GST glitches still exist: CAG report

Even after two years of the implementation of GST, government’s much-touted indirect tax regime, the technology-driven tax code has failed to curb evasion, said the Comptroller and Auditor General of India (CAG) in its report. CAG in its report has pointed out that matching invoice of buyers and sellers was still not in place. It also mentioned that an online system validated input tax credit (ITC) through “invoice matching” was not in place. Input tax credit is the deduction for tax already paid by businesses.

“One significant area where the full potential of GST (Goods and Services tax) has not been achieved is the roll out of the simplified tax compliance regime,” states the report presented by CAG on GST for fiscal 2018-19. The return filing system was complex and technical glitches in the Goods and Services Tax Network (GSTN) led to the elimination of the invoice matching system that was seen as curbing evasion.

“The complexity of return mechanism and the technical glitches resulted in roll back of invoice-matching, rendering the system prone to ITC frauds. Thus, on the whole, the envisaged GST tax compliance system is non-functional,” the report said. While indicating a “serious lack of coordination between the executive and the developers”, CAG also said there were deficiencies in the GST system.