FinMin, Central Board of Indirect Taxes rapped for non-user friendly tax filing system
The Comptroller and Auditor General (CAG) in its first report on the implementation of Goods and Services Tax (GST) has noted that the failures in proper implementation of the GST resulted in slowing down of growth of indirect taxes to 5.80 per cent in 2017-18 as compared to 21.33 per cent during 2016-17. The Government of India’s revenue from goods and services also took a 10 per cent dip.
The report criticised Revenue Department under the Finance Ministry and Central Board of Indirect Taxes (CBIC) for imposing non-user friendly tax filing system.
“The system of payment and settlement of tax that was envisaged for GST was based on one hundred per cent invoice-matching and availment of input tax credit, as well as settlement of IGST on the basis of invoice-matching. Neither is possible as of now, as an invoice-matching system has not kicked in. Invoice-matching is the critical requirement that would yield the full benefits of this major tax reform. It would protect the tax revenues of both the Centre and the States, it would lead to proper settlement of IGST and would minimise, if not eliminate, the tax official-assessee interface,” the report said.
The report went on to say that even after two years of rollout of GST, system validated Input Tax Credit through invoice matching was not in place and non-intrusive e-tax system still remained elusive.
“The complexity of return mechanism and the technical glitches resulted in rollback of invoice-matching, rendering the system prone to ITC frauds. Without invoice matching and auto generation of refunds, assessments etc. on the whole, the envisaged GST tax compliance system is non-functional,” said the CAG Report tabled in Parliament on Tuesday, putting blame of Department of Revenue, CBIC, Tax authorities of the State Governments and the GST’s tax collection unit GSTN,” the report said.
The CAG Report pointed out that Revenue Department, CBIC and GSTN failed to check the mechanism of GST collection properly before rolling out in July 2017. The apex auditor observed that these problems occurred in the administration of GST was due to inadequate co-ordination among these three main stakeholders
The growth of indirect taxes of Government of India slowed down to 5.80 per cent in 2017-18 over 2016-17 as compared to 21.33 per cent during 2016-17, with Government of India’s revenue from goods and services declined by 10 per cent.
Detailing a series of technical problems in the GSTN, the CAG observed that many aspects of technical system were totally user friendly to the tax payers. The auditor blamed Finance Ministry for not allowing the tax payer to pay tax through debit and credit cards. “Facility of payment through debit / credit cards could not be made available as the Ministry did not decide on how to deal with the financial implications, said CAG in citing deficiencies in the taxpaying mechanism.
“While it was expected that compliance would improve as the system would stabilise, all returns being filed showed a declining trend of filing. System validations were not aligned to the provisions of the GST Acts and Rules, leaving the following crucial gaps in GST Registration module. System failed to validate and debar ineligible taxpayers from availing Composition Levy Scheme,” said CAG, observing that these lacunas lead to less tax collection.
CAG also said that many data of tax collection and filing mechanism details were not available to its auditors. “While acknowledging that GST is a completely new system being developed, in view of its magnitude and Pan-India impact, it is all the more necessary that due care is taken both in development and in testing of the system before rollout. The failure to map business rules correctly and the absence of key validations in the rolled out system points to inadequacies in the functioning of GSTN,” said CAG urging for a proper transparent user friendly taxpaying mechanism in GST.
