GST evaders beware: Risky taxpayers to be profiled to pre-empt dodging

By: |
Updated: July 30, 2019 7:05:45 AM

In a bid to pre-empt tax evasion under the Goods and Services Tax (GST), the government is looking at options to deal with taxpayers based on their risk profile.

The government has been grappling with evasion through fake invoice since the GST was launched two years ago.

In a bid to pre-empt tax evasion under the Goods and Services Tax (GST), the government is looking at options to deal with taxpayers based on their risk profile. Assessees identified as ‘risky’ could face restrictions on issuing invoices, utilisation of input tax credit and sanctioning of refunds.

The government has been grappling with evasion through fake invoice since the GST was launched two years ago. The indirect tax department has detected such frauds worth over Rs 12,000 crore. A tax official said the rule of the thumb indicated that detected frauds were only about 10% in value of actual frauds being committed, which would take actual evasion to nearly Rs 1.2 lakh crore.

The GST Council, which is the apex decision-making body for the GST, has constituted a committee of officers (CoO) to suggest parameters for risk-based profiling so that a taxpayer could be categorised as risky in an automated manner. Further, the CoO will identify methods for assessing financial credibility of a taxpayer vis-a-vis its GST profile. The committee will submit a report to the GST Council on August 15.

According to the terms of reference (ToR) for the committee, it will also suggest changes in GST law and rules to enable profiling and regulating risky taxpayers, including invocation of penal provisions in case of failure to undertake desired know your customer (KYC) verification. Further, the panel is required to suggest “measures for implementation of suggested risk-based management on immediate basis and any other measures, mechanism and machinery to check and curb multiple type of frauds,” the ToR said.

The official quoted above said recovery of tax evasion after it has happened was onerous and doesn’t yield results as often fly-by-night operators are not found at their addresses. It was important, he added, that pre-emptive mechanisms were employed to detect the likely instance of frauds before they took place.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.