New norms for Excise and Service Tax Audits

CBEC has revised Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates vide circular no. 995/2/2015-CX dated 27th Feb’2015. This has been done to overcome the difficulties faced in selection of the units for audit under the existing norms which are based on single criterion, namely, the threshold limits of taxes paid in the previous financial year.

Below are the revised guidelines:

1. Annual plan for audit coverage:

a) Annual audit plan indicating the name of the assessees to be audited during the course of the year (1st July to 30th June next year) shall be released by the Audit Commissionerate by 31st May of each year.

b) It shall consult the zonal units of Directorate General of Audit while finalising the Annual Audit Plan.

c) To ensure adequate coverage, the assessees shall be categorised in large, medium and small enterprises based on their annual value of clearances/services provided and the total duty/taxes paid.

d) The frequency of audit, composition, deployment etc. would be decided based on the size of the assesse.

2. Selection methodology:

a) Shall be based on the risk evaluation methodology prescribed by Directorate General of Audit.

b) Shall be communicated to Audit Commissionerate during the month of March/April every year.

c) National Risk Managers (NRM) and Local Risk Managers (LRM) shall handle the risk assessment function.

d) Apart from above, it can select few units for audit randomly or based on local risk perception.

e) The revised guidelines shall be effective from 1’July2015.

3. Theme based coordinated audits:

a) Theme shall be selected by the Directorate General of Audit.

b) Shall be based on systematic and methodical risk analysis of internal taxpayer data, economic indicators etc.

4. Other key aspects:

a) Frequency and periodicity of audit shall not be less than three years in case of the assessees granted with ‘Accredited’ status based on their proven track record of tax compliance.

b) The procedure and criteria for accreditation shall be communicated separately.

c) In case of audit of a LTU, 80% and 20% of the manpower shall conduct audit and do headquarters functions respectively.

Please refer the attached files

1. Circular No. 995/2/2015 – CX

2. Accredition in Customs

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