Arjuna (Fictional Character): Krishna, everyone around the nation enjoyed a lot on the day of Makar Sankranti, flying high their kites and cutting the ones of their friends and others. From children to elderly, everyone was seen having fun flying their Kites. Krishna, how high do you think the Taxpayers' Kite will fly this year?
Krishna (Fictional Character): Arjuna, indeed excitement was seen in everyone's eyes on Makar Sankranti. People wait a whole year to enjoy this beautiful event with their friends and families. Also, you rightly said about the taxpayer's wish to fly high their kites but the flight of Taxpayers' kite is actually controlled by the department by taking hold of the 'Chakri'. With the use of technology, the department have obtained a firm grip on the ‘Chakri' and also the Taxpayers' kite.
Arjuna (Fictional Character): Krishna, how has the GST department controlled the flight of GST kites flown by taxpayers?
Krishna (Fictional Character): Arjuna, the GST department by use of technology has brought in various measures to control the flight of GST kites.
Few measures adopted by the department to control the Taxpayers' GST Kites are as below:
- GSTR 2B: GST rule 36(4) has undergone changes on 29th Dec 2021 to limit the claim of ITC by the taxpayers. Accordingly, the rule w.e.f. 01st Jan 2022 has restricted the claim of ITC by the taxpayers to the amount reflected in their GSTR 2B for the month. In other words, GST Officials have limited flight of ITC kites to the amount reflected in GSTR 2B.
- E-Invoicing: E-Invoicing refers to issue of invoices in electronic mode by the registered person. E-invoicing enables the GST Department to keep a record of the transaction entered into by the taxpayers. Presently the threshold limit of turnover for applicability of E-Invoicing is Rs.10 Crore.
- GST Department Audits and Scrutiny: The GST Department are now sending department audit and scrutiny notices to the taxpayers on a regular basis for verification of their records and intimation of discrepancies in tax and ITC. Thus the taxpayers are reminded on a timely basis that a watch has been kept on them by the department.
Arjuna (Fictional Character): Krishna, how has the Income Tax Department kept check on the Taxpayers' Income Tax Kites?
Krishna (Fictional Character): Arjuna, just like the GST department the Income Tax Department too have made proper use of technology and have brought in various tools for keeping check on the flight of Income Tax Kites.
Some measures adopted by the Income Tax Department are as follows:
- AIS/TIS reports: From the FY 2020-21 the Income Tax Department have introduced new reports for keeping track of the taxpayer's income and significant transactions through the financial year. Annual Information Statement commonly known as AIS reflects TDS/TCS, Significant Financial Transaction(SFT), Advance Tax Payment details of the Taxpayer. Taxpayer Information Summary or TIS is a summary of AIS.
- Faceless Assessment: The Income Tax Department have started to conduct faceless assessment of the assessee which have resulted in fast paced resolution of proceedings. Further, the return of taxpayer belonging to one city can now being scrutinized anonymously by AO's based in other city resulting in the abolition of territorial jurisdiction.
Arjuna (Fictional Character): Krishna, what should one learn from this?
Krishna (Fictional Character): Arjuna, the department now has become very vigilant and the use of technology has additionally strengthened the department's drive to bring financial discipline in the country. Flying kite too high brings with itself the risk of being cut and falling on the ground. The taxpayers shall make sure that they abide by all the rules and regulation prescribed by the department to avoid actions against them. Just like a strong kite withholds the pressure of strong winds and tough competiton by others, proper compliances and maintenance of proper records allows a taxpayer to conduct his business without any hindrance and difficulty.