The Comptroller and Auditor General (CAG) has recommended that the Finance Ministry implement a system to identify high-risk taxpayers within the GST composition scheme. This follows an audit of 8.66 lakh taxpayers, which revealed issues with turnover declarations and eligibility compliance.
The GST composition scheme, designed for businesses with a turnover of up to Rs 1.5 crore (Rs 75 lakh for special category states), has faced scrutiny for potential misuse. The CAG found that some taxpayers are under-declaring their sales or failing to meet eligibility requirements to remain in the scheme.
The audit highlighted two major risks: under-declaration of sales to stay within the scheme and non-fulfillment of scheme conditions. To address these issues, the CAG recommends periodic identification of high-risk taxpayers and cross-verification of their declared sales using third-party data.
The Finance Ministry is advised to develop a system for monitoring and excluding ineligible taxpayers to prevent misuse and ensure the scheme’s integrity.
