GST: Automated returns scrutiny set to roll out

Businesses will have to more careful while filing returns as the automated scrutiny system for the goods and services tax (GST) is about to use advanced artificial intelligence and data analytics to monitor mismatches.

Expected to be rolled out over the next few days, the new system is expected to correlate data in the various GST returns filed by a taxpayer to ensure there are no discrepancies.

Finance minister Nirmala Sitharaman had in a review meeting on April 29 directed the Central Board of Indirect Taxes and Customs (CBIC) to introduce the automated GST return scrutiny by next week.

It is also likely to also use data from other sources like bank accounts, payments and invoices to check for any discrepancies in the GST return.

According to sources, the new system will be on the lines of the income tax department’s computer assisted scrutiny selection (CASS) where in based on certain parameters, an automated notice is sent. In case of any discrepancy in returns for GST, an automatic scrutiny notice will be sent. In case of genuine errors, taxpayers will be given an opportunity to rectify returns.

The move is a part of the government’s move to widen the taxpayer base and increase compliance. Experts said that with the automated return scrutiny system is likely to lead to issuance of more notices. “The GST automated return scrutiny will be on similar lines like that being used for income tax. It will help the government in preventing tax evasion, improving compliance as well as revenue collections. However, registered GST taxpayers will have to be more careful in filing returns and more scrutiny notices may be issued once the system is automated,” said Bimal Jain, founder, A2Z Taxcorp LLP.

This will be part of the GST department’s plans to use more data analytics to improve compliance. In a recent national level coordination meeting of Central and state tax officials, the use of data analytics was a key focus area to cut down on tax evasion. New functionalities have been introduced in the Advanced Analytics in Indirect Taxation (ADVAIT) system that would allow deeper analysis of revenue and trends in export and import. It would also use advance data science models to analyse outliers in both customs and GST.