Data mismatches to trigger notices under automated GST scrutiny, say experts

New Delhi, May 13, 2023

The central government's rollout of automated scrutiny of Goods and Services Tax (GST) returns this week could lead to assessees getting notices in cases where there are data mismatches between different types of tax returns, said experts.

The finance ministry said on Thursday that the Central Board of Indirect Taxes and Customs (CBIC) has rolled out an automated scrutiny module for GST returns for central GST officers. The idea is to enable the officers to carry out scrutiny of GST returns on the basis of data analytics and risks identified by the system.

Similar to income tax returns processing, now the process of GST notices will also be automated through a system driven approach instead of direct notices from the assessment officer, according to Archit Gupta, founder and CEO of Clear, a business-to-business fintech software as a service (SaaS) company.

"This will perhaps lead to more notices where there are differences in data between say forms GSTR1 and GSTR 3B," said Gupta. Taxpayers may have to be prepared to address these notices timely, he said. GSTR1 is the return form for reporting sales and GSTR3B is the form for reporting a monthly summary of transactions.

Use of data analytics for scrutiny of returns should lead to reduced physical interface with the department and ultimately enhance ease of doing business, according to Niraj Bagri, partner, Dhruva Advisors. Implementation remains the key in ensuring hassle free compliance.

"One of the challenges faced by the trade is that substantial amount of information is sought, which many a time, is not required for scrutiny. To ensure successful implementation of the scheme, it should focus on seeking only relevant information or documents necessary for scrutiny," said Bagri.

[Livemint]