The GST wing of the Central Board of Indirect Taxes and Customs (CBIC) has off-late been shooting out GST show-cause notices to several tax-evading entities underpaying taxes.
Almost 20,000 notices were issued for tax evasion in FY 2017-18 after the scrutiny of 34,000 taxpayer accounts when the GST audit was rolled out for the first time. Tax evasion accounted for about Rs.2,000 crore. The department is in the process of issuing further notices for FY 2018-19 in 35,000 cases.
After that, the department expects to receive explanations on notices from the taxpayers, confirming that tax demand exists or closing the case without any demand. Scrutiny is completed in 95% of the 34,000 selected cases. Out of this, explanations have been sought for short payment in 50-60% of cases.
The department aims to ensure that selected taxpayers accurately and consistently report input tax credits, supply details, and tax payments. Advanced Analytics in Indirect Taxation, Directorate General of Analytics and Risk Management, GST Network, and e-way bill portal provide the necessary data to allow the GST officers to scrutinise taxpayers with a minimal interface. There is a backend reconciliation of income tax done to identify any discrepancies.
The GST rate rationalisation for improving the average GST rate has been delayed to 2024. Hence, the CBIC is adopting alternate measures to boost tax revenue collections by improving compliance. It is ramping up GST scrutiny and audits to curb fraudulent input tax credit claims and tax evasion.
Rs 1.49 trillion a month was the average monthly GST collection that improved in the first seven months of the present financial year 2022-23. Rs 1.23 trillion a month was the corresponding figure for the preceding financial year 2021-22.
Higher GST collection implies that the government may garner up to Rs.1.5 trillion more than the budgeted Central GST (CGST) collections in FY 2022-23. Meanwhile, states would garner more revenue than that in additional receipts, facilitating much-needed resources to finance the programmes. The GST revenue neutral rate (RNR) was approximately 15-15.5% before the GST roll-out in July 2017. However, the average current GST rate is about 11.5%.