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.