You are using an older browser version. Please use a supported version for the best MSN experience.

GST evasion: Govt to create database of "risky" companies

Business Today logo Business Today 27-10-2020 BusinessToday.In
GST evasion: Govt to create database of "risky" companies © India Today Group GST evasion: Govt to create database of "risky" companies

The government is now planning to use artificial intelligence (AI) and Aadhaar registration to prepare a list of dubious companies to check Goods and Services Tax (GST) evasion. Such firms will be categorised as "risky" to keep a tab on their activities, according to finance ministry officials.

Recently, the customs department busted an illegal input tax credit (ITC) racket and nabbed several firms with the help of a database of "risky" exporters. The government is planning to implement the same mechanism to track the fake firms claiming GST refunds without actually conducting business, Hindustan Times d financial ministry officials as saying.

"It is surprising that many fake firms and shell companies have been created that generate fake invoices to claim GST refunds. It has become an independent business, which needs to be dealt with an iron hand. Recently we caught the owner of one such fake firm in Pune that made over Rs 50 crore illegally," one of the officials said.

The central government's finances, which continue to look bleak due to abysmally low corporate tax and Central GST collections, have been impacted by tax evasion. According to a Fifteenth Finance Commission (FFC) report, the government may lose Rs 5 lakh crore in indirect tax revenue a year, amounting to 40 per cent of its GST collection target, due to defaults and tax evasion. The tax authorities have detected evasion of Rs 70,206 crore between July 2017, when the GST regime was rolled out, and January 2020. However, the tax department has managed to recover nearly half of this amount (Rs 34,591 crore).

During the first five months of the current financial year (April-August 2020), fiscal deficit stood at Rs 8.7 lakh crore, 109 per cent of the government's budget estimate of Rs 7.96 lakh crore. Gross tax collection in the said period was Rs 5.04 lakh crore, just 76 per cent of Rs 6.6 lakh crore in the corresponding period last year.

Also Read: GST revenue collection rises 4% to Rs 95,480 crore in September

Also Read: Gross tax collections shrink 24% in April-August

More from Business Today

image beaconimage beaconimage beacon