A GST audit, an inspection, and a search are different legal processes under India’s Central Goods and Services Tax Act (CGST Act). A section 65 audit is a planned, records-focused review normally preceded by at least 15 working days’ notice. An inspection or search under section 67 is an investigatory power that depends on specified “reasons to believe” and written authorization. A section 66 special audit is a separate, specialist examination ordered during another proceeding. Identify the section, officer, period, premises and documents named in any communication before responding, and verify the current amended central and applicable state or Union-territory law for your case.
The short answer: these powers are not interchangeable
Businesses often use “GST audit,” “GST inspection” and “GST search” as if they describe the same visit. They do not. The legal basis, threshold, paperwork, notice expectations, people who may conduct the exercise, material that can be examined or taken, and possible follow-up differ.
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- Section 65 audit: a notified review of a registered person’s records and GST compliance for a defined period. It can be conducted at the business premises or the tax office.
- Section 66 special audit: a specialist examination by a chartered accountant or cost accountant nominated by the Commissioner, ordered during scrutiny, inquiry, investigation or another proceeding.
- Section 67(1) inspection: an investigatory inspection where a qualified officer has statutory reasons to believe that transactions or stock have been suppressed, excess input tax credit has been claimed, or the Act or Rules have been contravened to evade tax.
- Section 67(2) search and seizure: a search for goods liable to confiscation or documents, books or things useful or relevant to proceedings that are believed to be secreted in a place.
The relevant provisions and rules are on the Central Board of Indirect Taxes and Customs (CBIC) website. Its hosted CGST Act page contains the original 2017 text and should not be treated as a fully consolidated 2026 statute without checking later amendments, notifications and the law applicable in the relevant state or Union territory.
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Read the CBIC-hosted CGST Act text and CBIC’s Assessment, Audit and Rules page alongside the current official materials before relying on a provision.
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GST audit under section 65
What the audit is for
The Commissioner, or an officer authorized by general or specific order, may audit a registered person for a period, frequency and manner prescribed by the Rules. The exercise is primarily a verification of records and the GST positions reported from them. It is not automatically an allegation that the business has committed an offence.
The rules say the period audited is a financial year or multiples of a financial year. The officer can test supporting documents, books and returns, turnover, exemptions and deductions, tax rates, input tax credit, refunds and other relevant matters. That breadth means an audit can connect accounting data with GST returns rather than looking at only one invoice series.
Notice, location and commencement
The registered person must receive notice at least 15 working days before the audit. The rules use FORM GST ADT-01 for the audit notice. An audit may take place at the business premises or at the tax office, so the notice and any accompanying communication should be read for the specified location and period.
For the statutory completion period, the audit runs for three months from commencement. Commencement is the later of the date on which the records or documents called for are made available or the date on which the audit is actually instituted at the business premises. The Commissioner may extend the period by recording reasons, but the extension cannot exceed a further six months.
What officers can require
The authorized officer can require facilities to verify books and documents, information and assistance. In practical terms, a business should be able to provide a suitable contact person, explain its accounting and return systems, retrieve source documents and identify how electronic records are linked to reported figures.
CBIC’s accounts and records rules address electronic records, audit trails and inter-linkages, source documents, record layouts, data dictionaries and explanations for codes. A request for data in a particular format may therefore require coordination between finance, tax, information technology and the person responsible for the accounting system. See the CBIC accounts and records rules for the record-keeping framework.
Findings and possible tax proceedings
Within 30 days after the audit is concluded, the proper officer must inform the registered person of the audit findings, rights and obligations, and the reasons for those findings. The rules provide for communication of discrepancies and consideration of the registered person’s reply before findings are finalized in FORM GST ADT-02.
An audit finding is not itself the final demand order for every issue. If the audit identifies unpaid or short-paid tax, an erroneous refund, or input tax credit wrongly availed or utilized, it may lead to separate action under section 73 or section 74, depending on the statutory circumstances and the version of the law in force. Treat any subsequent notice as a new procedural step with its own response deadline.
