In Future GST Officials Can Prevent Fraud Transactions of Suspected Firms

From time to time, the government has been making changes to avoid evasion of taxes and according to a recent update, the government will soon push the efficiency of the indirect tax system These types of taxes paid on Consumption by the consumer but they do not pay directly to the government (unlike income tax). For example, GST, Sales Tax, VAT, Custom Duty and Octroi Tax to the next level to prevent and track the evasion of Goods and Service Tax (GST). As per the update, soon authorities will be able to stop suspicious transactions on a real-time basis and before the fraud taking place.

The idea here is to empower tax authorities and provide them with the option to block the generation of electronic invoices at the time of the transaction in the case of companies that are already red-flagged in the system.

Electronic GST invoicing Get to know about the new E-invoice generation system on government GST portal with applicability. The system mandates to generate e-invoice for every sale by a registered business (e-invoicing) is a newly introduces system that made validating transaction details in real-time possible. The process is taking place on a portal running by the National Informatics Center. The government made it mandatory from October 1 for companies with a turnover above ₹500 crores. The government also has plans to further expanded it to cover all businesses in the next year.

A government official said that “the current plan is to make this facility applicable to business with turnover ₹ 100 crores from January 1, 2021, and to impose this facility for all from April 1, 2021”.

E-invoice will include various details such as buyer and seller details, description of the item sold according to the harmonized system of nomenclature (HSN), the amount, and the tax payable. These details will be fetched in some of the tax return forms and on the basis of the same the eligible tax credit and tax liability of the parties to the transaction will be calculated.

The government has eyes on the pre-filled return forms GSTN portal has recently added an option to pre-fill an application form for the tax refund of the tax filed for the taxpayers. The portal has included which need to be validated or modify by the business at the end of every month. The duration will allow the tax administration to look at the economic activities and to make sure that any attempt of tax evasion can not escape the taxation.

Already, with the integration of data mining and artificial intelligence, authorities are able to catch fake invoices and shell companies before it is too late while protecting revenue. On top of this, the ability of the tax administration to prevent/ stop fake transactions is like an extra cherry on the cake.

One Official said that “Now what will happen is that our intervention can also happen almost on a real-time basis. With data analytics, we can identify and block such entities from issuing electronic invoices so that they are not able to damage the system. While deterring fraudulent elements, this also provides greater simplicity and convenience to honest taxpayers”.