CAG Urges Finance Ministry to Identify and Monitor High-Risk Taxpayers in GST Composition Scheme

The Comptroller and Auditor General (CAG) has recommended the Finance Ministry to periodically identify high-risk taxpayers in the GST composition scheme. An analysis revealed that many taxpayers are at risk of exceeding the turnover limit. The CAG suggests verifying declared sales from multiple sources to curb tax evasion.

The Comptroller and Auditor General (CAG) has urged the Finance Ministry to periodically identify high-risk taxpayers in the GST composition scheme and verify their declared sales from various sources to prevent tax evasion.

According to an analysis conducted on 8.66 lakh composition taxpayers between fiscal years 2019-20 to 2021-22, a substantial number of taxpayers are at risk of crossing the turnover threshold for the composition levy scheme (CLS). These taxpayers were identified through audit from GST returns and other third-party data sources like IT returns and the 'Vahan' database.

The CAG highlighted two major risk areas: under-declaration of the value of outward supply and non-fulfillment of eligibility conditions by CLS taxpayers. The auditor noted that some taxpayers remained in the scheme despite being ineligible, and many failed to meet their filing and payment obligations. The CAG has recommended that the Finance Ministry develop a system to identify and exclude ineligible taxpayers to maintain the scheme's integrity.

(With inputs from agencies.)