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Issues of Compliance in GST
Debates on compliance audits of the goods and services tax will have to move beyond mere “invoice matching” to more holistic approaches for data reconciliation that can enable effective tax enforcements, and compliance risk assessment and mitigation.
The Comptroller and Auditor General of India (CAG) has come out with the first assessment report on goods and services tax (GST) for 2018–19 (CAG 2019). The report was tabled before Parliament on 30 July 2019. This is the first assessment of the GST system that has been carried out by any independent institution. There are three broad areas where the assessments have been carried out: GST revenue and return filing trends (Chapter II), information technology (IT) audit of GST network (Chapter III), and compliance audit of GST (Chapter IV). Though this article is mostly restricted to issues related to GST compliance and revenue, yet, before discussing on the main findings of the report in these aspects, it would be important for the readers to know the GST return (GSTR) system and expected interlinkages among returns.
There are two main steps under GST for taxpayers. First, is the origin of tax liability, which is mostly related to outward supplies; but also related to inward supplies in case the supply originates from unregistered entities or composition taxpayers where tax is charged on reverse charge basis. Second, is the tax payment after settlement of available input tax credits (ITC adjustment).
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