Goods and Services Tax authorities are seeking near real-time access to banking transactions of the taxpayers, as a means to detect fake invoices and excess use of input tax credit (ITC) by sections of businesses.
The move follows recent investigations that revealed that undue tax credits accumulated through fake invoices are being used for hawala transactions. In several cases, it was also found that through circuitous routes, the funds finally returned to the persons generating the fake invoices. Shell companies too have been found routing money through fake invoices.
“Money trail is very important in these cases. While at the time of GST registration, the taxpayer gives details of only one bank account, a business can be using several accounts,” said a source, adding that it is difficult to get data on banking transactions in a timely manner at present.
Often, by the time the details are made available, the company or person generating the bogus invoices has already vanished, the source further explained.
GST authorities are now keen on getting faster data on banking transactions, akin to the access the income tax authorities have.
The income tax department gets data on high value transactions, suspicious transactions as well as cash deposits above a certain threshold to keep tab on possible tax evasion.
Sources said the issue is now being taken up by the Central Board of Indirect Taxes and Customs (CBIC) as well in a bid to curb tax evasion. However, it would require more discussions internally as well as with the Reserve Bank of India, they said.
GST authorities are also planning to include more databases in their risk parameters to catch possible tax evaders. This would be done more so for service-related industries, where it is difficult to prove the actual delivery of services.
Databases that are likely to be tapped into include the provident fund data, customs data on shipping lines and freight forwarders, Railways as well as Panchayati Raj data on services such as construction and works.
“This would give an idea of the kind of services that are being provided by various companies and if they are paying the right tax and availing input tax credit,” said the source. GST authorities are already planning to tap into the income tax database as well as filings of the ministry of corporate affairs to cross check information on taxpayers and understand if they are paying the right taxes.
The focus on tax evasion comes at a time when the GST department is looking to cut down on fake invoicing and tax evasion. A special all-India drive is also being conducted from May 16 to July 15 by all central and atate tax administrations to detect suspicious and fake GST identification numbers.
There are nearly 14 million registered businesses and professionals under GST and the government is keen on expanding the taxpayer base by ensuring that those evading tax are brought into the tax net.