Govt. did not try out GST system before rollout: CAG

  1. Government has tabled the Comptroller and Auditor General(CAG) audit report on the Goods and Services Tax(GST) in the Parliament.
  2. The report has said that the government had failed to try out the GST system before its rollout leading to inadequate compliance mechanisms, and lower tax revenues.
  3. The report has also pointed out that the complexity of the return mechanism and the technical glitches in invoice-matching has rendered the system prone to Input Tax Credit(ITC) frauds.
  4. The report said that post-implementation,the Centre’s revenue from GST has registered a decline of 10% in 2017-18 compared to revenue of subsumed taxes in 2016-17.
  5. The audit report has also said that the Central government has not been following the rules set out regarding the transfer of revenue to the States.
  6. GST (Goods and Services Tax) is an indirect tax that has replaced many Central and State taxes like excise duty, VAT and service tax.It is a single comprehensive tax levied on all goods and services produced in India as well as those imported from other countries.
  7. Input tax credit is the tax that a business pays on a purchase and that it can use to reduce its tax liability when it makes a sale.In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases.
  8. The Comptroller and Auditor General (CAG) of India is an authority established by Article 148 of the Constitution of India.The CAG is appointed by the President of India following a recommendation by the Prime Minister.