New GST (Goods and Services Tax) return forms have been proposed which are ready to bring an end to the most popular and widely used tax evasion method which is “claiming rebate for the tax that was not paid in the first place”.
These new forms will be rolled out soon and will start from the large businesses. The companies will now not be able to claim any of the tax rebates they are eligible of by the invoices that have been issued by the vendors. Under the GST, the things that will be taxed are the amount of value addition or the margins that the businesses claim during the supply chain. The businesses are given credits for the taxes that have been paid formerly because of services and raw material.
The expert said that the tax credit system in the GST is far better than what was there during pre-GST but it was not flawless. And the new forms which will be rolled out will remove this con.
1sy July was the date of the rollout the new GST return forms (Normal, Sahaj, Sugam) and the businesses were told to file the new forms on the very same day but was not rolled out. The government will soon roll out after making changes in it and simplifying it so that the businesses can avoid the disruption. Because of the extension of date of roll out the small businesses will also get more time to come to its level. It is expected that the new forms rollout date will be decided in the next GST Council meeting.
Before the rollout of the GST, the businesses had to pay the excise duty, service tax, and VAT (value added tax) and on the other hand the buyers could get the credits for the taxes he paid on services and raw materials and this credit was availed from the hard copy of the invoice that the seller issued. While now, the seller just to upload the details of the transaction which will be shown in the electronic credit ledger of the buyer. But availing this credit is in your hand i.e. you can self-declare and the authority can verify it anytime.
After the rollout of the new forms, there will be no self-declaration and the mismatch of the credits which the seller uploaded in the GSTN Portal and the buyer claiming will not be there.
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Abhishek Jain, tax partner, EY said “Prior to GST rollout, there was no electronic way of checking whether the credit taken by a business is correct. The current GST system is a much-improved version, wherein tax authorities can check electronically whether it is correct or not. In the revised return form, credit can be taken only to the extent the transaction details uploaded by vendors allow”.
Common Practices for Tax Evasion
Given below are the most common practices that are used for tax evasion-
- Claiming wrong credit
- Collection of taxes by the merchants from the end consumers, but not forwarding it to the funds and also selling without invoices.
- Claiming wrong credit by fake invoices
And till the government would catch the frauds they could shut the shop and run. But don’t think that less information will be furnished by the business in the new forms
