Worried about tax evasion under the Goods and Services Tax (GST), officials are keen that the new returns filing system should ensure that the tax is first paid before the credit is given.
Sources said inclusion of such a provision is one of the key differences between the alternate monthly GST return that was proposed by the committee of officers to the GST Council on Saturday.
“The tax department is worried about revenue collections, which is reflected in the revised model for GST returns. The question is that if you have not paid tax, then how can you get credit,” said a senior government officials.
Sources said a few more checks could also be included to ensure that taxes are paid on time.
The GST Council, in its meeting, deferred any decision on a new return filing system and extended GSTR-3B by three months.
“The system is a single monthly return, which is simple but not evasion prone. The view was that it should be further simplified,” he said.
The Group of Ministers led by Bihar Deputy Finance Minister along with IT experts will not discuss how to simplify it further.
Under the other model that was under discussion the credit would have been available to the buyer once the seller had uploaded the invoice.
But officials said it could lead to non-compliance and tax evasion. Under the revised monthly return form proposed by officers, at best, a provisional credit may be given to taxpayers.
With the use of data analytics, the Central Board of Excise and Customs and the GST Network have found major gaps between self-declared liability in FORM GSTR-1 and FORM GSTR-3B.
Similarly, there were also differences between the amount of Integrated GST and compensation cess paid by importers at Customs ports and input tax credit of the same claimed in GSTR-3B.
With a high compliance burden on taxpayers, the GST Council has been working on a simple, single page monthly return. Businesses were originally expected to file three returns every month, outlining their sales and purchases as well as the summarised GSTR 3-B.