GST system vulnerable to fraudulent claims: CAG

Coming down heavily on the government for failing to put in place a non-intrusive indirect tax compliance IT system,  the Comptroller and Auditor General (CAG) has slammed it for having a system which remains vulnerable to fraudulent Input Tax Credit (ITC) claims even after two years of the GST rollout.

“The complexity of return mechanism and the technical glitches resulted in the rollback of invoice-matching, rendering the system prone to ITC frauds. Thus, on the whole, the envisaged GST tax compliance system is non-functional,” the CAG has said a report tabled in Parliament on Tuesday.

The new indirect tax regime was implemented in July 2017. It was aimed at reducing the effect of cascading tax, ushering in a common market for goods and services and bringing in a simplified, self-regulating and non-intrusive tax compliance regime.

The CAG said that one significant area where the full potential of GST rollout has not been achieved is the rollout of the simplified tax compliance regime.