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Taxman to Give Cos Time to Explain Turnover Mismatch in GST Returns

In a relief for businesses, tax authorities will allow “reasonable” time for explaining any mismatch in turnover in goods and services tax (GST) returns before initiating recovery action for short payment or non-payment of taxes.

The Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines on recovery proceedings, saying taxmen will give time to businesses to explain the reasons for mismatch in turnover reported in sales return GSTR-1 and tax payment from 3B before initiating any coercive action.

GST officers have been allowed to directly initiate recovery action against errant businesses that show higher sales in monthly return GSTR-1 but under-report it while paying tax in GSTR-3B, as per the changes in rules effective January 1. The government had brought in this change in the GST Act as part of the Finance Act, passed by Parliament last year.

The move was aimed at curbing the menace of fake bills where by sellers show higher sales in GSTR-1 to enable a purchaser to claim an input tax credit (ITC) but report suppressed sales in GSTR-3B to lower GST liability.

So far, under the GST law, show-because notices were first issued and then a recovery process was initiated in such cases of mismatch in GSTR-1 and GSTR-3B.

Following doubts raised by the trade and the field formations regarding modalities for initiation of the recovery proceedings, the CBIC issued guidelines on January 7, saying that an opportunity needs to be provided to the businesses concerned for short payment or non-payment of the amount of self-assessed tax liability.

It noted that in some cases there may be a genuine reason for the difference between the details of outward supplies declared in GSTR-1 and those declared in GSTR-3B. Giving an example, the apex indirect tax body said the GST law permits rectification of typographical errors or omissions in the GSTR-1 or GSTR-3B of a particular month, in the returns or tax payment forms of subsequent months. S-ET

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