The Comptroller and Auditor General (CAG) of India found that the Goods and Services Tax (GST) system is prone to Input Tax Credit (ITC) frauds due to complexity in the compliance system.
The CAG submitted a report to the Parliament and stated that the department had not implemented the originally envisaged invoice matching system for validating ITC. The complexity of the GST return mechanism and technical glitches in the portal had resulted in the roll-back of GST returns, rendering the system prone to ITC frauds.
The CAG pointed out that the GST returns system is still a work in progress despite more than three years of the rollout. The report stated that one of GST rollout’s main objectives, a simplified tax compliance system, is yet to be achieved as a stable and simplified return mechanism is not in place.
CAG recommended fixing a definite time frame for rolling out simplified returns forms as frequent delays become an obstacle for stabilisation and uncertainty in the GST ecosystem.
The CAG examined 4,736 records out of 23,106 refunds related to 33 Central GST commissioners and noticed non-adherence to the GST provisions in processing 280 refunds claims. The non-adherence constituted 6% of total audited records and involved more than Rs 16 crore.
Also, it observed instances of the irregular grant of refund without considering minimum balance in electronic credit ledger, irregular sanction of refund of ITC availed of on capital goods, etc.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
