With proposed quarterly review, CBIC aims to plug leaks in tax evasion


CBIC has proposed a mandatory review of GST returns on a quarterly basis

To boost compliance and collections, the Central Board of Excise and Customs (CBIC) has proposed a mandatory review of Goods and Services Tax (GST) returns on a quarterly basis.

According to a report by CNBC-TV18, the council’s proposal came after tax evasion of up to Rs 52,000 crore was detected between July 2017 and April 1, 2021. And fake invoices were the biggest practice of tax evasion employed by taxpayers. The council, the national nodal agency for GST-related issues, would use business intelligence and other available business data to conduct the quarterly review.

With this decision, the board aims to plug the leaks and add more transparency to the system. The CBIC has already begun reviewing the returns of 50,000 taxpayers for alleged failures to pay returns in fiscal year 2018, when the GST was launched.

After that, the board plans to review taxpayer returns in subsequent years. CNBC-TV18’s report says the review will be based on AI inputs and risk assessment metrics finalized by the department.

On March 23, the CBIC had released the standard operating procedure for reviewing GST returns for the first two years of the GST system (fiscal years 2017-2018 and 2018-2019). During this process, the Risk Analysis and Management Branch will select GST Identification Numbers (GSTINs) for review.

The report, citing sources, also states that the 50,000 GSTINs selected for review were shortlisted based on a set of parameters including:

1. Taxpayers with large turnover not selected for audit

2.Discordance between the taxpayers’ supplies, their tax liability and their input tax credit.

While the industry believes the use of technologies like AI is going in the right direction, it worries that officials are overstepping their mandate. Some traders have demanded that instead of penalizing them for any possible inconsistencies in filings, the government make an effort to educate them to better understand the system.

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