On July 1, 2017, a nationwide Goods and Services Tax (GST) was introduced, consolidating 17 local levies such as excise, service tax, and VAT, as well as 13 cesses.
To expand the taxpayer base and ensure entities are fulfilling their GST obligations, the GST department has announced plans to examine the income tax returns (ITRs) filed by businesses and professionals, as well as Ministry of Corporate Affairs (MCA) filings. This analysis will help determine if these entities are appropriately discharging their GST liability.
As of now, there are approximately 1.38 crore registered businesses and professionals under the Goods and Services Tax (GST), which was implemented on July 1, 2017. The GST mandates that businesses operating in the manufacturing and services sectors, with an annual turnover exceeding Rs 40 lakh and Rs 20 lakh, respectively, must register themselves under the GST regime and file their tax returns accordingly.
An official stated that they will be utilizing data triangulation from the information at hand with the I-T department. The purpose of this analysis is to identify any entities that are required to pay taxes under GST but are not currently doing so. In the event that such entities are identified, the official mentioned that they will initiate a cordial inquiry as a first step.
The primary objective of the data analysis will be to pinpoint those entities that do not fall under the exempt category and are mandated to register under the GST and file returns periodically, either on a monthly or quarterly basis. Once these non-compliant entities are identified, the GST department will initiate communication at their registered place of business to inquire about the reasons behind their failure to adhere to the GST law.
According to the official, the data analysis team will not only be focusing on the information available with the I-T department, but also sifting through the quarterly and annual data submitted by businesses to the Ministry of Corporate Affairs. The purpose of this exercise is to detect any instances of GST evasion and take necessary action.
The initial stage would involve aligning the I-T department and GST records, which will be succeeded by the comparison of MCA filings.
According to a government official, there are plans to begin matching Income Tax data in the near future. This move is aimed at improving data accuracy and ensuring that information is consistent and up-to-date. This initiative is part of ongoing efforts to enhance data management practices and ensure that the government has access to the most reliable and comprehensive data possible. With this step, the government aims to better serve its citizens and make informed decisions that positively impact the nation.
GST exemption applies to various service sectors such as educational institutions that are recognized, agriculturists, companies involved in the transmission or distribution of electricity, and clinics offering medical services.
The Finance Ministry has revealed to Parliament that there has been a rise in the number of Goods and Services Tax (GST) evasion cases detected this fiscal year, with a total of 13,492 cases identified as of February. This marks an increase from the previous fiscal year’s 12,574 cases and the 12,596 cases discovered in 2020-21.
Between July 2017 and February 2023, GST authorities have detected almost Rs 3.08 lakh crore worth of tax evasion, of which they have successfully recovered over Rs 1.03 lakh crore. Additionally, over the past five and a half years, a total of 1,402 individuals have been apprehended by GST authorities for their involvement in tax evasion.
In its efforts to curb tax evasion, the tax department has been leveraging advanced data analytics and artificial intelligence tools to identify and monitor high-risk taxpayers, as well as to detect instances of tax evasion. To further enhance its effectiveness, the department has also been sharing data with partner law enforcement agencies to enable more targeted interventions. Additionally, new GST registrations now require mandatory Aadhaar-based authentication, and registered persons who fail to file their returns on time may face centralised suspension of their registrations.
Thanks to the implementation of anti-evasion measures and efforts to boost compliance, there has been a consistent monthly collection of GST revenues surpassing Rs 1.4 lakh crore for a full year. In the month of February alone, GST revenues exceeded Rs 1.49 lakh crore, indicating a strong performance for the tax regime.
The GST, a nationwide tax system that replaced 17 different local levies such as excise, service tax, and VAT, along with 13 cesses, was introduced on July 1, 2017.
According to Rajat Mohan, Senior Partner at AMRG & Associates, linking GST numbers with income tax and corporate law filings can greatly increase the amount of data available for big data analytics. By doing so, the identification of instances of tax underpayment can be expedited, resulting in faster and more efficient tax compliance measures.
Mohan commented that various government agencies are working diligently to integrate multiple data sources in order to improve compliance across all platforms.