In its second term, the Narendra Modi government will continue its crackdown on tax evasion and money laundering through data analysis to help detect overstated Goods & Services Tax (GST) claims and their mismatches with income tax returns, The Times of India reported. The government has sent notice to such entities, with further probe planned in case this is the first layer of sketchy transactions. In a similar exercise, the government targeted shell companies whose directors were concealed and many were deregistered in 2018.
The Centre decided to undertake this assessment for the first time since the launch of GST on July 1, 2017. They have found many cases of understatement of I-T returns and overstatement of GST claims, sources told the newspaper. Tough consequences may await the wrongdoers as the Supreme Court recently ruled that GST offenders will not get protection from arrest.
The government is keen to use data analytics for the Revenue Department later this year since there have been offences with respect to customs.
“So far, various tax agencies were working in silos, but now it’s possible to tally data and go after evaders,” an official told the newspaper. Now that we are past the elections, government officials said the process is picking up pace to make BJP’s campaign promise of fighting against corruption legit. Some arrests have already been made, like the case of Manpasand Beverages.
The most discrepancies tax officials found were in claims made by shell companies. They also had many cases of identity theft as well. In such cases, a company is set-up and undertakes fake transactions with other entities. On these fake transactions, companies claim input tax credit, but no transactions or income is reflected in their I-T returns. Such companies have slum dwellers, gardeners and drivers as directors.
The government is also working towards plugging gaps in other monitoring tools to prevent tax evasion.