CAG Report Identifies GSTN Validation and Works Contract Tax Gaps

The Comptroller and Auditor General (CAG) issued Report No. 20 of 2026 flagging significant deficiencies in GST administration and compliance. The report identifies GSTN validation gaps, IGST settlement issues, and compliance deficiencies specifically in works contract and construction services taxation under GST. These findings highlight systemic weaknesses in the GSTN (Goods and Services Tax Network) infrastructure and its processing of integrated GST settlements, particularly affecting the works contract segment. The CAG's scrutiny of works contract tax administration points to potential revenue leakage and administrative controls that require strengthening. Construction services and works contract providers should review their GST compliance posture and documentation, as the CAG's audit findings may inform future department enforcement actions and compliance audits. This audit signals regulatory focus on validation processes and settlement accuracy within the GST system.