Taxpayers may have to explain discrepancies in I-T, GST returns
NEW DELHI: The annual return forms for goods and services tax (GST) may ask taxpayers to explain any discrepancies between their income tax and GST returns as the government seeks to tighten rules to deter companies from evading taxes.
This is part of the government’s efforts to collate all available sources of information in order to get a 360-degree profile of a taxpayer. The government is trying to link different databases to get all relevant information about a company—financial transactions, registration information and direct and indirect tax filings—and use fraud analytics to look for tax evaders.
However, initially to deter taxpayers from evading GST by understating their turnover, the annual GST return form will seek details of taxpayers’ income tax return filings to see if they are understating sales turnover.
“The annual returns GSTR 9’s format is being finalized. We will be asking the taxpayer to disclose the details of their income tax declaration and explain the dis- crepancy if any,” an official familiar with the development said, on condition of anonymity.
“While the annual GST return contains details about sales and purchases, the income tax return of a company is in effect the income that is derived from the difference of sales and purchases,” the official added. “So the taxpayer will file the income tax return by September 30 and then the GST annual return by December 31,” the official further said.
Businesses are required by law to audit their results and have to file their income tax returns by September 30. The law has provisions that require tax- payers to give details about their audited financial statements as well as a reconciliation statement in the annual GST return.
The annual GST return will be a detailed collation of sales and purchases made during a year by a company under the three different types of taxes—central GST, state GST and integrated GST.
As per the laws, the annual return form or GSTR 9 has to be filed by December for the previous financial year. The last date for filing the annual tax return for 2017-18 is December 31, 2018. However, with the new tax return form yet to be put into place, it is unclear if this deadline will be extended.