18.11.2021- How GST authorities are using data analytics and technology for investigations

Guidelines issued to the tax officials for scrutiny of Goods and Services Tax (GST) returns in Kerala has thrown light on how the tax department is using data analytics and technology.

In a directive issued by commissioner of State GST to the tax officials, a detailed explanation of the risk factors and the red flags and procedure was detailed out. The directive not only mentions the top risk factors but even a detailed step by step procedure of how the system work, how it flags off up risk factors and how to investigate once the data analytics throws discrepancies in tax filings.

The directive also laid out the risk parameters flagged in the back-office system for the scrutiny of the GST returns.

“This is an important update, as the guidelines demonstrate the direction/procedure being followed by authorities while issuing notices,” said Harpreet Singh, Partner, indirect taxes at KPMG India.

The directive said that some investigators in the past may not have followed the procedure.

“Specific instances have come to the notice wherein proper procedures have apparently not been followed during the scrutiny of returns and thenceforth actions. Hence in order to ensure uniformity in the scrutiny of returns across the field formations and also to prioritise and dispose the cases initiated at the assessment vertical the following instructions/guidelines shall be adhered to,” the guidelines said.

The guidelines goes into detail how the system would flag off certain issues and how the tax officials are required to investigate before issuing notices.

The instructions and guidelines also mentioned the risk parameters on input tax credit availed by companies.

GST framework allows companies to set off part of their future tax liability against GST paid by them on the raw materials sourced from suppliers. The set off is often in the form of input tax credit.

“While aforesaid Guidelines have been issued in Kerala, other States are also likely to adopt similar guidelines/ procedure to track anomalies in different filings and issue notices,” said Singh.

SOURCE: The Economic Times



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