CBIC To Scrutinise 50,000 Taxpayers & Proposed Quarterly Scrutiny of Returns

The Central Board of Indirect Taxes and Customs (CBIC) has proposed mandatory scrutiny of Goods and Service Tax (GST) returns quarterly to boost compliance and collections.

According to sources, the board came up with this proposal after tax evasion of Rs 52,000 crores was detected between July 2017 and March 2021. Also, a few fictitious persons used fake invoices to fo tax evasions.

The department plans to use business intelligence and other enterprising data available to run the quarterly scrutiny of GST returns. Also, the department aims to plug leakages and add more transparency to the system.

The CBIC has started scrutinising returns filed by 50,000 alleged taxpayers who defaulted in filing returns at GST inception. After this, the board plans to go through the filings of taxpayers in the subsequent financial years. 

The scrutiny will be based on Artificial Intelligence inputs and risk assessment parameters finalised by the department. CBIC has already issued the Standard Operating Procedure (SOP) to scrutinise GST filings for the first two years of the GST regime, .i.e, FY 2017-18 and 2018-19, on 23rd March 2022.

The Directorate General of Analytics and Risk Management (DGARM) will select the GST numbers for scrutiny using this SOP. The DGARM shortlisted the 50,000 GSTINs for scrutiny based on the set of parameters that includes:

  • Taxpayers with significant turnover are not chosen for an audit
  • Mismatch in sales, Input Tax Credit (ITC) and tax liability

The industry experts feel that using the latest technologies such as Artificial Intelligence (AI) and data analytics will benefit the ecosystem. However, they are worried about officials overstepping their brief.

Also, some taxpayers are demanding that the government should make an effort to educate them to understand the system better instead of penalising them for mismatches in GST returns.

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

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