GST Scrutiny Parameters: All You Need to Know

GST or Goods and Services Tax is a comprehensive indirect tax on the supply of goods and services in India. It has been implemented to replace all the indirect taxes levied on goods and services by the Central and State governments. The GST is an attempt to streamline the taxation process and make it more transparent, efficient, and hassle-free for the taxpayers.

However, with the implementation of GST, the scrutiny process has become more stringent. The GST authorities have introduced various scrutiny parameters to ensure that taxpayers comply with the GST laws and regulations. In this article, we will discuss the various GST scrutiny parameters and how you can prepare for them.

What is GST Scrutiny?

GST scrutiny is a process of verifying the GST returns filed by the taxpayers. The GST authorities can scrutinize the GST returns to ensure that the taxpayers have correctly calculated and paid the GST. The scrutiny process helps to identify any tax evasion and non-compliance.

Types of GST Scrutiny

There are mainly two types of GST scrutiny:

1. Regular Scrutiny : The GST authorities can conduct regular scrutiny of the GST returns filed by the taxpayers. The scrutiny can be done randomly or based on specific criteria. The objective of the regular scrutiny is to ensure that the taxpayers have correctly calculated and paid the GST.

2. Special Audit : The GST authorities can order a special audit of the GST returns filed by the taxpayers. The special audit is ordered when the GST authorities suspect tax evasion or non-compliance. The special audit is conducted by a chartered accountant or a cost accountant appointed by the GST authorities.

Parameters for GST Scrutiny

The GST authorities can scrutinize the GST returns based on various parameters. These parameters include:

1. Input Tax Credit (ITC) : The GST authorities can scrutinize the ITC claimed by the taxpayers. The taxpayers can claim ITC for the GST paid on inputs used in the production of goods or services. The GST authorities can verify the ITC claimed by the taxpayers and ensure that it is legitimate.

2. Classification of Goods and Services : The GST authorities can scrutinize the classification of goods and services as per the GST laws. The taxpayers must correctly classify the goods and services to determine the GST rate applicable.

3. Valuation of Goods and Services : The GST authorities can scrutinize the valuation of goods and services. The taxpayers must correctly determine the value of goods and services to calculate the GST.

4. Export of Goods and Services : The GST authorities can scrutinize the export of goods and services. The taxpayers must comply with the GST rules and regulations while exporting goods and services.‍

5. Non-filing or Late Filing of GST Returns : The GST authorities can scrutinize the non-filing or late filing of GST returns by the taxpayers. The taxpayers must file the GST returns on time to avoid penalties and interest.

6. Mismatch of GST Returns : The GST authorities can scrutinize the mismatch of GST returns filed by the taxpayers. The taxpayers must reconcile the GST returns to avoid any mismatches.

7. Financial Transactions : The GST authorities can scrutinize the financial transactions of the taxpayers. The taxpayers must maintain proper records of their financial transactions to comply with the GST laws and regulations.

How to Prepare for GST Scrutiny?

Here are some tips to prepare for GST scrutiny:

1. Maintain Proper Records : The taxpayers must maintain proper records of their financial transactions and GST returns. The records must be accurate and up-to-date.

2. Comply with GST Laws and Regulations : The taxpayers must comply with the GST laws and regulations. They must correctly calculate and pay the GST.

3. Reconcile GST Returns : The taxpayers must reconcile the GST returns filed by them. They must ensure that there are no mismatches in the GST returns.

4. Get Professional Help : The taxpayers can get professional help from a chartered accountant or a cost accountant to prepare for the GST scrutiny.

Conclusion

GST scrutiny is a process of verifying the GST returns filed by the taxpayers. The GST authorities have introduced various scrutiny parameters to ensure that the taxpayers comply with the GST laws and regulations. The taxpayers must maintain proper records, comply with the GST laws and regulations, reconcile the GST returns, and get professional help to prepare for the GST scrutiny.