GST Department’s eye on Banking Transactions; Know What is Government’s Preparation

GST Authority is now monitoring taxpayers' financial activities in real time. This implies that business sector may identify fraudulent invoices and apply input tax credit inputs.

GST Department's eye on Banking Transactions

Reetu | May 15, 2023 |

GST Department’s eye on Banking Transactions; Know What is Government’s Preparation

GST Department’s eye on Banking Transactions; Know What is Government’s Preparation

The Good and Service Tax Authority is now monitoring taxpayers’ financial activities in real time. This implies that the business sector may identify fraudulent invoices and apply input tax credit inputs. A recent probe by the GST department found that fake invoices are being used to obtain disproportionate tax credits for hawala operations.

In many circumstances, the money is returned to the individual who created the fake invoice via many transactions in the final transaction. Shell businesses are also wasting money by issuing counterfeit banknotes. Money trail is vital in these circumstances, according to the report.

Multiple Accounts in One Business

During GST registration, taxpayers submit just one bank account number, and businesses can utilise numerous accounts. Even financial transaction data is tough to obtain at the moment. According to insiders, by the time the data are provided, the firm or individual responsible for the fraudulent bills has already vanished. GST officials now want quick data on financial activities in such a case.

Preparation to Combat Tax Evasion

To combat tax evasion, the Income Tax Department now gets information on high-value transactions, questionable transactions, and cash deposits above a specific threshold. According to the article, the Central Board of Indirect Taxes and Customs (CBIC) has also highlighted the matter in order to prevent tax evasion. According to the report, there is a need for dialogue and conversation with the RBI.

Planning to Prevent Tax Evasion

GST officials intend to add additional databases to their vulnerability parameters in order to catch suspected tax evaders. This will be done more often for service-related businesses. Databases that are most likely to be accessed.

What will Change?

If this is done, it will be known what kind of services are supplied by various firms, as well as if they are paying the correct taxes and claiming input tax credits. The GST authorities, on the other hand, are already going to cross-check taxpayers’ information with the corporate affairs ministry’s files for the income tax database in order to determine if they are paying the correct tax.

1.4 crore businesses registered under GST

Notably, the emphasis on tax evasion comes at a time when the GST department is attempting to crack down on fraudulent invoices and tax evasion. GST has registered 1.4 crore companies and professions. The government wishes to broaden the taxpayer base by imposing taxes on tax evaders.

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