CBIC detects bogus tax credit claims worth Rs 38,000 cr since last November
The Central Board of Indirect Taxes and Customs (CBIC) has since last November detected Rs 38,000 crore of bogus claims from businesses for input tax credit in a technology and data analytics enabled drive against tax evasion, said a person familiar with the development.
The result of the CBIC’s year-long compliance drive points to the potential goods and services tax (GST) has in widening the tax base buoyancy, one of the key goals of the 2017 indirect tax reforms.
Several factors had in the past affected tax revenue collections. These include successive rounds of tax rate cuts, the less stringent compliance enforcement in the transition period after GST was rolled out, and the gradual loss of economic growth momentum from the 8.2% seen in the fourth quarter of FY18.
The year-long compliance drive along with several policy steps, including e-invoicing and a sharp reduction in availability of tax credits where reporting requirements are not met, has helped boost GST revenue collections.
GST officials at the central and state level are using data from multiple agencies, including data on truck movement collected at toll plazas, to verify claims for tax credits.
The compliance enforcement drive has helped detect instances of invoices being used to report purchases without the goods or services actually being supplied, as well as cases of clandestine removal of supplies from factories, the person mentioned above said.
Central and state governments have assessed that the improvement in the collection of revenue seen in recent months is a result of better compliance and also the recovery in economic activity. The CBIC has already urged field officers to gently remind all taxpayers to file their returns and deposit the tax due in time. This would help improve November GST collections compared to the collections in October, which was already the second highest since GST rollout.
Going by e-way bill data available with GSTN, the company that processes GST returns, November GST receipt is on course to being a record high.To augment GST revenue receipts, central and state governments are now exploring better use of technology and a possible rationalization of GST slabs. A ministerial panel led by Maharashtra deputy chief minister Ajit Pawar is working on finding new ways of limiting revenue leakage because of tax evasion, while another panel led by Karnataka chief minister Basavaraj Bomai is exploring possible slab revisions. A member of the Bommai committee told Mint in an interview last week that the final view on tax slab changes has not been made and that an impact assessment was needed before finalizing the proposals.
