To curb tax evasion, authorities will start matching details given in the Goods and Services Tax Return (GSTR1) Form Number 1 with those given in the e-way bill.
The matching will begin with returns to be filed for April as it is the first month when the tax authorities will have both GSTR1 and e-way bill data.
In the meantime, tax authorities have issued notices to over 8,000 assessees for differences in sales figures of more than ₹50 lakh in their GSTR1 and GSTR3B forms. Notices have been served on the basis of returns filed during August and December 2017. Based on their response, a decision will be taken on how much tax and penalty they need to pay.
“Matching process will ensure supply of goods have been done properly,” Prakash Kumar, CEO of GSTN, the IT backbone of the unified indirect tax system, told BusinessLine.
The logic behind matching is to plug any possible loophole in the filing of returns. All the GST assessees are required to file GSTR 1 either on monthly or on a quarterly basis while an e-way bill is required for movement of goods of value exceeding ₹50,000.
Commenting on the development, Rakesh Nangia, Managing Partner, Nangia & Co LLP, said the matching of details mentioned in GSTR-1 with the e-way bills will help in curbing tax evading practices as the invoice matching mechanism will be a significant tool in ascertaining the transaction details while matching it with the details furnished by the taxpayer.
“However, the said mechanism will be partly effective/beneficial since the only supply of goods can be traced by the matching concept. Further, the e-way bill is required on the movement of goods where consignment value exceeds ₹50,000,” he explained while adding that in cases where the value of goods does not exceed ₹50,000, matching would not be possible.
Action for mismatch
An option has been given on the e-way bill portal to take reports for particular tax period from e-way bill portal and match with tax invoices for outward supply and inward supply/delivery challan. Information about e-way bills, along with the transactions captured in GSTR1, will make it easy to spot mismatches in certain cases where an invoice has not been reported in GST return by the taxpayer or where the taxpayer fails to file his returns or furnishes wrong details.
“In such cases, notice may be served by the authorities demanding clarifications for a difference in tax amounts along with penalties. The said measures were adopted by the VAT authorities in the erstwhile regime also. Further in extreme cases, confiscation of goods, along with penalties may be imposed by the authorities,” Nangia said.
e-way bill was introduced from April 1. It is applicable for both inter-State and intra-States movement of goods, though the latter is being introduced on phases. So far, 18 States have adopted the e-way system. Maharashtra and 7 Union Territories will start the new system for the intra state/UT movement of goods from May 25 while the others will do so by June 3.
E-way bill capacity
GSTN claims that there is the capacity to generate e-way bill up to 70 lakh every day. At present, on an average 11-13 lakh e-way bills are being generated every day. Nearly three-fourths of the e-way bills are related to inter-State trade while the remaining are for intra-State. However, once all the States start using e-way bill for internal movement, the ratio is expected to change to 50:50.