19.06.2023: GST Council likely to vet CBIC’s plan for additional validations in return filing to check evasion

The GST Council is likely to consider CBIC's proposal in its meeting scheduled to take place next month. According to Central Board of Indirect Taxes and Customs' (CBIC) proposal, it aims to introduce additional validations within the GST return filling system with the goal of keeping track of evasion and fake input tax credit (ITC) claims.

Since November 2020, under special circumstances, several central agencies have detected fake ITC claims worth nearly Rs 62,000 crore and has arrested 776 people, including several professionals. The move was introduced to checking fraud and revenue loss, by including certain validations in the return filing system.

The CBIC last week introduced validation and risk rating for GST registrations, as it looks to curb fake entities issuing fake bills just to claim ITC benefit and defraud the exchequer.

The official said the strategy to go in for additional validation both at the time of registration and filing of return is aimed at eliminating tax evasion.

“We are planning to introduce validations in returns filing system in a way such that the process does not become cumbersome for honest taxpayers. The validation would be done by the tax department and ITC claims could be blocked in cases of mismatch,” the official told PTI.

The additional validations that would be introduced at the tax officers end will have to go through the GST Council, which is likely to discuss the issue in next meeting on July 11.

Last week, CBIC Chairman Vivek Johri had said the Council will discuss anti-evasion measures to tighten the noose on fake GST registration and fraudulent generation of input tax credit (ITC).

The GST officers have from May 16 initiated a two-month special drive against fake registration.

During the drive, GST Network has identified 60,000 entities which could be having fake registration. Of these, on 43,000 entities, physical verifications by way of visiting business premises have been completed by central and state tax officers.

Following this, 11,140 fake GST registration, involving GST evasion of over Rs 15,000 crore, have been detected by taxmen and action against fraudsters is being taken.

Under GST, a monthly self-declaration return GSTR-3B is filed by all registered taxpayers, except composition dealers. The return serves as a summary of a business' tax liabilities and contains details of input tax credit (ITC) claimed and output tax liabilities.

Presently, GSTR-3B is bifurcated into 7 sections – GST Identification Number; legal name of the registered person; outward and inward supplies on reverse charge; eligible ITC; values of exempt, nil-rated, and non-GST inward supplies; payment of tax and verifications.

Source: The Economic Times 

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