Automated GST Scrutiny to Result In Notices For Data Discrepancies

Automated GST Scrutiny to Result In Notices For Data Discrepancies

The idea aims to empower officers to conduct GST return scrutiny based on data analytics and system-identified risks.

According to experts, the recent implementation of automated scrutiny of Goods and Services Tax (GST) returns by the central government may result in taxpayers receiving notices when there are discrepancies between various types of tax returns.

On Thursday, the finance ministry announced that the Central Board of Indirect Taxes and Customs (CBIC) has introduced an automated scrutiny module for GST returns aimed at central GST officers. This module aims to empower officers to conduct GST return scrutiny using data analytics and risk assessments generated by the system.

Archit Gupta, the founder and CEO of Clear, a business-to-business fintech software as a service (SaaS) company, states that the automation of GST notices will follow a system-driven approach similar to the processing of income tax returns. Instead of receiving direct notices from assessment officers, the process of GST notices will now be automated.

Gupta further explains that as a result of this automation, there may be an increase in the number of notices issued in cases where there are discrepancies in data between forms such as GSTR1 (used for reporting sales) and GSTR 3B (used for reporting a monthly summary of transactions). Taxpayers should be prepared to respond to these notices promptly and address the issues raised.

Niraj Bagri, a partner at Dhruva Advisors, emphasizes that the utilization of data analytics in scrutinizing returns is expected to minimize direct interaction with the department, thereby enhancing the ease of doing business. Bagri highlights that successful implementation of this approach is crucial in ensuring seamless compliance and minimizing any potential difficulties.

one of the challenges encountered by the trade is the requirement to provide a significant amount of information, which often exceeds what is necessary for scrutiny purposes. 

To ensure the effective implementation of the scheme, Bagri suggests that the focus should be on seeking only relevant information and documents that are essential for the scrutiny process. This approach would streamline the process and alleviate unnecessary burdens on businesses.

Concluding it, the implementation of automated scrutiny for GST returns is expected to increase notices to taxpayers for discrepancies between tax returns. The automated module empowers officers to conduct efficient scrutiny using data analytics. Taxpayers must respond promptly, particularly addressing discrepancies between GSTR1 and GSTR 3B forms. The system-driven approach aims to minimize direct interactions and improve the ease of doing business. 

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