Tax evasion of Rs 40,000 crore reported in over a year

GST tax evasion of Rs 40,000 crore has been recorded in over a year by tax officials, The Economic Times reported.

This has largely been attributed to false invoices or fraud input tax credit claims.

The Centre is set to launch a slew of measures on January 1, 2022, hoping to 'plug these loopholes' and counter tax fraud.

'Adequate care was being taken to ensure these did not compromise with the government's ease of doing business initiative', a government official told the publication.

An All-India Enforcement Drive was launched on November 9 by the Central Board of Indirect Taxes and Customs, through the Directorate General of GST Intelligence and many Central GST formations.

The government official said that more than 5,700 cases, involving an amount of about Rs 40,000 crore, had been spotted.

Apart from countering fraud, the new measures seek to 'impart better payment discipline' as well as safeguard the recipient as they may not always be able to determine if their supplier has paid the taxes

"These amendments will not, in any way, impact ease of doing business which is achieved in GST through a liberal registration, refund regime and self-compliance mechanism based on self-assessment and self-policing, with little or no manual checks," the official said.

Pratik Jain, partner at Price Waterhouse & Co, told The Economic Times, "Most of these changes are aimed at plugging the misuse of input credit and are in the right direction".

Several big companies already have in place a system of claiming only matched credit, he said, adding that others would now need to follow suit.

However, Jain said that if volumes of transactions are large it would require the use of robust technology - something that is not available at the moment.

There is no way for a buyer to tell if the seller has paid the tax, he said.

In order to combat tax loopholes, the Centre has taken the GST Council's recommendations and made some amendments to the CGST Act 2017, through the Finance Act, 2021. These take effect on January 1, 2022.

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