Role of CAG

in
GST Regime
 Goods and Services Tax
• Destination based tax on supply
• Subsumes most of the indirect taxes
• Service Tax, Central Excise, VAT etc.
• Petroleum products and alcohol not included
• Simultaneous levy by both Centre and the States across
the value chain
• CGST : Central GST
• SGST : State GST
• IGST : Integrated GST on inter-state supply of
goods and services
CAG’s mandate to audit receipts
Section 16 of CAG’s DPC Act: Audit of Receipts
It is the duty of the CAG
•to audit all receipts payable into the Consolidated Fund
and
•to satisfy himself that the rules and procedures in that
behalf are
 effectively designed
•to secure a check on the assessment, collection
and proper allocation of revenue
 and are being duly observed
 What is new and different ?
New Tax

Dual Control

IT Intensive

Creation of GSTN to perform sovereign function of

collection of taxes
 About GSTN
• Goods and Services Tax Network
• A Section 8 (Companies Act, 2013) Non-Government,
Not for Profit, Private Limited Company
• 49% shareholding with Government and 51%
shareholding with private financial institutions
• ` 144 crore given as Grant in Aid by Government
 About GSTN
• Set up primarily to provide IT infrastructure and services
for implementation of GST
• Front end for all tax payers
• Verification of Registration details
• Matching of invoices
• Developing the backend for 20 States and 5 UTs
• Calculation of apportionment of IGST among Centre
and States
 What it entails for CAG’s mandate?
Data with GSTN
CAG’s access to
which otherwise would
records and IT systems
rest only with govt

Accounts audit of GSTN, a Section 19 :

company controlled by CAG’s Audit of companies
Government as per Companies Act

Audit of Grants in Aid given

Section 14
by Centre
Expenditure audit of cost of
Section 13
tax collection
Challenges
And
Way Forward
 One tax on goods
Tax on supply Single Return
and services

New Tax

Reorientation of
Enhancing
audit methodology
knowledge base
and procedures
 Overlapping Scope of
Different
jurisdiction of divergent
approaches
Centre and States interpretations

Dual Control

Co-ordinate audit
Relook at
Restructure reve of state and
nue audit Report Structure
central tax
 Validations and
Primary Data integrity
IGST Calculation
source of data and security
on GSTN portal

Key role of GSTN

Periodic and need

Access to data Ensuring Accounta based IT Audit of
bility of GSTN GSTN
 Online verification
Single interface Shared IT
and matching of
for all tax payers platform
invoices

IT Intensive

Capacity building Digital auditing and

Technology as a
& IT use of data
means to an end
infrastructure analytics
 Underlying
records – basis Transition period
for assessment

Beyond departmental records

Access to Making Assessing Nodal officers

records of officers responsible to for transition
assessees provide records period
Run up to GST
What we have done so far
 Run Up to GST
Preparedness at the top

• Discussions by Senior Management

• Steering committee on GST Audit

• Advance inputs on Accounting procedure

• Focus on GST in Accountants General

conference 2016 and Symposium
 Run Up to GST
Interaction with Revenue Department :
•Correspondence and meetings with DoR regarding
• CAG's access to GSTN IT application and data
• Mechanism to ensure CAG audit of GSTN
 Run Up to GST
Interaction with GSTN:
•Presentation by GSTN to senior officers
•CAG’s power to appoint statutory auditor as well as conduct
supplementary audit of accounts of GSTN communicated to
GSTN
•GSTN requested CAG to conduct IT audit of their
application
 Run Up to GST
Engagement of field offices:
•Subcommittee to assist steering committee
• Maharashtra, Gujarat, Tamilnadu, Delhi and Haryana
•Interaction with State Tax Departments
•Feasibilityof providing audited revenue figures for base
year (2015-16)as required by GST Compensation Bill
• excluding petroleum, alcohol etc.
•Efforts to minimise legacy issues in 2017-18
 Run Up to GST
Capacity building:
•Training on basic concepts of GST in our Training Institutes
and In house workshops
•Graded GST training
• Level 1: Basics of GST
• Level 2: Auditing in IT environment
• Level 3: GST Law and Rules and Centre /
State specific training on IT platform
 Run Up to GST
Capacity building (Cont…):

