To encourage compliance and collection, the Central Council of Indirect Taxation and Customs (CBIC) has proposed mandatory quarterly inspections of Goods and Services Tax (GST) returns.
According to a CNBC-TV18 report, the council’s proposal came after tax evasion of 52,000 rupees was discovered between July 2017 and April 1, 2021. And false invoices were the biggest tax evasion practice by taxpayers. The board, the national hub for GST-related matters, would use business intelligence and other available corporate data to conduct the quarterly audit.
With this move, the board wants to close leaks and add more transparency to the system. The CBIC has already begun investigating the filings by 50,000 taxpayers for alleged errors in the payment of returns in fiscal year 2018, when the GST was launched.
Following this, the board plans to review taxpayer returns in the coming fiscal years. The CNBC-TV18 report said the investigation will be based on artificial intelligence inputs and risk assessment parameters finalized by the department.
By March 23, CBIC had issued the standard operating procedure for examining GST applications for the first two years of the GST regime (FY 2017-18 and 2018-19). During this process, the Directorate-General for Analysis and Risk Management selects the GST identification numbers (GSTINs) for verification.
The report, citing sources, also said the 50,000 GSTINs selected for research were shortlisted based on a range of parameters, including:
1.Taxpayers with significant revenue not opted for an audit
2. Mismatch in taxpayers’ supplies, their tax liability and their input tax credit.
While the industry believes the use of technologies such as AI is a step in the right direction, they are concerned that officials are overstepping their mandate. Some traders have demanded that the government, rather than punish them for a possible mismatch in the returns filed, make an effort to train them to better understand the system.