Difference between Statutory Audit, Tax Audit & GST Audit

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Most enterprises are subject to various audits throughout their financial year. But one common question that arises in the mind of every such entrepreneur is that why are they subject to different audits?

Since it is all related to tax shouldn’t it be one audit?

So, here we bring to you the difference between the three common audit types that your organization may be subject to,- Statutory Audit, Tax Audit and GST Audit.

Statutory Audit

Statutory Audit as the name suggests is a compulsory audit for all companies. Every entity which is registered under the Companies Act, as a Private Limited or a Public Limited company has to get its books of accounts audited every year. This type of audit is not conditional, it depends upon the entity type.

Thus, if your entity is a company, you need to get a statutory audit conducted from a Chartered Accountant, for your company

Tax Audit

Tax Audit is a conditional audit, conducted under the regulations of Income Tax Act. The Act states that if the turnover of any enterprise is more than 1 crore, and in case of professionals if the value of services is more than Rs. 50 lacs then they have to get their books of accounts audited by a Chartered Accountant.

The only exemption here is if the enterprise has opted for the Presumptive Taxation scheme, then the entity does not have to get its books of accounts audited. But this scheme is not applicable for companies, which means for every company whose turnover crosses Rs. 1 crore for the financial year, has to get its books of accounts audited. 

GST Audit

GST Audit is a new audit type, which is conducted under the Goods and Service Act. In this type of audit, any entity whose turnover is more than Rs. 2 crores in a financial year, has to get its books of accounts audited by a Chartered Accountant.

This audit is conducted to check whether the enterprise has complied with all the rules and regulations laid down by the CBEC in respect of GST. Also, whether the organisation has duly collected and paid the GST on time.

Let’s look at a comparative analysis of the three audit types

Comparative Analysis

Basis of difference Statutory Audit Tax Audit GST Audit
Governing Act Companies Act, 2013 or any other statute governing the entity. Income Tax Act, 1956 Goods & Service Tax, Act
Applicability All Companies All All
Conditions All Companies Any entity whose business has a turnover of more than Rs. 1 Crore Any entity whose business has a turnover of more than Rs. 2 Crore or if directed by the Dept.
Audit Type To check the whether all the disclosures and compliances have been made according to the Companies Act To check all the income, expenses and related transactions so as to check whether all tax has been calculated fairly and all the disclosures are proper. To check the whether all the disclosures and compliances have been made according to the GST Act and that the taxes on the same have been duly paid.
Auditor Chartered Accountant Chartered Accountant Chartered Accountant or Cost Accountant
Report Submission Shareholders Income Tax Department CBEC
Nature of Audit Mandatory Conditional Conditional

I hope now that you have this article, you will have a better idea as to which audit is your entity subject to and why. It will also give you a clarity on what each audit type focuses on.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and is an expert in helping people save Taxes legally. He can be reached by booking an appointment for Tax Advisory Service.