Indirect Tax Laws · Accounts and Records; E-way Bill

Audit and Special Records under GST

Updated 5 October 2026 · Fact-checked

Audit and special records under GST are the extra record-keeping duties beyond normal books. Transporters and godown owners must keep goods-handling records even if unregistered. Principals track job work challans. Audit now means a self-certified reconciliation, departmental audit and special audit. To solve, name the person, the record, the section and the consequence.

Understand Audit and Special Records under GST

Section 35 of the CGST Act is the base. Every registered person must keep accounts at the principal place of business: production or manufacture, inward and outward supplies, stock, input tax credit availed, and tax payable and paid. Other particulars can be prescribed in the rules. Accounts can be kept in manual or electronic form.

Some persons handle goods but may not supply them. These are transporters and owners or operators of godowns and warehouses. The law makes them keep records of the goods they handle, whether or not they are registered. The reason is control. The department can trace goods in movement and in storage through these persons. The records cover the consigner, the consignee and other details of the goods.

A principal who sends goods to a job worker must also keep records. These are the challans for goods sent out and received back, goods moved from one job worker to another, and the stock lying with the job worker. This links to the job work provisions of Section 143, which allow movement under challan without treating it as a supply.

Students confuse accounts and records. Think of accounts as the books where the figures sit: stock registers, ITC and tax ledgers, and the output and input registers. Records are the supporting papers and details: invoices, challans, e-way bills, and the goods-handling details kept by transporters and godown owners. The law uses both words, so keep both in your answer.

Then comes audit. Earlier, a registered person above a turnover limit had to get accounts audited by a chartered or cost accountant. That requirement was omitted by the Finance Act, 2021 (effective 1 August 2021), and the self-certified reconciliation applies from the 2020-21 financial year. Now the person files a self-certified reconciliation statement under Section 44, reconciling the annual return with the financial statements (audited, where audit is required under any other law), above a notified turnover limit. Audit still exists in two other forms. These are audit by tax authorities (Section 65) and special audit by a nominated CA or cost accountant (Section 66). Records must be retained under Section 36.

Key rules to remember

Accounts under Section 35: Registered person keeps at principal place: production or manufacture + inward and outward supplies + stock + ITC availed + output tax payable and paid + prescribed particulars; Applies to every registered person. Additional places of business should be declared in the registration.
Transporter and godown owner records: Duty under Section 35(2) applies irrespective of registration. Record the consigner, consignee and other details of the goods handled or stored; Section 35(2) creates the duty. The detailed record contents are in Rule 58, not in the section text alone. Under the Rule, godown owners also record depositor details, the nature and quantity of goods, the period of storage and their movement. Unregistered transporters and godown owners must enrol on the common portal (Section 35(2) read with Rule 58).
Job work records of the principal: Challans for goods sent and received + goods moved between job workers + stock with job worker; Link with Section 143. Goods sent under challan are not a supply, but the trail must be complete.
Retention period (Section 36): 72 months from the due date of the annual return for the year of the accounts; If litigation is pending, keep until one year after the final disposal of the appeal or proceeding.
Reconciliation statement: Self-certified reconciliation statement reconciling the annual return with the financial statements (audited, where audit is required under any other law), filed above the notified turnover limit; No CA certification is needed now. The limit is notified and has been ₹5 crore (reconciliation statement in GSTR-9C for turnover above ₹5 crore). Check that it has not changed in your study material.
Audit by tax authorities (Section 65): Notice at least 15 working days before. Complete within 3 months of commencement, extendable by up to 6 months; Conducted at the premises or the office, by an officer authorised by the Commissioner, by general or specific order, under Section 65(1).
Special audit (Section 66): Officer not below the rank of Assistant Commissioner forms the opinion, at any stage of scrutiny, inquiry, investigation or other proceedings, that value is not correctly declared or credit is beyond normal limits + Commissioner's prior approval + nominated CA or cost accountant; Report in 90 days, extendable by 90 days on application. The cost is borne by the department.

How to solve Audit and Special Records under GST questions

Use this method for any case on special records or audit. It keeps the answer in provision, facts and conclusion form.

1Identify who the person is: registered supplier, transporter, godown owner, principal, or job worker.
2Check registration status. For transporters and godown owners, registration does not change the duty to keep records.
3Name the rule: Section 35 for accounts and records, Section 36 for retention, Section 65 or 66 for audit.
4List the specific records the facts call for, for example consigner and consignee, depositor and period of storage, or job work challans.
5Apply the time or limit in the facts: retention months, notice period, audit completion period, or turnover limit for the reconciliation statement.
6If the question asks about CA audit, say first that Section 35 no longer requires it for taxpayers, then deal with the reconciliation statement and Section 66.
7Conclude in one line with the consequence: compliance, non-compliance, or the action the department may take.

Quickest way: Four-question filter

When to use it: Use it for short MCQs and for the opening lines of a written answer, when time is tight.

Who? Taxpayer, transporter, godown owner or principal.
What? Accounts (books) or records (documents and details).
How long? Retain for 72 months from the annual return due date, longer in litigation.
Which audit? Self-certified reconciliation, Section 65 departmental audit, or Section 66 special audit by a nominated CA or cost accountant.

