The Central Board of Indirect Taxes and Customs (CBIC) is examining a proposal to introduce a centralised GST audit and investigation mechanism for businesses operating across multiple states under the same Permanent Account Number (PAN). The proposed framework is intended to reduce duplication in audits and investigations, improve consistency in tax administration and ease compliance for multi-state businesses.
A working group has been constituted to examine the proposed scheme, which could be introduced within the next six months. The group is expected to submit its report this month.
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Unified Authority Proposed for Multi-State GST Audits
Under the proposed mechanism, businesses with GST registrations in different states under a common PAN could come under the oversight of a unified Central GST authority for audit and investigation-related matters.
The proposal, however, is not expected to change the existing GST registration system. Each state GST registration would continue to remain legally distinct, while taxpayers would still be required to undertake state-wise GST return filing and other routine compliance requirements.
The proposed change would primarily affect the way audits and investigations involving businesses operating across several states are conducted.
Plan Aims to Cut Repeated Queries and Compliance Burden
Under the present system, a business following an identical tax position across multiple states may be required to respond separately to similar queries raised by different GST authorities. Those authorities could also potentially take different positions on the same issue.
A centralised review could instead allow businesses to make one set of submissions, facilitate a common examination of facts and create greater consistency in interpreting tax positions.
Tax experts believe such centralisation could substantially reduce the administrative burden on large multi-state businesses. The proposed system may also lower compliance costs by reducing repeated interactions with multiple GST authorities.
Greater consistency could also provide taxpayers with more certainty while adopting tax positions and making business decisions.
State-Wise GST Registration System to Continue
While the proposal seeks greater uniformity in audits and investigations, it would retain the existing state-wise GST registration and revenue-allocation structure under GST law.
Businesses would therefore continue to comply with their routine state-level obligations even if audit and investigation functions are brought under a more centralised framework.
If implemented, the proposal could mark a shift towards greater uniformity in GST administration for businesses with operations spread across multiple states, while leaving the fundamental state-wise registration structure unchanged.
