Internal mismatches are the major reason behind GST notices: Clear Tax

Most of the notices served by tax authorities to enterprises for conflicts in Goods and Services Tax (GST) payment were due to internal system mismatches rather than the complex rate structure, according to a report by Clear Tax.

“80% of enterprises in our study received at least one notice in FY 2025 that was caused by a mismatch between their own GSTR-1 and 3B filing. Not by any external factor,” Clear Tax said in its State of Tax Assurance Report 2026. GSTR-1 is the sales report and GSTR 3B are the tax payment documents. The two are based on different datbases but are not connecting with each other creating a mismatch and thus triggering a notice, the report read. “The same invoices, the same transactions, processed through systems that don’t talk to each other, producing two different numbers, and triggering an automatic mismatch notice from the GSTN.”

Eight of the ten notices received were system triggered and most of them , around 35%, were because of an Input Tax Credit (ITC) filing mismatch which is preventable, Clear Tax said. GST tax collections increased 9.4% to ₹22.8 lakh crore. in fiscal 2025. However the number of tax notices also increased 33.3% to 200000 notices in fiscal 2025.

“The enterprises receiving the most notices are not the non-compliant ones. They are the ones whose compliance processes have not kept pace with the system’s ability to detect gaps. The threshold for triggering a scrutiny notice is increasingly low, and the response window is getting shorter,” the report read. 

The study surveyed over hundred chief financial officers of firms with revenues exceeding ₹500 crore , email surveys, meetings with management in addition to analysis of tax transaction filings.The survey covered firms in five industries: manufacturing, Retail, logistics, E-commerce, FMCG .