Mandatory GST Scrutiny by CBIC on Quarterly Basis

Seep Gupta
Seep Gupta at April 17, 2022

The Central Board of Indirect Taxes is the national nodal agency responsible for administrating customs, GST, central excise, service tax and narcotics in India has proposed to make GST scrutiny on a quarterly basis mandatory.

It has even begun the inspection of 50,000 taxpayers who allegedly evaded the tax filing in the financial year of 2018. The purpose of the GST scrutiny is to enhance compliance via effective and standardised scrutiny of returns.

Need for the Mandatory Goods and Service Taxes Scrutiny

Tax evasion and fraudulent activities in the GST domain have become a menace. According to one survey, in the year 2020-2021 GST officers discovered over Rs. 35,000 crore fraud. This data is really shocking. 426 people have been arrested including CA, lawyers and bigshot directors. Among these frauds, fake invoices and ITC are noted as the biggest tax evasion practices.

Advantages of the Mandatory Goods and Service Taxes Scrutiny

There can be several advantages to this GST scrutiny. Some are listed below:-

  1. Periodical scrutiny will bring transparency to the system and will also detect tax evasion and other frauds.
  2. It will make the compliance system more effective.
  3. Regular mandatory GST scrutiny will gradually curb the problem of the creation of fake invoices, tax evasion and alleged lapses.
  4. It will also help in plugging the tax leakages and other loopholes that are often undetected in the system.

Standard Procedure for GST Scrutiny

The Central Board of Indirect Taxes and Customs has even issued a standardised procedure for GST scrutiny. First, the GST returns for the year 2017-18 and 2018-19 will be scrutinised. The DGARM (Directorate General of Analytics and Risk Management) has been assigned this task of GST scrutiny. Effective communication from time to time will also be done with the field officers in order to maintain transparency.

Steps taken for the Standardised Procedure for GST Scrutiny.

  • The standardised procedure is issued by the government for ensuring transparency and uniformity.
  • Uniformity is essential for the selection and for the identification of returns which are needed to be scrutinised.
  • Methodology and approach to scrutinising the returns must be identified.
  • The selection of returns for the GST scrutiny is based on certain risk parameters. That’s why DGARM has been assigned this task.
  • The main work of the Directorate General of Analytics and Risk Management includes the selection of GSTIN registered with the central tax authorities, whose returns are to be scrutinised.
  • Communication from time to time with the field officers is also necessary to maintain transparency and effectiveness.
  • It is also given in the guidelines that the interface with the taxpayer must be kept minimum with very less complications.
  • In case of any fraud, a notice may be issued by the tax authorities specifying the amount of the fraud to the taxpayer. The communication will be kept very specific to avoid any miscommunication and misunderstanding.
  • Several measures and precautions have been taken for the effective implementation of these guidelines and to curb the problem of fraudulent activities.
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