Section 61 – Scrutiny of Returns
Section 61 of CGST Act, 2017 – Scrutiny of Returns
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Objective and Importance of Section 61
Section 61 empowers the tax authorities to conduct scrutiny of returns furnished by registered persons to verify their correctness.
Scrutiny is a desk-based examination and acts as the first compliance check under the GST law.
2. Statutory Provision – Section 61
Section 61(1):
The proper officer may scrutinise the return
and related particulars furnished by the registered person
to verify the correctness of the return
and inform him of the discrepancies noticed,
if any, in such manner as may be prescribed,
and seek his explanation thereto.
Section 61(2):
In case the explanation is found acceptable,
the registered person shall be informed accordingly
and no further action shall be taken.
Section 61(3):
In case no satisfactory explanation is furnished
within the prescribed time
or where the registered person,
after accepting the discrepancies,
fails to take corrective action,
the proper officer may initiate appropriate action,
including:
- Audit under Section 65
- Special audit under Section 66
- Demand proceedings under Sections 73 or 74
3. Nature of Scrutiny under Section 61
Scrutiny under Section 61 is:
- Return-based
- Non-intrusive
- Conducted without visiting business premises
It is distinct from audit or inspection.
4. What is Scrutinised?
The proper officer may scrutinise:
- GSTR-1 vs GSTR-3B mismatch
- ITC claimed vs GSTR-2B
- Turnover mismatch with e-way bills
- Tax rate or classification errors
5. Communication of Discrepancies
Discrepancies noticed are communicated through:
- FORM GST ASMT-10
The registered person is required to:
- Furnish explanation, or
- Accept discrepancy and pay tax with interest
Relevant Rule:
6. Time Limit to Reply to Scrutiny Notice
The registered person must reply:
- Within 30 days from the date of service of notice
The officer may extend this time on request.
7. Outcomes of Scrutiny
Possible outcomes:
- Explanation accepted – Proceedings closed via FORM GST ASMT-12
- Explanation rejected – Further action initiated
8. Scrutiny vs Audit vs Inspection
- Scrutiny (Section 61): Desk-based return verification
- Audit (Section 65): Detailed examination of records
- Inspection (Section 67): Search and seizure action
Scrutiny is the least invasive.
9. Practical Compliance Strategy
- Timely reconciliation of returns
- Reply with documentary evidence
- Voluntary payment where mistake is admitted
- Avoid non-response to ASMT-10
A proper reply often closes the matter.
10. Related Provisions
- Section 59 – Self-assessment
- Section 65 – Audit
- Section 73 – Demand (non-fraud)
- Rule 99 – Scrutiny of returns
11. Professional Insight
Section 61 is an opportunity, not a threat. A timely, reasoned and documented reply at scrutiny stage can prevent audit, demand and litigation altogether.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Failure to respond to scrutiny notice may lead to serious proceedings under GST law.
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