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GST evaders beware: Risky Taxpayers to be Profiled to Prevent Tax Evasion

Numbers of fraud cases were identified and many GST taxpayers have been arrested in previous two months on the grounds of evasion of GST.

The government is continuously struggling with the issue of tax evasion through fake invoices. The indirect tax department has already detected such frauds worth over Rs 12,000 crore.

Now, the government is looking at options to deal with taxpayers based on their risk profile In order to prevent the evading of tax under the Goods and Services Tax (GST).

An automated system will help to identify risky taxpayers. This method might allow the council to profile taxpayers based on their risk profile. If an assessee is identified as ‘risky’, he/she could face restrictions on issuing invoices, utilization of input tax credit (ITC), and approval of refunds.

The GST Council has formed a 10-member Committee of Officers (CoO) on Risk-Based Management of Taxpayers under GST regime.

The committee will submit a report to the GST Council on August 15 in which it will,

  • Suggest parameters for risk-based profiling so that a taxpayer could be categorized as risky in an automated manner and,
  • Study, examine and suggest the procedure for assessing the financial credibility of a taxpayer in relation to his/her GST profile.
  • Suggest changes in GST law and rules to enable profiling and regulating risky taxpayers and in case of failure to undertake the desired know your customer (KYC) verification, there could be the invocation of penal provisions. 
  • Suggestion of measures for the implementation of suggested risk-based management on an immediate basis and any other measures, mechanism, and machinery to check and curb multiple types of frauds.

To boost GST revenue, detection of fraud and Challenge of identifying GST evasion, the government is looking for pre-emptive mechanisms and detect the likely instance of frauds even before it takes place. Hence, anti-evasion measures could increase the efficiency of revenue collections.

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