The measure will provide information about manufacturers in a way similar to the e-way bill system
Tax officials are working on a proposal to link electricity connection of some manufacturers with GST identification numbers (GSTIN) to keep a tab on power consumption. This will act as an anti-evasion measure to dissuade taxpayers from underreporting sales.
Although the measure was to be implemented after the original return-filing system stabilised, but due to cumbersome design and technical glitches, the triplicate return format was suspended last year. Taxpayers have since been filing the summary return GSTR-3B and the GSTR-1, which contain outward sales details.
“The idea is to send a signal that tax authorities also have information about power consumption – one of the critical inputs in manufacturing. The IT system of GST Network (GSTN) would be able to identify a factory or a plant whose turnover is not in sync with electricity consumption,” a tax official privy to the discussion said.
The official added that the measure would provide information about manufacturers in a way similar to the e-way bill system. Under the e-way bill system, any movement of goods over Rs 50,000 is required to be reported. This allows the GSTN to link supplies made to taxpayers with sales declared in returns, thereby detecting any anomaly.
However, the proposal is currently on hold as the department is focused on rolling out the new simplified return-filing system. It is expected to be functional early next year.
According to the discussions held on the subject, the linking of electricity connection with GSTIN would be restricted to a very small number (500-1,000) of manufacturers, as the department intends to use it as more of a deterrent than a blanket regulation for lakhs of manufacturing units.
“The department may select a few taxpayers with turnover in the range of Rs 10-100 crore, and ask state-owned power distribution companies (discoms) providing power to these units to share their power consumption pattern,” another tax official said. He added that the knowledge that the tax department could do this should drive the message to assessees that underreporting of sales is fraught with risks.