The Central Board of Indirect Taxes and Customs (CBIC) will focus on scrutiny and audit of items and companies tax returns in the coming 12 months, and ease compliances for Special Economic Zones, its chairman Vivek Johri informed.
Johri anticipates the central government’s indirect tax revenue sources to undergo a shift, with green mobility picking up and fossil fuel consumption declining over time.
That would mean more services such as electric vehicle charging stations and service centres emerging as sources of GST collections, while an emphasis on tax compliance in domestic transactions and a wider tax base helps make up for the lower usage of fossil fuels for revenue collections.
In an interview, the CBIC chairman said that compliance improvement measures taken by the department are already showing in GST collections and that there is scope for augmenting revenue further by taking some more measures in GST.
CBIC, he said, was already focusing on those now.
“Apart from verifying that those who come into the tax base file their returns and pay their taxes, what we need to also look at now—and we have already started because it is very much part of any tax administration—is the need to scrutinize the returns properly to see that the data that has been turned in is valid and compares well with the financials which the business has reported. We will deal with this with scrutiny and audit,” said Johri.
He explained that these are the two limbs of CBIC’s compliance management strategy. States are also focusing on that, he said.
Currently, CBIC conducts scrutiny and departmental audits based on certain red flag reports raised by the system because of discrepancies. Now the effort is to make the scrutiny and departmental audit cases more systematic and structured based on risk parameters.
“We are also laying down the methodology of how that scrutiny needs to be done. That is, for a particular type of risk, what are the checks needed to be carried out, and we will mention that to the field officer. Likewise, we will pick up cases for audit,” explained Johri.
Scrutiny is different from audit, as an audit will examine the financials of assessees to see whether that is in agreement with what has been reported in the GST return.
“In this day and age, it goes without saying that it will be technology-driven,” Johri said, adding that the process will be data-driven and automated so that the officers who conduct scrutiny are given transparent inputs on what they need to check in the tax returns and what would be the possible risk areas.
Departmental audits have been there in the earlier excise duty and services tax regimes and even in the GST regime, but the effort now is to leverage the extensive data and the IT prowess that the tax authority has to make it more robust to widen the tax base.
The anti-evasion measures taken by central and state administrations have already helped improve GST collections. State administrations, too, are keen to adopt compliance enhancement measures with states’ GST compensation ending in June
Some Edited excerpts:
What is the roadmap forward for exemptions that also stay inside customs?
Review of exemptions occur yearly in the funds. What we’ve accomplished this time is to do a deeper evaluate. By that I imply we held very wide-ranging consultations. On that foundation we’ve withdrawn some exemptions. We have saved some on maintain the place we didn’t get very concrete inputs, however we have prescribed a timeframe. All conditional exemptions will probably be up for evaluate, in any other case they only lapse. We try to construct unconditional exemptions so far as attainable into the tariff itself. It offers extra transparency and certainty to the tax as a result of it is not really easy to alter tariff charges. It’s a lot simpler to alter charges that you simply function via notification.
What is the income influence of these modifications?
For a few years now we’re not taking a look at customs as a supply of income. It is especially meant to offer some extent of assist or safety to the home trade, for manufacturing, for exports for MSMEs. When we have been working on the proposal this 12 months, we have been not likely taking a look at income augmentation via customs. Withdrawal of exemptions is pushed extra by coverage consideration.
GST collections have stabilised now. What can now be anticipated in phrases of GST construction?
The rationalisation train would contain restructuring of the charges. It could contain a evaluate of exemptions. And in the discount, correction of inversions, no matter is left. Those are three broad facets that I see as being half of the rationalisation train. Personally, in the event you ask me, I do not see all these taking place collectively at one go. You should assume of methods to arrive at one thing that doesn’t disrupt your revenues and, in truth, augments your revenues. There are positives and negatives in phrases of income while you rejig the charges.
Now, that will probably be a troublesome train to attain. We could have some type of a roadmap accessible on what ought to be accomplished and that’s what the GoM (group of ministers) will take a look at. In phrases of processes for the central GST, there are two issues that we have to work on with nice rigour – scrutiny of returns and audit. We already achieved vital enchancment in return filings, however now we’ve to take a look at what’s the income yield from the returns and if the tax was being accurately paid or not. These are the 2 issues CBIC goes to focus on in the coming 12 months. This, of course, will not be dependent on rationalisation. This ought to occur regardless.
The finance minister has introduced a revamp of the Special Economic Zones Act. From the customs aspect what are the modifications doubtless?
What companies are telling us is that whereas customs has accomplished lots of work on ease of doing enterprise, these advantages have accrued to the non-SEZ entities, and SEZ models have been omitted of their profit.
They do not use the ICES (Indian Customs EDI System). The fundamental submitting on SEZ is on-line, little question, however there are lots of contact factors in that process. Permissions should be taken now and again. They have to use for renewing them; items are examined most of the time.
We should work out the small print. We need to migrate all of the SEZ models to the customs portal, so as an alternative of working via SEZ on-line, all their filings will occur on ICES itself. So, no matter advantages that circulation from it to regular importers and exporters will even be accessible to SEZs. We will take a look at different enterprise processes almost about customs and we are going to re-engineer them to ease compliance.
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