Skip to main content

GST data may be used to track income tax evaders

GST data may be used to track income tax evaders
The government may be looking to use data obtained from Goods and Services Tax (GST) filings to track those who are escaping income-tax, two people close to the development said.The government is setting up a mechanism wherein data obtained through GST reporting could be correlated with the income-tax filings.
While the project is still in the initial stage, the government wants to create a database whereby income of companies and their promoters could be matched with that of the tax returns filed, said a person in the know.It is still unclear whether the government would use this data to dig out tax evasions in the earlier years or whether this will only be for prospective tax scrutiny.
Unlike the earlier tax regime, GST leaves a trail, especially for the business of size, and it becomes hard to underreport income or exaggerate expenses.Industry trackers said tax officers don’t have to go through the sea of data to make sense as big data analytics could do the same for them and throw results or raise red flags.
“Technically, it is possible to use GST data to draw linkage with the income-tax data through the common data set with the help of analytics. Currently, the GSTN and tax department already have the data to carry out the risk analysis where outliers in terms of the industry average of tax payments is scrutinised and those not paying or under-reporting company revenues could be questioned,” said Jaskiran Bhatia, partner, tax technology and analytics, Deloitte India.
Take the example of a unit manufacturing a specialised chemical used in the pharmaceutical industry. The promoters of the company have a turnover of about Rs 30 crore annually for the past few years, but they were paying corporate tax only on about Rs 4 crore. Not just that, the promoters have been underreporting their own income and escaping income-tax.
“Such manoeuvrings are now tough,” said a tax adviser for the promoter family. “Earlier, there was no record of raw materials purchased and goods supplied; now, that cannot be manipulated, resulting in a sudden surge in the company’s revenues. Also, there are other tricks promoters used to show that their income is much below the highest I-T band,” the adviser told ET.
“It is imperative that the GST return is tied with the financials submitted to the income-tax office. Any discrepancy would be questioned by the income-tax office and the taxpayers would be required to explain the deviations,” said Amit Maheshwari, partner, Ashok Maheshwary & Associates.
Tax experts say a sudden spurt in revenues in a company’s turnover mainly due to GST could raise red flags. “If the GST return shows a big jump in turnover of the taxpayer (due to increasing formalisation of the economy, which is definitely a possibility in several cases) compared to the previous years, this could lead to tax officers questioning the past year’s returns as well,” said Maheshwari.

To bring more companies under the corporate tax net and zero in on areas where registered companies pay less tax through underreporting, the government has, since 2016, already been running tax analytics on the sea of data collected.ET had first reported on August 3 that the government was conducting data analytics on income-tax records of taxpayers and is set to go after benami properties.
The tax department has commenced raids across the country, starting with the biggest income-tax evaders, on those creating and owning benami properties.The tax department is already analysing a maze of data including phone records, credit cards and PAN details, tax returns and even social media platforms of the tax payers.

It is virtually impossible to go through various structured and unstructured data sources and make sense of it, but for the big data analysis tools used by the tax department.The department also involves some outside technology experts to analyse the data or provide the necessary tools.
The Economic Times, New Delhi, 6th December 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…