•Target to train entire staff dealing with indirect tax audit in

GST by end of 2017-18

•Liaison with NACEN and GSTN

•48 hour Data Hackathon held by CRA wing at Bangalore

• Hands on experience on data analytic tools to officials

trained in data analytics
 Audit of GST – Strategy for 2018-19

• Full scale audit of GST can commence from

2019-20
– First annual return on GST due by 31 Dec 2018
• Audit plan 2018-19 to cover
– Pre-GST Indirect Taxes
– GST (Registration, Transitional provisions and
systems in place)
– Indirect taxes not subsumed into GST

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Thank You
Reorientation of audit methodology and
procedures
• Digital auditing based on desk reviews and data analytics
• Combined audit of Central and State GST by one office
on Pilot basis in 2017-18
• as recommended by AsG conference
• Centre for Excellence in Revenue Audit
• Nodal agency for conducting research and data
analysis for Revenue Audit
• Hosting of centralized data bank
• End-to-end IT solution for audit of both central and State
GST from first day of GST audit
 Audit Structure
• Options in the GST regime: -
– 1 To continue with the present set up
– 2 To have GST Audit in CRA wing
– 3 To have GST audit with state AsG
• AsG Conference Recommendation
– Status quo initially
– Pilot audit – entire GST audit by PDA(C) in one
state

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 Audit Structure
• Need to experiment with more than one
organizational model to help us to examine
– Best fit among the three options
– Implications of two models of IT applications for
statutory functions of Tax departments
• Model I (own IT application) – 9 states and CBEC
• Model II (IT application developed by GSTN)
• Time line
– Pilot audit during Jan 2018 to Mar 2018
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 Audit Structure
• Two locations for pilot
– Kolkatta
• Entire audit by PDA(C)
• Covering West Bengal (Model 2) and Meghalaya or
Sikkim (Model 1)
• Respective AsG to facilitate audit in their jurisdiction.
– Chandigarh
• Haryana (Model 1) and Punjab (Model 2)
• Entire audit by AG in one state and status quo in
another state
• UT of Chandigarh : Audit by PDA(C), Chandigarh
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 Single Report on GST
• Current Report Structure:
• Separate reports placed in Parliament and State
Legislatures as per Tax laws administered.
• One single report ideal:
• Uniform tax structure and the underlying principle
of one country, one market and one tax.
• CAG’s observation on any GST return, whether
administered by Centre or States, will impact
Consolidated Fund of India.
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 Single Report on GST
One single report ideal (Cont…)
•Need for uniform view by CAG in interpretation of law
or observations on processes and procedures across
States and Centre.
•Observations on GSTN’s role and its IT systems are
relevant for Centre and all the States.
•A single CAG report on GST can be a useful aid for GST
Council which is the apex decision making body with
representatives of both the Centre and the States.

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 Single Report on GST
Structure of Report
–All observations on GST to be included in one Report giving an
overview of the results of audit of GST in terms of revenue impact,
policy issues and systemic lapses.
–The detailed audit observations relating to tax administration by
CBEC and each state can be included either as chapters / sections /
volumes in the same single report.
–Observations on IT application of GSTN, role of GSTN in tax
administration, its compliance with applicable rules / regulations
and accounts of GSTN to be part of the Overview as a distinct
section as it impacts Centre and well as States.

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 Single Report on GST
• Process of laying of report
– The Report is to be tabled first in Parliament
– Report to be then laid in respective state legislature in the
ensuing session of that state legislature.
– The Central / State Public Accounts Committee (PAC) can
discuss observations relating to tax departments in their
jurisdiction.

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