A GST departmental audit begins with Form ADT-01, and it is not the same as a notice or a demand. It is a structured examination of your records for selected years. Handled well, it closes with a clean report; handled badly, it becomes the source of the next DRC-01. The difference is almost always preparation. Here is what an audit covers and how to be ready.
What a GST audit is (and is not)
Under section 65, the department can audit a registered person’s records. It starts with Form ADT-01 (notice of audit), proceeds through document examination and queries, and ends with Form ADT-02 (audit findings). It is fact-finding — but every finding can seed a demand, so treat it seriously from day one.
Why you were selected
Audits are increasingly data-driven. Common triggers include:
- Mismatches between GSTR-1, 3B and 2B.
- High ITC-to-output ratios or sudden swings.
- Refund claims, exports, or inverted-duty positions.
- Sector risk-profiling and random selection.
You rarely control selection — but you fully control how prepared you are when it happens.
An audit is won or lost before the officer ever arrives — in whether your file is ready. The businesses that sail through are not the ones with no mistakes; they are the ones whose returns, reconciliations and invoices tie out, with a one-page note explaining every odd entry. When ADT-01 lands, the worst move is to start assembling records in a panic. Keep the file audit-ready year-round and the audit becomes a conversation, not an excavation.
— Hardik Garg, Founder & Senior Advisor
Received an ADT-01?
We prepare the audit file, manage the queries, and sit in the audit with you — so findings are answered before they become demands.
The documents to have ready
- GSTR-1, 3B, 9 and 9C for the audit period.
- Audited financials, trial balance and the GST control account.
- ITC register with the 2A/2B reconciliation and reasons for differences.
- Sample invoices, e-way bills, contracts and shipping documents.
- RCM workings and any rate/classification opinions you relied on.
A well-indexed file does two things: it answers questions before they are asked, and it signals that your compliance is in order.
What auditors actually look at
- ITC — eligibility, blocked credits, reversals, and 2B matching. This is the number-one focus.
- Output classification and rates — especially where multiple rates apply.
- RCM — liabilities often missed by taxpayers.
- Turnover reconciliation — books vs returns vs e-way bills.
- Refunds and exports — documentation and formula.
How to handle the audit
- Single point of contact — route all communication through one informed person, not scattered replies.
- Answer in writing with documents attached; avoid casual verbal concessions.
- Fix small errors proactively where the law allows — voluntary correction is viewed far better than a finding.
- Do not over-share — provide what is asked, accurately, without volunteering unrelated exposure.
ADT-02 and what comes next
The audit concludes with ADT-02 setting out observations. If issues are accepted, you can pay with reduced consequences; if you disagree, the matter may move to a show cause (DRC-01) — at which point the reply strategy becomes critical. Either way, a clean audit file shapes how far it goes.
Turn the audit into a clean close, not a demand.
One named advisor builds the file, handles the queries, and represents you from ADT-01 through to closure.
The bottom line
A Section 65 audit is a time-boxed, document-driven process — which means it rewards preparation and punishes scramble. Know what ADT-01 is asking for, hand over a reconciled file with the awkward entries already explained, and engage on the findings in ADT-02 in writing rather than conceding under pressure. The goal is not to have a perfect history; it is to have a defensible one, ready before the notice arrives.