Small Goods & Services Tax (GST) assessees will not have tax officials paying them a visit for the first audit of annual indirect tax return.

According to the Audit Plan for 2019-20, prepared by the Directorate-General of Audit (Indirect Taxes) under the Central Board of Indirect Taxes & Customs (CBIC), small taxpayers mean assessees with turnover below ₹7.5-10 crore and medium category includes taxpayers with turnover between ₹7.5-10 crore and ₹30-40 crore. Beyond this, assessees will fall under the category of large taxpayers. The turnover includes total taxable, exempt and zero rated clearances of goods and services, but excludes supplies during the year.

The last date for filing the first annual GST return is August 31 and then the audit will begin.

As there is emphasis on trade facilitation, intelligent enforcement and providing non-intrusive environment to taxpayers, it has been decided to move from the present system of premises-based audit to desk-based (office) audit in case of small category of taxpayers, according to the action plan. However, it clarified that premise-based audit can be done with due approval from senior official, if the taxpayer is not co-operative. It also states that in the case of large and medium category of taxpayers, premise-based audit has to be conducted.

The plan is to cover those assessees first, who have filed annual returns. Also, while conducting audit under GST, if any non-compliance of law is observed that has repercussion on erstwhile Central Excise or Service Tax period as well, then action can be taken. It has also been proposed to complete the audit process in large units within seven working days, in medium units within five working days and in small units within three working days.

The action plan covers only those taxpayers that are under Central administration and have filed more than GSTR3B returns during July 2017 and March 2018. Also, a profile has been prepared with the help of Red Flag parameters. It may be noted that all administrative control over 90 per cent of taxpayers having turnover below ₹1.5 crore has been vested with State tax administration and the remaining with the Centre. Similarly half of the taxpayers having turnover above ₹1.5 crore will be under Central Tax Administration and remaining half with State Tax Administration.

Risk parameters

The action plan has also given a tentative list of 39 local risk parameters which may be considered during selection of units for audit. These include not providing or delay in providing documents sought, taxpayers whose turnover increased substantially after enactment of GST, taxpayer who was not audited in the pre-GST era for the last 4-5 years, stop filers and taxpayers operating in specific sectors such as restaurants, hotels, apartment rentals, professionals, car rental, spare parts for vehicles, chemicals, telecommunication, retail etc.

According to Anita Rastogi, indirect tax partner with PwC, for businesses it will be extremely critical and hence full attention should be given. It is urged that the authorities should be lenient in those matters where there were interpretational challenges in the initial phase of GST implementation. “A non-payment of tax on a transaction due to genuine non-clarity in law should be differentiated from a case of intentional tax avoidance,” she said.

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