The Comptroller and Auditor General (CAG) of India have established that the goods and services tax (GST) system is inclined to input tax credit (ITC) frauds due to intricacy in the compliance system. In this article, we will talk about GST technical glitches behind ITC frauds. |
Notification on GST technical glitches behind ITC frauds
The Comptroller and Auditor General (CAG) of India have announced that the goods and services tax (GST) system is inclined to input tax credit (ITC) frauds due to complexity in the obedience system.
The initially envisaged system-validated ITC through ‘invoice matching’ had not been implemented. The complexness of return mechanism and technical glitches had occurred in the roll-back of key GST returns, providing the system prone to ITC frauds.
CAG recommended rebuilding a definite time frame for rollout simplified returns forms as frequent differences are occurring in a delay in its stabilisation and continued apprehension in the GST ecosystem. From October 2018 to March 2020, CAG assessed records relating to 4,736 23,106 refunds in 33 Central GST (CGST) commissioners. It noticed non-adherence to actual requirements in processing refunds in 280 claims (6 per cent) implicating an amount of Rs 16.16 crore.
GST compensation shortfall released by Government
The Central Government has reimbursed the 19th weekly instalment of Rs. 2,104 crore to the States to deal with the GST payment shortfalls. Out of this, a proportion of Rs. 2,103.95 crore has been released to 7 States and a quantity of Rs. 0.05 crore has been acquired to the Union Territory of Puducherry.
Till now, 96 per cent of the fully evaluated GST compensation shortfall has been acquired to the States & UTs with the Legislative Assembly. Out of this, a probability of Rs. 97,242.03 crore has been released to the States and a probability of Rs. 8,861.97 crore has been acquitted to the 3 UTs with the Legislative Assembly.
Additional Notification on GST Shortfall
The CGST earnings were low of the Budget Estimates and the modified Estimates during 2018-19 and 2019-20. The shortfall Budget Estimates was 22 per cent and 10 per cent for years, respectively. Moreover, CGST revenue accumulated 2.97 per cent in FY20 over FY19. CGST income as a percentage of GDP, though, decreased from 3.08 per cent in FY19 to 2.95 per in FY20.
Further, The central Government recommendations of the GST Council, rate rationalisations have been executed from time to time by the government and, therefore, the real erratic tax collections may vary concerning the target set for a financial year.
Also, it should be reported that in December 2015, the report on the revenue-neutral rate and pattern of rates for GST recommended the span of 15-15.5 per cent as the revenue-neutral rate. Nevertheless, the important weighted average GST rate as of July 2019 was 11.6 per cent.
In addition, the GST Council revised the threshold turnover margins upwards for GST registration of taxpayers and the composition levy scheme, which influenced GST collections, the ministry affirmed.
Know more about GST technical glitches behind ITC frauds: CAG report.
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