The Indian government is ready to take action against tax evasion and money laundering using data analysis to detect numerous overstated GST claims that do not match up with IT returns.
Notices have been sent out already to the entities in question. This clean-up operation is followed by the previous exercise where possible shell firms were identified and their directors were found fake.
An official told The Times of India (ToI) that this is the first time the Indian government is the income tax returns with the GST claims. The initial results indicated the overstatement of the goods and services claims and understatement of IT returns.
Recently, the Supreme Court (SC) refused to protect the GST violators from the arrest. Hence, stringent action will be taken against these entities.
In the next few months, the revenue department will focus on data analytics as the analysis shows mismatch on the customs’ front. Some traders, for example, to claim exports, have shown inflated imports and dispatched the funds overseas exceeding the requirement. According to ToI, the proceeds from the exports were not shown in the ITRs.
The national publication cited an official saying, “So far, various tax agencies were working in silos, but now it’s possible to tally data and go after evaders. Based on preliminary data mapping, thousands of companies were identified.”
The authorities in the tax department have complained of GST leakages, but the central and the state leadership asked for more time to let the new tax regime to settle down.
Since the elections are over, arrests have begun in several cases and Manpasand Beverages is a prime example.
Shell companies make several bogus claims. The officials have witnessed instances where gardeners, drivers, and slum-dwellers were found as directors of these organisations.
The authorities have also found cases where the slum-dwellers were made to fill a form to join a delivery service and details such as Aadhaar numbers were collected. Then, these details were used to open bank accounts and set-up companies.
Steps are also being taken to reinforce other monitoring tools to fill gaps and stop GST evasion.