GST Dept to scrutinise Income Tax Returns, MCA data to identify entities not paying taxes

The GST department will soon begin analysing ITRs and MCA filings submitted by firms and professionals to determine if the entities are adequately discharging their GST burden and expanding the taxpayer base.

Presently, 1.38 crore firms and professionals are registered under the Goods and Services Tax, which was implemented on July 1, 2017. Companies in the manufacturing and services sectors with an annual turnover of more than Rs 40 lakh and Rs 20 lakh, respectively, must register for GST and file tax returns.

“We will triangulate data based on the information available from the I-T department. If, according to the study, the entities that should be paying GST taxes are not doing so, we will send a mild inquiry first “an official stated.

The data analysis will concentrate on those firms that are not exempt and must register for GST and make monthly or quarterly returns. After identifying organisations that are not in compliance with the GST law, the GST department will contact them at their registered place of business and ask them to explain why they are not in compliance.

The data analysis wing will also look through quarterly and annual data filed by enterprises with the Ministry of Corporate Affairs to determine if any Tax avoidance is taking place, according to the official.

The official stated that the first phase will be the matching of Income Tax Department and GST data, followed by MCA filing matching. “We will shortly begin matching the Income Tax data,” stated the official.

Certain service industries are free from GST, including recognised educational institutions, agriculturists, electricity transmission or distribution businesses, and medical services provided by clinics.

According to data released by the Finance Ministry to Parliament, the total number of Goods and Services Tax evasion cases this financial year has increased to 13,492 from 12,574 previous financial year and 12,596 in 2020-21.

Between July 2017 and February 2023, the total evasion found was close to Rs 3.08 lakh crore, of which over Rs 1.03 lakh crore was realised. In the last five and a half years, GST authorities have arrested 1,402 people for tax evasion.

The tax department has used strong data analytics and artificial intelligence to identify and track risky taxpayers and detect tax evasion; data sharing with partner law enforcement agencies for more targeted interventions; and mandatory Aadhaar-based authentication for new GST registrations, as well as centralised suspension of registrations of registered persons who fail to file returns on time.

With anti-evasion measures and better compliance, monthly GST receipts have exceeded Rs 1.4 lakh crore for the past 12 months in a row. In February, GST revenues exceeded Rs 1.49 lakh crore.

On July 1, 2017, a countrywide GST was implemented, which replaced 17 local levies such as excise, service tax, and VAT, as well as 13 cesses.

“Government agencies are rushing to consolidate disparate data sources in order to improve compliance levels across all platforms,” Mohan said.