioner has four audit visits
per month, assistant commissioner have eight visits per month, the sale
tax officer has to complete ten audit visits per month, to hot the actual target.
Actual management of Audit activity is an interesting part to be
discussed. The actual & proper management of VAT audit section is the
responsibility of additional commissioner sales tax. Planning &
achieving the VAT audit revenue target in the respective geographical region
with the help of joint commissioner VAT administration. Commissioner has
to look for policy matters related to business audit and generating the general
audit cases according to region. Joint and Deputy commissioner carries out different
activities such as confirmation of satisfactory audit programs, maintaining
control register for the cases allocated to his section, reviewing overall
audit results achieved, conducting quarterly staff meetings to share opinions,
views regarding areas & audit techniques. Responsibility of the sales tax
officer ensuring the team audit program is completed.
