Section 65 Audit: ADT-01, the Three Months and the Extension

Section 65 Audit explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

A departmental audit has a defined start, a defined length and a defined output. Each of those is worth knowing precisely, because each is a point at which the audit can be challenged if the department gets it wrong.

Section 65(1): the Commissioner or any officer authorised by him may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed. 65(3): the registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of the audit. 65(4): the audit shall be completed within three months from the date of commencement, extendable by the Commissioner for a further period not exceeding six months for reasons recorded in writing. 65(6): the officer shall, within thirty days, inform the registered person of the findings, his rights and obligations and the reasons for such findings.

Who may be audited, and where

Section 65(1) places no threshold. Any registered person may be audited, for any period, at any frequency — all of it "as may be prescribed."

Section 65(2): the officers may conduct the audit at the place of business of the registered person or in their office.

That second limb matters. A desk audit conducted entirely from the department's office is as much a s.65 audit as one conducted on the taxpayer's premises, and it carries the same timelines and the same output requirements.

The notice — Rule 101(2): where it is decided to undertake the audit of a registered person under s.65, the proper officer shall issue a notice in FORM GST ADT-01 in accordance with s.65(3).

"Fifteen working days" — and why the word matters

Section 65(3) requires not less than fifteen working days prior notice.

Working days, not days. Saturdays, Sundays and gazetted holidays are excluded, so fifteen working days is typically three calendar weeks or more.

An ADT-01 served with less than that notice is defective, and the defect should be pointed out before the audit commences rather than raised later — because once the taxpayer participates without objection, the argument weakens considerably.

"Commencement" — the date the clock starts

Explanation to s.65(4): "commencement of audit" shall mean the **date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later.*

Two limbs, and whichever is later governs.

So the three months does not run from:

• the date of the ADT-01;
• the date stated in the ADT-01 as the audit date;
• the date the officer first visits.

It runs from the later of the records being made available and the audit actually beginning at the place of business.

The practical consequence is that a taxpayer who supplies records promptly and completely starts the clock; one who supplies them in instalments over three months has effectively extended the department's time by three months. Documenting the date of complete submission — a covering letter listing everything provided, acknowledged — is therefore the single most useful procedural step in an audit.

The three months and the extension

Section 65(4): audit completed within three months from commencement.

The proviso: where the Commissioner is satisfied that the audit cannot be completed in three months, he may, for reasons to be recorded in writing, extend the period by a further period not exceeding six months.

So the outer limit is nine months from commencement.

Note who extends: the Commissioner, not the auditing officer, and not the Joint or Additional Commissioner. And note the requirement: reasons recorded in writing. An extension order without recorded reasons, or one made by a subordinate authority, is open to challenge.

During the audit: section 65(5)

Section 65(5): the registered person shall be required to afford the officer the necessary facility to verify the books of account or other documents as he may require, and to furnish such information as he may require and render assistance for timely completion of the audit.

Note the framing. It is an obligation to afford facility, furnish information and render assistance — not an obligation to concede a position. Cooperation on access and records is required; agreement with the auditor's conclusions is not.

The output: ADT-02 within thirty days

Section 65(6): on conclusion of the audit, the proper officer shall, within thirty days, inform the registered person whose records are audited about the findings, his rights and obligations and the reasons for such findings.

Rule 101(5): on conclusion of the audit, the proper officer shall inform the findings as referred to in s.65(6) in FORM GST ADT-02.

Three things must be in the ADT-02: the findings, the rights and obligations, and the reasons. An ADT-02 that states a conclusion without reasons does not satisfy s.65(6), and that is a point worth taking in the reply.

What follows the findings

Section 65(7): where the audit results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under s.73 or s.74 or s.74A.

May, not shall. And under a separate provision, with its own notice, its own limitation and its own hearing.

So the ADT-02 is not a demand. Nothing is payable on it. A taxpayer who accepts a finding may pay under s.73(5) or s.74(5) and avoid the notice; one who does not simply responds and awaits the show cause notice. Voluntary payment in DRC-03 →

Key takeaways

• Any registered person may be audited under s.65, for any period, at the office or the premises.
• ADT-01 must give not less than fifteen working days notice.
• The three months runs from commencement — the later of records being made available and the audit actually starting.
• The Commissioner alone may extend, by up to six months, with reasons recorded in writing.
• ADT-02 within thirty days, stating findings, rights and obligations, and reasons.
• An ADT-02 is not a demand; s.73, s.74 or s.74A action is separate and optional.

Read next

• Section 66: Special Audit and the Commissioner's Nomination
• Rule 101: How a GST Audit Is Actually Conducted
• Section 59: Self-Assessment Is the Whole Architecture
• Audit by Tax Authorities Under GST — Section 65 and 66

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).