The struggle of the taxpayers in order to comply with the regime has become old news now. The Goods and Services Tax got implemented almost a year ago and a lot has changed in the regime since then. The disapproval of the people has turned into the acceptance. And as millions of the businesses implemented GST, the network has become vast and complex. Amidst the evasion-preventive measures or changes implemented by the government in the regime, the taxpayers suffer from the jeopardized ITC claims and returns.
The government has long been observing the fraudulent processes like the wrongful payment of tax prevailing the Goods and Services Tax Act. The businesses have been indulging in the evasion practices like non-payment of GST, claiming hiked input tax credit claims and manipulating the sales invoices. Besides forging the tax, the businesses have also been found engaged in profiteering processes. In case you don’t figure out what profiteering actually is, here’s a simple description of the same. The profiteering happens when a business has claimed and received the taxes paid on the inputs on a product but keeps the MRP unreduced of the profit gained from the government side.
The businesses under investigation
Even after the technology swooping in the regime to play a vital role in easing the compliance, the businesses, mainly mid-sized, tend to be deceitful. Overlooking the benefits of a Dynamic GST calculator, the businesses in the iron and steel and many organized retailers found guilty of evading the tax. However, the authorities have been focusing on the GST compliance issues and were working to make GST return simpler. Amazingly, no one expected the evasion in such large amount that too after the compliance made easy by the high-tech software. Here are some points that show the progress of GST after the businesses integrated software widely:
- More than 1.03 crore businesses registered under the Goods and Services Tax Act.
- The tax revenue collections crossed the INR 90,000 crore mark, highest since the implementation of the regime.
- More than 50,000 of micro and medium-sized enterprises registered under GST regime.
In reality, these progressive numbers seem like an optical illusion as the tax evasion still continues. More than 5.95 million taxpayers, highest of all-time, filed GST return. But most of them manipulated the process trying to dodge GST.
Unique evasion patterns
The taxpayers, in general, have developed an understanding that mere registration under the Goods and Services Tax Act could solve the problems related to it. But that’s completely false and this ideology needs to be changed. Even if you successfully forge the tax documents, which you never should, and come out like a hot-shot tax-evader, the government’s going to seize the business anyway.
In addition to the anti-evasion measures, the government has even asked the company that operates GST network to assemble a team of analysts to figure out the evasion patterns. Most of the medium-sized businesses using GST calculator and tool have been tampering the sales invoices. Taking the sales invoices and summary form into the account, the government verifies the refund to-be-made to the taxpayer.
One of the most prominent forms of evasion that has been arising lately is a result of the conspiracy between the buyers and the sellers. Soon after the implementation of the Good and Services Tax Act, the buyers and sellers started manipulating with the transaction records. If a business shows decreased amount or fewer products being bought or sold, then lower tax is levied. And since GST is destination-based, lowering the sale/purchase amounts, the businesses have been able to evade tax.
Such kind of fraudulent measure has not only weaken the Goods and Services Tax Act but also forced the government to completely revamp the regime. No sane government authority would tolerate such tricky actions that affect the entire economy and thus the entire nation. Even before the roll-out of the regime, the government made the taxpayers aware of the regime’s functioning. It also brought into contrast the kind of serious and cooperative efforts required to make the regime work. But the taxpayers flawed anyway.
In the beginning, when GST rolled-out, the technology facilitated the people in compliance with the regime. And even the government promoted the use of third-party software as it had multiple benefits. On the one hand the revenues increased, and on the other hand, the businesses started becoming digitalized. But no one would have anticipated that some of the fraudulent businesses would use the technology for the unlawfully. However, now the government would implement strict measures to stop evasion. And this move might even discomfort the taxpayers but the fault will be theirs only. Now one could only hope that what the government’s next move is going to be.