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Special audit under section 66
Why it is different from a section 65 audit
A special audit is not simply a more intense routine audit by the same officer. During scrutiny, inquiry, investigation or another proceeding, an officer not below the rank of Assistant Commissioner may, having regard to the nature and complexity of the case and the revenue interest, direct a registered person in writing to have records examined by a chartered accountant or cost accountant nominated by the Commissioner. The direction requires prior approval from the Commissioner.
The purpose is to obtain specialist examination where the ordinary proceeding raises issues that require an independent professional review. The nominated professional is not chosen by the business under this statutory mechanism.
Report period, expenses and hearing
The Act allows 90 days for the special-audit report. The Commissioner may extend that period by up to another 90 days when there is a material and sufficient reason or on the professional’s application. The Commissioner determines and pays the examination or audit expenses.
The registered person must be given an opportunity to be heard on material from the special audit that the authorities propose to use in proceedings. Keep that hearing opportunity separate from the technical work of supplying records: a professional’s report can inform later proceedings, but the business still needs to respond to the material relied upon against it.
Inspection under section 67(1)
The statutory trigger
Inspection is available when a proper officer not below the rank of Joint Commissioner has reasons to believe that a taxable person has suppressed transactions or stock, claimed excess input tax credit, or contravened the Act or Rules to evade tax. The provision also covers transporters and warehouse or godown operators in specified circumstances.
The qualified officer may authorize another central tax officer in writing to inspect relevant places of business. The written authorization should therefore be examined for the legal section, premises and scope. A visit described informally as an “inspection” should not be assumed to be a section 65 audit.
What an inspection can mean operationally
An inspection is directed at investigating the suspected circumstances identified by the officer. Officers may examine relevant business locations and the records, stock or systems connected with the authorization. The precise scope depends on the authorization and the facts; it is not a general invitation to treat every business record as part of a routine audit.
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Search and seizure under section 67(2)
When a search may be authorized
Search and seizure require reasons to believe that goods liable to confiscation, or documents, books or things useful or relevant to proceedings, are secreted in a place. The qualified proper officer may conduct the search and seizure personally or authorize another central tax officer in writing.
This is a stronger investigatory power than a records review. The statutory language focuses on material believed to be hidden, and the authorization should identify the legal basis and the place to which it relates. It is not a routine next step in every audit.
Seizure, prohibition orders and records
Where goods cannot practicably be seized, the Act permits an order prohibiting their removal or dealing without permission. The law also addresses retention and return of seized or produced materials. During a visit, maintain an accurate contemporaneous inventory of what officers take, what remains at the premises and any order restricting movement or use of goods.
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The rules include FORM GST INS-01 for inspection or search authorization and FORM GST INS-02 for a seizure order. Preserve copies of every authorization, order, inventory, receipt and acknowledgment. These documents establish what was authorized and help identify the next procedural deadline.
