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More compliance, less black money

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For all those who thought that GST was just an indirect tax reform, think again.
The implementation of GST will affect direct taxes as well, helpinwideningthetaxbaseand increase taxe collections.
According to tax administrators, GST will help in curbing domesticblackmoney.“Though it is a reform for indirect taxes, there are filers who understate incomes by not reporting transactions. By doing this, they save excise, VAT, Octroi etc, and under-report their incomes. Since, GSTwillhaveapapertrail, which can be accessed by the income tax department, such practiceswilldiscouragegeneration of black money in the system,” a tax official said.
Permanent account number (PAN) and Aadhar will be used more frequently, and will be requiredtofileGSTreturns. This willhelpthetaxmentracktransactions more systematically. Therecanbemoredatamapping forauditbyrevenueauthorities.
Last year, a panel headed by chief economic adviser Arvind Subramanian had said that bringing alcohol, real estate and precious metals, including gold, withintheambitofGSTwillhelp curb blackmoney in the sectors.
Though alcohol is likely to remain outside GST, the other two key sources of illicit money are likely to get busted.
Both the Central Board of Direct Taxes and the Central Board of Excise and Customs havestartedsharingdatatomonitortheflowofblackmoneymore effectively, sources said.
“If a retailer has purchased goods from a wholesaler and is notshowingthatpurchasetoday, he will not be able to do so after GST,” ataxofficialwiththeDelhi government said.“To substantiate his purchase, he will have to maintain the books of sales, for which proper bills will be generated. SoanytraderafterGSTwill not be able to sell products or goods without bills. Once a bill is in the system, scope for black money reduces automatically.”
The dual-monitoring structure proposed within GST, involving the Centre and the states, willalsocurbtaxevasions. So, even if one set of tax authorities overlooks or fails to detect evasion, there is the possibility that the other authority may not.
Hindustan Times New Delhi,05th August 2016

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