Armed with information analytics and details from agencies, the government has launched a huge crackdown on GST evaders, initiating action against 7,000 entities such as arrest of 187 — a campaign that contributed to buoyancy in tax collection, Finance Secretary Ajay Bhushan Pandey stated on Sunday.
The government netted a record GST collection of Rs 1.15 lakh crore in December 2020, helped by the action against tax evaders alongside choose up in the economy.
In an interview to PTI, Pandey stated action against fake invoicing racket in final one particular- and-a-half months has led to arrest of 187, such as 5 chartered accountants and one particular firm secretary.
“Many of them including some managing directors are in jail for last 40-50 days. Thrre are few large companies which too are found involved in taking fake bills through multiple layers, thereby evading GST and income tax. So they have also been booked,” he stated.
The action against these who attempt to misuse the method, he stated, has been primarily based on collating details from several agencies such as Income Tax Department, Customs unit, FIU and GST division and banks.
“We have taken action against 7,000 evaders out of a tax base of 1.20 crore. Hence our success rate is very very high,” stated Pandey, who is also the Revenue Secretary. He stated the Income Tax Department straight away follows up on all the circumstances booked beneath GST fake invoice for the reason that the tax implication is larger.
“Because of the data available, it is very very difficult to escape because sooner or later they will get caught,” he stated.
The secretary stated from April 1, e-invoice would be produced mandatory for all B2B transactions by corporations with turnover of more than Rs 5 crore. Electronic invoice was produced mandatory for B2B transactions by corporations with turnover more than Rs 500 crore from October 1,2020, and for more than Rs one hundred crore turnover from January 1.
Pandey stated the provision restricting usage of input tax credit (ITC) is an anti-abuse provision and targets shell businesses.
“We have found many shell companies which are issuing invoices worth crores of rupees and not paying income tax and paying the entire liability through ITC. So in order to ensure that these companies are not able to abuse the system, this particular anti-abuse provision has been put in and this will impact less than 45,000 units in the entire tax base of 1.2 crore,” he stated.
After unearthing a rampant fake invoicing scam to evade goods and services tax (GST), the Central Board of Indirect Taxes and Customs (CBIC) amended guidelines producing it mandatory for corporations with month-to-month turnover of more than Rs 50 lakh to spend at least 1 per cent of their GST liability in money from January 1. The new rule restricts use of input tax credit (ITC) for discharging GST liability to 99 per cent. GST collections surged to an all-time higher of more than Rs 1.15 lakh crore in December as financial activities picked up soon after lifting of stringent lockdown restrictions.
GST, which is levied when a consumable item is sold or a service is rendered, in December was 12 per cent larger than such receipts in the similar month of 2019.
Pandey stated December has noticed record collection due to the fact GST implementation, which can be attributed to two aspects. “The trend suggests that the economy is picking up and we are seeing faster pace of recovery”.
“Also the measures like e-invoice, pre-population of information on supplier wise input tax credit, which deter those who are trying to claim excess ITC, are helping compliance. By targeted action against tax evaders by way of full data analytics, it is possible to pinpoint the entity which issued fake bill and also the ultimate beneficiary,” he added.