Side-by-side comparison
| Process | Purpose and scope | Trigger and officer | Notice or authorization | Material examined or taken | Timing and follow-up |
|---|---|---|---|---|---|
| Section 65 audit | Notified review of a registered person’s records and GST compliance for a financial year or multiples of a financial year. | Commissioner or officer authorized by general or specific order. | At least 15 working days’ advance notice; rules use FORM GST ADT-01. | Books, returns, supporting documents, turnover, exemptions, deductions, rates, input tax credit, refunds and other relevant matters. | Three months from commencement; Commissioner may extend by up to six additional months for recorded reasons. Findings, rights, obligations and reasons communicated within 30 days after conclusion; rules use FORM GST ADT-02. |
| Section 66 special audit | Specialist examination during scrutiny, inquiry, investigation or another proceeding where case nature, complexity and revenue interest justify it. | Officer not below Assistant Commissioner, with prior Commissioner approval; examination by a Commissioner-nominated chartered accountant or cost accountant. | Written direction for the special audit. | Records selected for the nominated professional’s examination. | Report within 90 days, with possible extension of up to 90 more days for material and sufficient reason or on application. Commissioner determines and pays expenses; hearing required on material proposed for use. |
| Section 67(1) inspection | Investigation of suspected suppressed transactions or stock, excess input tax credit, or contravention to evade tax; specified provisions also cover transporters and warehouse or godown operators. | Proper officer not below Joint Commissioner with reasons to believe; written authorization may empower another central tax officer. | Written inspection authorization; section 65’s 15-working-day notice rule is not the quoted trigger. | Relevant places of business and connected records, stock or information within the authorization. | Follow-up depends on the investigation and any later proceedings; no single section 67(1) completion period is stated in the cited provision. |
| Section 67(2) search and seizure | Locate goods liable to confiscation or documents, books or things useful or relevant to proceedings believed to be secreted in a place. | Qualified proper officer with reasons to believe; may act personally or authorize another central tax officer in writing. | Written search authorization; FORM GST INS-01 is used under the cited rules. | Goods, documents, books or other relevant things; FORM GST INS-02 is used for a seizure order. An order may prohibit dealing with goods that cannot practicably be seized. | Retention and return of seized or produced materials are addressed by the Act; the next steps depend on the investigation and proceedings. |
The comparison reflects the cited CGST Act and rules. State and Union-territory GST enactments, notifications, later amendments and the exact wording of an authorization can affect how a particular matter proceeds.
What to do when a GST audit notice arrives
1. Authenticate and map the notice
- Check that the communication identifies the registered person, GSTIN, issuing office, officer, statutory section, audit period, proposed location and date.
- Confirm whether it is FORM GST ADT-01 or another document. Do not treat a section 67 authorization, summons or demand notice as an audit notice.
- Record the date of receipt because the 15-working-day period is measured before the section 65 audit, subject to the wording of the applicable law and notice.
2. Build a period-based evidence file
Prepare a working index rather than sending disconnected files. Include:
- the notice, authorizations and all correspondence;
- period-wise GST returns and reconciliations to the general ledger and financial statements;
- sales and purchase registers, tax invoices, credit notes and debit notes;
- input-tax-credit support, including vendor documents and reconciliations;
- refund applications, sanction orders and supporting schedules;
- turnover, exemption, deduction and rate calculations; and
- the accounting-system export, audit trail, data dictionary and explanation of internal codes where electronic records are involved.
This is a practical organization method based on the categories the Act and rules allow an auditor to verify; it is not an exhaustive checklist prescribed for every business.
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Name one coordinator who can provide records and keep a request log. Assign subject owners for sales, purchases, input tax credit, refunds, finance systems and logistics. Make sure every explanation ties back to a document and a return period. If a requested record does not exist, state that accurately and explain the retention or system position rather than creating a substitute.
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4. Track discrepancies and replies
When the officer communicates a discrepancy, log the issue, tax period, amount, legal provision, supporting evidence and response date. The rules contemplate consideration of the registered person’s reply before findings are finalized in FORM GST ADT-02. Keep proof of delivery for every response and preserve the version of each spreadsheet or data file supplied.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What to do during an inspection or search visit
Verify the legal authority without obstructing the visit
- Ask for the officers’ names, designations and identity cards, and note the rank of the officer who signed or issued the authorization.
- Request a copy of the written authorization and check the section, premises, date, stated grounds or scope and any named records, goods or places.
- Record whether the document is an inspection authorization, search authorization, seizure order or another form. FORM GST INS-01 and FORM GST INS-02 have different functions under the cited rules.
- Nominate a responsible representative to accompany officers and maintain a time-stamped log of requests, explanations, documents supplied and items removed.
Protect the integrity of records and inventory
- Do not delete, alter, move or conceal records, stock or electronic data.
- Provide copies or exports in a way that preserves the original file, metadata and audit trail where possible.
