An automated system of identifying risky entities through risk-based profiling of taxpayers under Goods and Services Tax (GST) regime and changes, if required, in law to include penal provisions for failure to undertake the desired KYC compliance or verification by such entities are being considered by the government. The GST Council has formed a 10-member ‘Committee of Officers on Risk-Based Management of Taxpayers under GST regime’, which will submit its report within a month.
The officers’ committee will study, examine and suggest the modalities for assessing financial credibility of a taxpayer vis-à-vis his/her GST profile and may also suggest various threshold limits for such taxpayers. Also, the officers’ committee will suggest reasonable restrictions/ interventions to be imposed on taxpayers based on risk parameters to regulate issue of invoices, utilisation of input tax credit, passing of input tax credit, refunds etc.
“…the Committee of Officers on risk-based management of taxpayers under GST regime shall study, examine and suggest measures for implementation of suggested risk-based management on immediate basis and any other measures, mechanism and machinery to check and curb multiple types of frauds,” the office memorandum dated July 15 stated. Modalities of KYC verification of a taxpayer through various agencies, parameters for risk-based profiling of a taxpayer so as to identify ‘risky’ entity in an automated manner will be suggested by the officers committee.
Gujarat’s Chief Commissioner of State Tax P D Vaghela, Central Board of Indirect Taxes and Customs (CBIC) Principal Commissioner, GST Policy Wing Upender Gupta have been named the co-conveners of the 10-member officers committee. Other members include officials from Directorate General of Analytics and Risk Management (DG ARM), DG System and Data Management and GST Network (GSTN).
GST collections had fallen short of the Budget target by Rs 1.6 lakh crore and by around Rs 62,000 crore from the revised estimates in the previous financial year, prompting the government to look at various data-analytics based anti-evasion measures to shore up revenues. In his post-Budget interview with The Indian Express earlier this month, Revenue Secretary Ajay Bhushan Pandey had said that with the Indian economy expected to grow only marginally higher this fiscal, the government will explore anti-evasion measures to increase the efficiency of revenue collections.
“We have estimated 11 per cent as nominal (GDP) growth, and we are saying 14 per cent (growth target for GST revenue). This difference between 11 and 14 per cent will come from increasing our efficiency of collection and that includes taking anti-evasion measures,” Pandey said.
Apart from economic slowdown creating a dent on the growth of GST collections, the government is also grappling with revenue leaks due to multiple fraud cases under the indirect tax regime. A total of 9,385 cases of tax fraud involving amount of Rs 45,682.83 crore has been detected by the tax authorities under the GST regime since its rollout from July 1,2017, government data showed. Out of this, 1,593 tax fraud cases involving an amount of Rs 6,520.40 crore have been detected in April-June, the first three months of this financial year.
Tax fraud worth Rs 37,946.41 crore was detected in 7,368 cases in 2018-19. Also, in 2018-19, Rs 11,251 crore worth of cases of tax credit availment by issue of fake invoices were detected by the tax authorities and Rs 2,805 crore in April-June of the current fiscal.
In 2018-19, 1,620 cases of fake invoicing were detected involving Rs 11,251.23 crore, and 154 persons were arrested. Between April-June of 2019-20, 666 cases of fake invoicing were detected and the amount involved stood at Rs 2,804.98 crore. A total of 41 persons were arrested.