GST Evasion of Crores: Tax Collectors use Data Analytics to find missing link in Supply Chain

An official added that GST officers are utilising data analytics to determine whether the entire supply chain in a particular sector is paying enough GST or if there is a missing link. With over Rs 1 lakh crore in GST evasion found in the financial year ending March 31, the Directorate General of GST Intelligence (DGGI) has increased efforts to catch evasion at the start so that compliance improves.

“We are using ‘end-to-end’ analytics for a sector and ‘gap analysis’ of the taxes paid in a supply chain to determine if the entire value chain is paying adequate GST or if there is a missing link,” the official explained.

The data analysis includes comparisons of a specific sector’s tax payment profile to the previous excise and service tax regime.

“Now that the GST system has stabilised, efforts are being made to further streamline it. We want to make sure that all of the sectors covered by GST are paying their fair share of taxes,” an official said.

Following the analysis, if the department determines that changes to the law or tariffs are required to combat evasion by boosting compliance, the proposal will be forwarded to the Council for approval.

If a subset of a sector fails to pay taxes along the value chain and there is evidence of evasion, enforcement action may be taken, according to the official.

“Data analytics is a time-consuming process, but it is necessary to detect GST evasion at the manufacturing stage.” It will help increase revenue collection while also improving compliance,” the official noted.

GST evasion detection by tax officers nearly increased year on year to more than Rs 1.01 lakh crore in financial 2022-23. The officers of the DGGI were successful in recovering Rs 21,000 crore.

The total number of Goods and Services Tax (GST) evasion cases had also increased, with almost 14,000 cases found in 2022-23, up from 12,574 in 2021-22 and 12,596 in 2020-21.

The Finance Ministry stated in a reply to the Lok Sabha last month that total GST evasion found between July 2017 and February 2023 was close to Rs 3.08 lakh crore, of which over Rs 1.03 lakh crore was recovered. In the five-and-a-half years leading up to February 2023, GST inspectors arrested 1,402 people for tax evasion.