CBIC Launches Scrutiny Into 50,000 GST Filings, Proposes Quarterly Scrutiny

CBIC has proposed mandatory scrutiny of GST returns on a quarterly basis
CBIC has proposed mandatory scrutiny of GST returns on a quarterly basis

To boost compliance and collections, the Central Board of Indirect Taxes and Customs (CBIC) has proposed mandatory scrutiny of Goods and Service Tax (GST) returns on a quarterly basis. 

According to a CNBC-TV18 report, the board's proposal came after tax evasion to the tune of Rs 52,000 crore was detected between July 2017 and April 1, 2021. And fake invoices were the biggest tax evasion practice employed by taxpayers. The board, the national nodal agency for matters related to GST, would use business intelligence and other enterprising data available to run the quarterly scrutiny.

With this move, the board aims to plug leakages and add more transparency to the system. The CBIC has already begun looking into the filings by 50,000 taxpayers for alleged lapses in paying returns in the financial year 2018, when the GST was launched. 

After this, the board plans to go through the filings of taxpayers in the subsequent financial years. The CNBC-TV18 report said the scrutiny will be based on Artificial Intelligence inputs and risk assessment parameters finalised by the department.

On March 23, CBIC had issued the standard operating procedure for the scrutiny of GST filings for the first two years of the GST regime (FY 2017-18 and 2018-19). During this process, the Directorate General of Analytics and Risk Management will select the GST identification numbers (GSTINs) for scrutiny.

The report, citing sources, also said that the 50,000 GSTINs selected for scrutiny were shortlisted on the basis of a set of parameters that included:

1.Taxpayers with significant turnover not chosen for an audit

2.Mismatch in supplies of taxpayers, their tax liability and their input tax credit.

While the industry feels using technologies like AI is in the right direction, they are worried about officials overstepping their brief. Some traders have demanded that instead of penalising them for any possible mismatch in the returns filed, the government should make an effort to educate them to understand the system better.