- For seized or produced material, obtain an itemized inventory, acknowledgment and copy of every order.
- If goods remain on site under a prohibition order, segregate them and communicate the restriction to warehouse, sales and logistics staff.
- Escalate immediately to a qualified GST professional when the authorization is unclear, the premises or period appears outside its scope, privileged material is requested, or a seizure affects operations.
Cooperation does not mean waiving the right to know what has been authorized or what material has been taken. Keep communications factual and avoid guessing when a record cannot be located; say that retrieval is in progress and document the request.
Records and systems that reduce audit risk
Reconcile returns to the ledger
Before any scheduled audit, reconcile outward supplies, inward supplies, tax liability, input tax credit and refunds from the books to the relevant GST returns. Investigate timing differences, amendments, credit notes, reverse-charge entries and transactions posted in a different period. Preserve the reconciliation methodology, not only the final totals.
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The accounts and records rules contemplate electronic records, audit trails and inter-linkages. Keep a readable description of table names, field codes, invoice-number logic, tax-rate masters, user permissions and links between source documents, ledger postings and returns. A data dump without a data dictionary can be difficult to verify even when the underlying records are complete.
Control access and retention
Use read-only copies for material supplied to officers where practicable, maintain a transfer log and retain an internal copy of every file. Align retention and backup practices with the applicable GST and corporate-record requirements. If a system migration occurred during the audit period, preserve legacy exports and explain how opening balances and document numbers were carried forward.
Common mistakes and how to correct them
Calling every visit an audit
A section 67 inspection or search does not become a section 65 audit because officers ask for books. Read the section and authorization first; the notice period, scope and safeguards differ.
Assuming notice periods transfer between processes
The cited section 65 provision specifies at least 15 working days’ advance notice. The section 67 triggers described in the Act are reasons to believe and written authorization, not that same advance-notice formula. Do not delay a response to an inspection or search while waiting for an audit-style notice.
Sending unstructured data
Large folders with duplicate invoices and unexplained spreadsheets increase the chance of inconsistent answers. Use an index, period labels, document identifiers and a single owner for each submission.
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Ignoring the post-audit stage
Once findings are communicated, review the stated reasons, rights and obligations and prepare for any separate section 73 or 74 notice. The audit finding and a later tax demand are procedurally related but not the same document.
Failing to verify the current law
The CBIC-hosted Act page cited for these provisions is an older 2017 host text. Amendments, rules, notifications and state or Union-territory enactments may change the wording or procedure. For a live matter, compare the notice with the current official consolidated statute and obtain case-specific advice.
Questions businesses commonly ask
How much notice is required for a GST audit?
For a section 65 audit, the registered person must receive at least 15 working days’ notice. The rules use FORM GST ADT-01. That rule should not be presumed to govern a section 67 inspection or search, which turns on statutory reasons to believe and written authorization.
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Can GST officers search business premises?
Section 67(2) permits a search when the qualified proper officer has reasons to believe that confiscable goods or relevant documents, books or things are secreted in a place. The search must be conducted by the qualified officer or by another central tax officer authorized in writing. Check the premises and scope stated in the authorization.
What documents should be ready for an audit?
Have the notice, returns and reconciliations, sales and purchase records, invoices and credit or debit notes, input-credit support, refund files, financial statements, turnover and rate workings, and intelligible electronic-record documentation ready. The officer may also request other relevant records within the audit scope.
How long can a section 65 audit last?
The statutory period is three months from commencement, with a Commissioner-authorized extension of no more than six additional months when reasons are recorded. Commencement is the later of the date the called-for records are made available or the date the audit is instituted at the business premises.
What happens after the audit ends?
Within 30 days after conclusion, the proper officer must communicate findings, rights and obligations and the reasons for the findings. The rules provide for FORM GST ADT-02 after discrepancies and the registered person’s reply are considered. Further tax proceedings, if any, follow their own notices and deadlines.
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