GST evasion: DGGI shoots over 1,000 tax notices ahead of 5 August deadline

livemint.com:

₹5 trillion has been detected, and of this, ₹1.2 trillion has been paid voluntarily by the assesses," the first person said. A large chunk of the total tax evasion detected—about ₹1 trillion—accounts for using fake input tax credits, said the person. The value of the taxable sales in these cases would be significantly higher than ₹5 trillion as GST is levied only as a percentage of the sale value.

The Central Board of Indirect Taxes and Customs (CBIC), earlier this week, said it would launch a second drive against fake GST registrations to weed out entities dealing in bogus tax credits. Tax evasion is suspected in the supply of both goods and services. “The services sector, by nature, is prone to tax evasion as end consumers, in many cases, do not insist on an invoice.

In the case of goods, iron and steel, cigarette, cement and metal scrap related businesses are prone to tax evasion," said the person. Airlines, shipping companies, asset management companies and insurers had previously come under the probe agency's scrutiny. An email sent to the DGGI on Tuesday seeking comments for the story remained unanswered at the time of publishing.

The spurt in investigations and enquiries has led to businesses having to extract data from their systems for past periods, prepare extensive reconciliations and re-evaluate earlier positions, said M.S. Mani, partner at Deloitte India. “All of these activities, in addition to being extremely time intensive, are also quite complex considering the various changes in the GST legislation, especially during the first two years of GST and the paucity of precedents and case laws even after seven years of GST," said Mani.