CAG: GST fails to perform to its full potential

It’s been two years since GST was implemented in India. However, even after two years of GST roll-out, a lot of GST glitches still exist, says the Comptroller and Auditor General of India (CAG) report. CAG has also pointed out that an online system which validates Input Tax Credit (ITC) claims via invoice matching is still not implemented.

According to CAG, implementation of the simplified tax compliance regime is another important area in which the complete GST potential was not achieved. CAG also mentioned that the GST system had deficiencies such as lack of coordination amongst the executive and the developers.

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Due to technical glitches and complexity of the GST return mechanism, invoice-matching did not get implemented as expected. This only lead to more number of ITC frauds. Hence, CAG thinks that the GST compliance system has not functioned up to the mark.

CAG also mentioned that there was no improvement w.r.t. the number of returns (GSTR-3B: summary return form) filed. 87% of taxpayers filed their GSTR-3B in April 2018; however, this number reduced to 79% by December, which indicates a significant dip in the compliance front.

During the  audit, CAG noticed that the registration module had a few critical gaps because the system validations were not as per the provisions of the GST Act. Due to one such significant gap, the system could not validate and prevent unauthorised taxpayers from availing the benefits of the Composition Levy Scheme.