The government has detected Rs 20,000 crore worth evasion under the goods and services tax (GST) regime so far in this financial year and will take more steps to check frauds and increase compliance in the coming days, Central Board of Indirect Taxes and Customs (CBIC) Member John Joseph said Wednesday.
Of the GST evasion detected worth Rs 20,000 crore between April-February 2018-19, Rs 10,000 crore has been recovered so far.
The government will take more measures to increase compliance and act against evaders so that genuine businesses do not suffer, he said.
Joseph said the tax officers on Tuesday detected fake invoices worth Rs 1,500 crore which was used to claim illegal GST credit of Rs 75 crore. “We have already recovered Rs 25 crore and the rest is on the way,” Joseph said.
Stating that only 5-10 per cent of the businesses are “black sheep” and bring bad name to the industry, he said the government will take more measures to increase compliance and plug leakage of GST revenue.
Instances of fraudulent input tax credit (ITC) claims, with many of such claims made in the summary returns GSTR-3B, have been detected and investigations into these cases are going on. The evasion cases include cases where fake invoice bills have been used to claim ITC and cases where businesses deducted tax from consumers but failed to deposit the same with the government.
On the latest decision to cut rates for residential housing, Joseph said the department would soon call a meeting of the representatives of the real estate sector to understand transition issues faced by the sector post-reduction in GST rates.
The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, earlier this week decided to cut tax rates on under-construction apartments and affordable housing to five per cent and one per cent, respectively, along with withdrawal of input tax credit. The earlier GST rate on under-construction apartments and affordable housing was 12 per cent and eight per cent with input tax credit (ITC), respectively.
On demand for giving ITC relief to the builders of the under-construction flats which are already built but not yet sold to buyers, Joseph said the real estate sector will have to raise the issue with the urban development ministry. “You need to talk to them (urban development ministry). As revenue department we cannot give you any benefit of subsidy to that extent,” he said at an Assocham event here.
Joseph said the government has been dynamic in rationalising tax rates since GST rollout on July 1, 2017, while increasing compliance for 1.2 crore registered businesses. “In future, as GST moves forward, the rates need to consolidate. Across the world it is one rate, but it may not be possible for us to implement it here… because we have the poorest of the poor and the richest of the rich in the country. “What is good for the richest, cannot be the best for the poor… But five rates converging into two or three, depending on what the Council decides. This is the way forward,” he said.
The GST regime at present has five broad categories of tax rates: zero, 5, 12,18 and 28 per cent, in addition to rates for gold, rough diamonds and various cesses over and above the peak slab of 28 per cent for sin and luxury goods.