CAG Audit Report points out Huge GST Revenue Leaks in FY 2021-2022: Key Highlights

The Comptroller and Auditor General ( CAG ) of India has released the Indirect Taxes – Goods and Services Tax Audit report for FY 2021-22, revealing many key details about the revenue collection situation in the Indian Indirect Tax - GST regime.

Focus on Revenue Loss

The Audit Report No 7 of 2024 highlights significant revenue shortfalls under the Goods and Services Tax ( GST ) regime, primarily due to gaps in compliance, inaccurate projections, and systemic inefficiencies.

The Central GST ( CGST ) revenue consistently failed to meet the budget targets in the early years:

2018-19: 22% shortfall

2019-20: 10% shortfall

2020-21: 21% shortfall

However, in 2021-22, the actual GST collections exceeded the budget estimates by 11%, reflecting a recovery attributed to economic rebound and enhanced compliance​.

Retention of IGST Balances

A significant portion of Integrated GST ( IGST ) balances has been retained in the Consolidated Fund of India, reducing timely apportionment to states:

2018-19: ₹13,944 crore

2019-20: ₹9,125 crore

2020-21: ₹7,251 crore

2021-22: ₹2,119 crore​

This delayed distribution affects states’ ability to manage revenue deficits amidst non-compliance and revenue leakages.

Compliance Inconsistencies

Systemic issues with GST return scrutiny and compliance monitoring were highlighted:

Of 8,220 inconsistencies reviewed, 15% were clear compliance deficiencies, with revenue implications of ₹2,203.57 crore.

Key issues included:

Non-payment of interest

Incorrect Input Tax Credit ( ITC )

Undervaluation of supplies

Short payment of tax under Reverse Charge Mechanism ( RCM )​

Impact of Non-submission of Compensation Fund Accounts

The GST Compensation Fund accounts for FY 2017-18 to FY 2020-21 remain unaudited, hindering transparency and timely state compensation. The statutory role of the audit could not be completed due to the absence of these records​.

Revenue Trends and Growth

While GST revenue grew 27.3% in FY22 over FY21, achieving ₹7,02,105 crore, it remained lower than pre-pandemic years relative to GDP​.

Efforts such as rate rationalization and enhanced anti-evasion measures contributed to this recovery.

To Read the full text of the Order CLICK HERE

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