Common mistakes in Audit and Special Records under GST

Saying a CA audit is compulsory above a turnover limit under Section 35.
Older notes and past papers carried the audit requirement.
Fix: State that it was omitted by the Finance Act, 2021 (effective 1 August 2021), with the self-certified reconciliation applying from 2020-21. Mention the reconciliation statement instead, and that Section 66 special audit can still be ordered.
Saying an unregistered transporter or godown owner has no record duty.
Students link all GST duties to registration.
Fix: Write that the duty applies irrespective of registration.
Treating job work challans as supply records only.
Job work is read only as a supply and ITC topic.
Fix: Add that the principal must also maintain challan details and the stock lying with the job worker.
Using 72 months from the end of the financial year.
The start point is remembered loosely.
Fix: Count from the due date of furnishing the annual return for that year, not from the year end.
Mixing Section 65 audit and Section 66 special audit.
Both are called audit and both involve officers.
Fix: Section 65 is a routine audit by the authorities. Section 66 is by a nominated CA or cost accountant, needs Commissioner's prior approval and arises from a doubt about value or credit.
Treating accounts and records as the same word in the answer.
Both appear in the section heading and in the question.
Fix: Write accounts as the books and registers, and records as supporting documents and details. Give one example of each.

Worked examples

Example 1

Case: Swift Carriers, an unregistered goods transport agency, carries goods for several consignors between cities. The owner says he need not keep any GST records because he is not registered. Also, Godam Stores, a warehouse operator, stores goods of many depositors. Advise on their record duties.

Show the solution

Provision: Section 35(2) requires transporters and owners or operators of godowns and warehouses to maintain records of the goods they handle, irrespective of registration. The detailed contents of these records are prescribed in Rule 58.
Swift Carriers: it must record the consigner, the consignee and other relevant details of each consignment it carries. Its claim fails.
Godam Stores: under Rule 58, it must record the depositor details, the nature and quantity of goods, the period of storage and the movement of goods in and out.
If Swift Carriers or Godam Stores is not registered, it must enrol on the common portal (Section 35(2) read with Rule 58).

Answer: Both must maintain goods-handling records even without registration. Swift Carriers' contention is wrong.

Example 2

Case: Meridian Ltd, a registered manufacturer with turnover of ₹7 crore for 2025-26, asks whether a CA audit is mandatory under GST. Assume the reconciliation statement limit is ₹5 crore; this is an assumption, so check it against the current notification. Assume also that the annual return for 2025-26 is due on 31 December 2026. State how long the accounts for 2025-26 must be kept, assuming no litigation. Suppose the Assistant Commissioner doubts the credit availed by Meridian during scrutiny.

Show the solution

Audit: Section 35 no longer requires a CA audit of accounts. That requirement was omitted by the Finance Act, 2021 (effective 1 August 2021).
Turnover of ₹7 crore is above the assumed limit of ₹5 crore, so Meridian must file a self-certified reconciliation statement under Section 44, reconciling its annual return with its financial statements (audited, where audit is required under any other law). The ₹5 crore limit is an assumption to be checked against the current notification.
Retention under Section 36: 72 months from the assumed annual return due date of 31 December 2026. 72 months is 6 years, so until 31 December 2032.
Special audit: if the Assistant Commissioner forms the opinion during scrutiny that credit availed is beyond normal limits, with the Commissioner's prior approval he can direct audit by a nominated CA or cost accountant under Section 66.
The report is due in 90 days, extendable by 90 days, and the department bears the cost.

Answer: A CA audit is not mandatory. Meridian files a self-certified reconciliation statement (turnover ₹7 crore exceeds the assumed ₹5 crore limit, to be checked against the current notification) and keeps accounts until 31 December 2032, on the assumed due date. A special audit under Section 66 remains possible.

Exam tips

Start any audit answer by saying whether the question is about taxpayer audit, Section 65 or Section 66. This avoids mixing them.
In MCQs, expect traps on registration status. Transporters and godown owners always keep records.
For numbers, learn 72 months, 15 working days, 3 plus 6 months, and 90 plus 90 days. Cases test these directly.
Write the old CA audit rule only as history. Present law is what carries marks.
Close each written answer with a one-line conclusion tied to the facts.

Practice questions from Accounts and Records; E-way Bill

Audit and Special Records under GST in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Audit and Special Records under GST: frequently asked questions

Is a GST audit by a CA compulsory for CA Final answers today?

No. The CA audit requirement was omitted by the Finance Act, 2021 (effective 1 August 2021), and the self-certified reconciliation applies from the 2020-21 financial year. Taxpayers above the notified limit file a self-certified reconciliation statement. Special audit by a nominated CA still exists under Section 66.

What records must a godown owner keep under GST?

The owner or operator must keep details of the goods stored and moved, such as the depositor, nature and quantity of goods, period of storage and movement. This applies whether or not the owner is registered.

What job work records must the principal keep?

The principal keeps the challans for goods sent to and received from job workers, goods moved between job workers, and the stock of goods lying with the job worker. These records support the no-supply treatment of job work movement.

What is the difference between accounts and records under GST?

Accounts are the books where figures are maintained, such as stock, ITC and tax registers. Records are the supporting documents and details, such as invoices, challans and goods-handling details of transporters. Both are required by Section 35.