Govt might use GST data to track tax evaders

The government wants to create a database to match income of companies and their promoters with that of the tax returns filed, said a person in the know.

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The government is setting up a mechanism to use data obtained from GST filings to track those who are escaping income-tax, two people close to the development said. 
 
The government wants to create a database to match income of companies and their promoters with that of the tax returns filed, said a person in the know. It is still unclear if this data would be used to dig out tax evasions in the earlier years or whether this will only be for prospective tax scrutiny.  
 
“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. 
 
“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,” a tax 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. 
 
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. The department also involves some outside technology experts to analyse the data or provide the necessary tools. 
 
Source: Economic Times
 

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