CBIC Increasing Audits To Improve Quality of GST Returns

Central Board of Indirect Taxes and Customs (CBIC) chairman Mr Vivek Johri said that they aim to improve the quality of returns through increasing the Goods and Services Tax (GST) audits but not to burden the businesses.

Recently, the audits under GST have picked up momentum. CBIC is gearing up its compliance management efforts after giving extra time to file annual returns during the covid period and liberalise the GSTR-9 & 9C for small businesses.

Mr Vivek Johri said that the effort is to get a departmental audit completed for the initial period as GST is about to complete five years. He stated that the department has to complete audits for the first two years of GST as soon as possible as a compliance management strategy.

Also, he stated that the GST return filing has improved significantly and that audits are meant to ensure the reported data quality. The department will make sure that the audits do not get prolonged and are not burdensome to taxpayers regarding submission of documents, etc. They will issue instructions to officers in this regard if needed.

GST audits are deeper than scrutiny, which involves seeking information and documents. After serving notice, an audit involves visiting the business premises and inspecting documents, including stock registers, audited financial statements, income tax returns, production records, and supplier & customer details. If the audit reveals any short payment of tax, the department can issue a notice. However, it has to be served within a specified time, based on circumstances.

In recent months, tax experts reported an increase in the number of businesses seeking advice on issues arising from departmental audits. Mostly, audits are triggered due to the mismatch between GSTR-2A/2B and GSTR-3B.

There is a general rise in GST audits. Currently, the audits are focused on verifying transitional input credit. However, some audits are also picking up interpretational issues such as classification and the applicable tax rate, admissibility of Input Tax Credit (ITC), etc.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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