GST evasion and measures taken

Subject: Economy

Section :Fiscal Policy

In News: GST evasion of a total Rs 2.68 lakh crore has been detected in 43,516 cases between 2020-23.

Key Points:

GST evasion worth Rs 1.32 lakh crore was detected in 15,562 cases in the 2022-23 financial year, an increase of 44 per cent over the previous financial year, as per data tabled in the parliament.
With the availability of information in electronic form, the Income Tax Department has developed a wide range of non-intrusive methods for detecting tax evasion.
GST is taking a multi pronged approach to address the problem of evasion:
- Information technology and data analytics tools are being used in identification of high-risk cases, fast e-verification of suspect cases and enforcement actions in appropriate cases.
- GST department is also sharing data with partner law enforcement agencies for more targeted interventions (see box2)
- Reduction in threshold limit for issue of e-invoice for B2B transactions from Rs 10 crore to Rs 5 crore from August 1, 2023.
Some of the specific tools being used are:
- Computer Assisted Scrutiny Selection (CASS) for selection of cases for Scrutiny;
- Non-filers Monitoring System (NMS) to prioritise action on non-filers;
- Income Tax Business Application (ITBA)

Computer Aided Scrutiny Selection (CASS)

Tax department regularly takes up cases for scrutiny. Earlier the selection of cases to be scrutinised was done manually. But now it is done using an automated computer based system.
CASS is a system-based method for scrutiny selection which identifies the cases through data-analytics and three-hundred sixty-degree data profiling of taxpayers and in a non-discretionary manner.
Cases are being selected in two categories viz. Limited Scrutiny & Complete Scrutiny in a centralised manner under CASS -2019.

Non-filers Monitoring System (NMS)

It is a system aimed at identifying and monitoring persons who enter into high value transactions and have potential tax liabilities but have still not filed their tax returns.
Analysis is carried-out to identify non-filers about whom specific information was available in the database of the Income Tax Department. The sources of information include Statement of Financial Transactions (SFT), Tax Deduction at Source (TDS), Tax Collection at Source (TCS), information about foreign remittances, exports and imports data etc.

Income Tax Business Application

It is a software to analyse and monitor transactions throughout the country and to curb black money trail.
This software allows taxmen to check, in a chronological order, the entire financial summary or transactions of an individual or company, wherever the PAN number has been used, throughout the country.
Income Tax Business Application (ITBA) to help in curbing tax evasion through putting in place end to end processes for all verticals of the Department.

GST and other law enforcement agencies:

The Government has brought Goods and Services Tax Network (GSTN) under the ambit of the Prevention of Money Laundering Act (PMLA).
With this, the GSTN is among those entities that have been mandated to share information with the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) under the PMLA Act.
Other agencies that need to share information include the Competition Commission of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Serious Fraud Investigation Office, and Director General of Foreign Trade. This list is updated from time to time.
PMLA was enacted to tackle terror funding and drug trafficking. The PMLA Act also provides for confiscation of property derived from or involved in money-laundering.