Will GST annual returns keep a check on tax evasion?

The Central Board of Indirect Tax and Customs issued the annual returns form GSTR 9 and GSTR 9A in early September this year.

They have specified that the last date for filing the annual return form for regular taxpayers (GSTR-9) and composition taxpayers (GSTR-9A) is December 31. This year’s notified annual GST returns form is said to be more effective in keeping tabs on tax evasion.     

The assessees are to provide complete details of every transaction they have conducted throughout the year in the annual return forms. Tax authorities are relying on these forms to detect tax evasion and fraudulent claims of input tax credit availed during the year.

There are no exhaustive GST monthly returns to facilitate matching of input tax credit claims.

At present, only simplified monthly GSTR 3B and GSTR 1 returns are filed by the normal taxpayers, and those returns do not allow invoice matching by the tax authorities.

These returns never required the segregated details of ITC into the inputs, input services and capital goods. Also, the HSN-wise inward supplies were never accounted. The tax authorities are asking for this break-ups to keep a check on the taxes paid, refunded, ITC claimed and the taxes evaded.

The taxpayers who have misled the books of accounts or the details in the GST data might end up receiving scrutiny notices. The taxpayers should gear up to match and reconcile the GST data and financial records correctly to avoid any consequences.

The registered taxpayers whose annual turnover was more than Rs. 2 crores in the Financial year 2017-18 are required to get their accounts audited under GST. The audited figures will have to be reported in a certified reconciliation statement, i.e. GSTR 9C by 31 December 2018. The audit will help the authorities to keep an eye on any fraudulent figure reported earlier.  

The due date of filing the annual returns for the FY 2017 -18 for the normal taxpayer and the composition scheme taxpayers and the audit report is approaching. With this broader and more in-depth view into an assessee’s financial records, the Tax Department is expected to weed out tax evasion from the economy more efficiently.