Form 26AS importance in GST- Never underestimate the power of 26AS

Form 26AS is not a new concept to all of us. It is an Annual statement under Income Tax which includes all details relating to Tax deducted at source (TDS), tax collected at source (TCS), Advance Tax paid, Self-Assessment tax paid, information regarding refund received, regular assessment tax that has been deposited, and information regarding high value transaction, etc.

As per recent announcements, now it will also include Statement of some Financial transaction to include details of all high value transaction so that nothing is missed out from tax and there is a cross check on such transactions.

Read Also: 12 New transactions in New 26AS making disclosure of total 25 transactions

GST

We are all familiar with this term “GST” i.e. Goods and Service Tax. It is an indirect tax different from Direct tax which is levied on supply of goods and services. GST is a destination-based tax and renders country with one unified common market. That’s why it is popular with the tag One Nation, One Tax.

Co-relation between GST and Form 26AS

With the recent changes in tax laws and amendments in 26AS, now information of GST return will also be included in form 26AS or new AIS i.e. Annual Information System. Department of revenue said that there will be no extra compliance burden on taxpayers for GST turnover displayed in Form 26AS. But we know Government never do anything without any objective.

Now, question comes is there any co-relation between Direct tax and Indirect tax to avoid curb any tax evasion? Answer is Yes, this cross check would ensure better compliance and would also curb tax evasion.

Over the recent announcements, CBDT i.e. Central board of Direct Taxes has authorized Principal Director General of Income tax to upload information related to GST return, which would be under his possession, in Annual Information Statement in form 26AS within 3 months from the end of the month in which the information is received by him.

Further, it has been specified that Principal DG/DG shall specify the formats, standards & Procedures for the purpose of uploading of Annual Information statement in form 26AS.

Read Also: How to view Form 26AS and what Income Tax Form 26AS contains?

The most important thing that is going to be included in form 26AS is the GST turnover that is reported in GST Returns.  As per Department of Revenue, there might be some mismatch or less variation in GSTR-3B and GST shown in form 26AS but it’s not possible to see high variation amount among form 26AS and GST return. If such high difference is identified then there are chances of investigation to be made for such a huge mismatch. For instance, if there is GST turnover of Rs. 1 Crore and despite that assessee is not paying adequate amount of tax, then it might raise suspicion over evasion of tax.

Dishonest taxpayer would be forced to display the correct information, due to fear of mismatch and consequence of notices from department of Revenue, and pay the correct income tax.

Read Also: GST Notice – Top Reasons, Types & Response

Audit Consideration of Form 26AS

Even this is going to add a new thing that the auditor might consider checking if any material misstatement exist or not and give their opinion on financials accordingly. Now, as a part of audit procedures, auditors would be matching the GST Return details available to them with form 26AS. If everything matches exactly or even if there is little mismatch, then there is no need to worry about it. But in case if there is a huge mismatch then auditor might audit such information in detail along with invoices and all the required supporting and would identify all the reasons for such mismatch and would also ask the management to provide reasons for such a mismatch. In case of detail investigation for such a mismatch, there are chances of fraud being detected which might also change the auditor’s opinion.

Read Also: GST audit of FY 18-19 : Not to repeat the mistakes done in FY 17-18 audit

Conclusion

Thus, at last, it is advisable to provide similar information in GST return and Form 26AS for example Turnover should match, profit margin should match, and it may also include minor differences. If there is a mismatch, then a reconciliation could be prepared to provide for differences in such variation. Although at present there is no additional requirement of reporting. However, huge variation of such information may result in detail investigation, notices from tax departments, litigation, etc.

Read Also: GST Turnover v/s Income Tax Turnover

The author of the above article is CA Rahul Gaur.

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