An analysis conducted by three states \u2014 West Bengal, Madhya Pradesh and Maharashtra \u2014 suggests that taxpayers may have under-reported value of goods entering these states by nearly Rs 2.6 lakh crore during July 2017 to March 2018. Government officials and tax experts, however, point out that a large part of this is likely to be the amount of tax evasion \u2014 in the pre-goods and services tax (GST) or VAT era \u2014 that has, in fact, been stopped by the implementation of GST. The analysis, discussed in the last GST Council meeting, was based on a comparison between declarations in the \u2018C\u2019 from in 2016-17 with those under Integrated GST (I-GST is applicable on interstate sales). With the C-form sales of goods between states much higher \u2014 Rs 2.6 lakh crore across these three states \u2014 compared to what was declared in July-March under I-GST, these three states argue the difference is likely to be the evasion that still takes place under the GST regime. Tax experts, however, argue that since VAT rates used to vary a lot across states, one way to bypass it was to disguise intrastate sales as interstate sales. While VAT rates could be as high as 12.5%, those against the \u2018C\u2019 form were as low as 2%. As Rajat Mohan, partner, AMRG & Associates, puts it, \u201cMany businesses based in Delhi would supply items to their branch in neighbouring states, say, Haryana or Rajasthan, and then sell these items to a Delhi-based buyer, making it an interstate sale.\u201d Under the VAT regime, stock transfers to a branch outside the state was not subject to either VAT or central sales tax. In which case, these experts argue, the C-form exaggerated genuine interstate sales. Under the GST regime, when taxes across all states are the same, there is no tax arbitrage to be made from recording transactions in this manner. \u201cIt is possible that such transactions have now stopped and this is reflecting in the lower value of goods entering states,\u201d a central tax official said. Indeed, in his report on GST in 2015, chief economic adviser Arvind Subramanian had also alluded to this possibility. Though he never referred to disguising of intrastate sales as interstate sales, Subramanian said at least half the interstate trade was accounted for by stock-transfers between branches of a company. With GST, such stock-transfers for purposes of saving on tax become redundant. There is, however, also no doubt that the e-way bill, introduced in April, will also boost GST compliance, though it is not certain by how much. MS Mani, partner at Deloitte India, said that the under-reporting could be for various reasons but said e-way bill was making a difference already. \u201cThe fact that GST collections were Rs 94,000 crore in April (month of e-way bill introduction) \u2014 which traditionally accounts for only 6-7% of the annual tax collections \u2014 is a pointer to the fact that GST collections are increasing due to reduction in the avenues for evasion,\u201d he said. Given that monthly GST collections averaged Rs 91,102 crore between July 2017 and April 2018, the April collections were 10.3% of the total.