To curb fraudulent availment of input tax credit (ITC) and tax evasion, the Central Board of Indirect Taxes (CBIC) will soon identify about 40,000 goods and services tax (GST) returns for 2018-19, based on the risk parameters, for scrutiny.

This would be the second such batch of GST returns to be subjected to scrutiny after the CBIC identified 35,000 GSTINs (assigned to business entities) for 2017-18 earlier this year to see consistency within the returns filed by businesses concerning input supplies, output supplies, input tax credits and tax payments.

“Based on data analytics, we are in the process of identifying cases which need to be scrutinised for 2018-19. We’ll be circulating that list to fill formations soon,” an official told FE.

During the scrutiny exercise, the interface with the taxpayer are being minimal and data is made available through various sources like the Directorate General of Analytics and Risk Management, Advanced Analytics in Indirect Taxation, GST Network, E-Way Bill Portal, among others, are being relied upon for this purpose. Income tax payments by these businesses are tallied at the back-end also to see if there is any discrepancy or not.

In case any discrepancies are found, the CBIC would quantify the amount of tax, interest and any other amount payable in this regard.

The central tax authorities have booked thousands of cases involving fake ITC of over Rs 50,000 crore in the past one-and-half year. While misuse of the beneficial provision of ITC under GST regime was the most common modus of evasion under the GST law, the scale of this was worrisome.

As GST slab rejig will take more time due to inflationary concerns, increased scrutiny along with the recent measures to reduce exemptions and correct inversions may help narrow the gap between the present weighted average GST rate of 11.6% and the intended revenue neutral rate of 15.5%, addressing partly the revenue shortfall concerns of the states.

Thanks to scrutiny and higher compliance, the average monthly gross GST collection for the first quarter of FY23 has been Rs 1.51 trillion against the average monthly collection of Rs 1.1 trillion in the first quarter of the last financial year, showing an increase of 37%.