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India Plans To Set Up Panel To Check GST Evasion, Frauds

The panel will suggest measures to check GST evasion and fraudulent refund claims.

The Revenue Secretary Ajay Bhushan Pandey in New Delhi. (Source: PIB)
The Revenue Secretary Ajay Bhushan Pandey in New Delhi. (Source: PIB)

The government will form a panel that will suggest measures to check evasion of goods and services tax and fraudulent refund claims.

The panel comprising officers will come up with a standard operating procedure within a week that will be implemented by January-end, according to an official.

The government, the official told BloombergQuint on the condition of anonymity, has also decided to link foreign exchange remittances with integrated GST refunds for risky exporters—or those claiming refund on bogus invoice—and new exporters to curb fraudulent IGST refunds.

The decision to set up the panel was taken at the second national GST conference of state and central tax officers in Delhi today, chaired by Revenue Secretary Ajay Bhushan Pandey, the Finance Ministry said in a statement. The conference focused on streamlining the indirect tax system and plugging revenue leakage.

The move comes in the backdrop of falling direct tax collections and GST revenue, with the Finance Ministry in December fixing its GST mop-up target at Rs 4.45 lakh crore for the last four months of the ongoing fiscal—Rs 1.1 lakh crore for three months and Rs 1.25 lakh crore in a single month. Faced with lower-than-projected revenue growth amid a weak economy, the government’s asking ministries to curtail spending in the final quarter of the current financial year.

The Central Board of Indirect Taxes and Customs has started using data analytics and recently cracked down on risky exporters. It had detected that some exporters who had claimed IGST refunds were untraceable.

At the meeting, the official cited earlier said, it was also decided that the investigation wing of Income Tax Department will investigate cases of fraud pertaining to:

  • Input tax credit.
  • Export or import fraud.
  • Refunds claimed by taxpayers to check direct tax related discrepancies.

Frequent data sharing also figures in the scheme of things, according to the official. The Central Board of Indirect Taxes and Customs and Central Board of Direct Taxes would share data with GST Network—the back-end system for the indirect tax—on a quarterly basis to red-flag cases of potential fraud. Previously, data-sharing would take place on an annual basis.

The government would also consider aligning the GST system with the Financial Intelligence Unit under the Department of Revenue to fetch bank account details and PAN-based banking transactions of suspicious accounts.

The measures, the official cited earlier said, would help in strengthening enforcement through knowledge sharing and data exchange, improve compliance and augment GST revenues.