Complexity of GST returns & technical glitches has rendered the system prone to ITC frauds
In the CAG’s first Audit Report on Goods and Services Tax (GST), we noted the Government and other stakeholders’ landmark achievement in roll out of GST. We had further noted that an area where full potential of GST had not been achieved was the simplified tax compliance regime. The originally envisaged system-validated Input Tax Credit (ITC) through “invoice matching” had not been implemented. The complexity of return mechanism and technical glitches had resulted in roll-back of key GST returns, rendering the system prone to ITC frauds. Accordingly, we had recommended simplified tax compliance regime by introducing simplified return forms duly using technological solutions.
During the current audit, we noticed that owing to the continuing extensions in the roll out of simplified return forms, and delay in decision making, the originally envisaged system-verified flow of ITC through “invoice matching” is yet to be implemented and a non-intrusive e-tax system still remains unimplemented. The GST return system is still a work in progress despite more than three GST rollout years. In the absence of a stable and simplified return mechanism, one of the main objectives of roll out of GST i.e. simplified tax compliance system is yet to be achieved.
It is recommended that a definite time frame for roll out of simplified return forms may be fixed and implemented as frequent deferments are resulting in delay in stabilisation of return filing system and continued uncertainty in the GST eco-system.
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