Robust GST audit system with safeguards can boost state revenue collection

An audit system has great advantages over routine tax return verification but requires greater skills

The expectation that the indirect tax revenues would be buoyant after the implementation of goods and services tax (GST) was based on two assumptions: (a) the design of the GST encompassing the whole value chain from raw material to retail would capture the entire value addition for taxation; and (b) the compliance levels would be higher because of the GST self-policing system where buyers ensure documentary discipline among the sellers in order to avail of input tax credits.

While the focus of the discussions, especially in the recently concluded GST council meeting, has been on rate rationalisation —