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UPI-GST Mismatch Notices: A Serious Alert for Businesses 1. A New GST Monitoring Trend Emerging Across the State In recent months, GST departments have begun comparing UPI and Digital Payment Data with the turnover reported in GST returns. When automated systems detect a mismatch, DRC-01 notices a
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GST departments are comparing UPI and digital payment data with reported GST returns. When automated systems detect a mismatch, they issue notices, often assuming UPI settlement amounts represent taxable turnover, which is incorrect.
UPI settlement amounts include refunds, failed transactions, non-business receipts, personal transfers, and other entries that do not constitute sales or taxable supplies. Therefore, they cannot be directly equated with taxable turnover.
Under GST law, the primary evidence for determining turnover consists of your books of accounts, sales registers, invoices, and GST returns. Payment data is considered supplementary.
No, Section 74, which deals with fraud or intent to evade tax, cannot be legally used for simple numerical mismatches. Doing so is unsustainable and can lead to excessive penalties.
Businesses should break down non-sales entries in UPI settlements, compile separate statements for refunds, failed transactions, and transfers, and prepare a detailed reconciliation comparing UPI settlements with sales, refunds, and other relevant reports.
Maintain daily UPI settlement reports, keep refund and failed transaction statements separate, reconcile sales registers with UPI ledgers monthly, ensure consistency between GSTR-1 and GSTR-3B, and carry out year-end UPI-GST reconciliation. Do not panic; these notices are defendable with proper documentation.
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