Government blocks Rs 40,000 crore GST claims on returns mismatch
NEW DELHI: The Central Board of Indirect Taxes and Customs (CBIC) has frozen tax credits of around Rs 40,000 crore as the returns did not match, exposing alleged fraud by close to 2,000 entities, apart from cases where returns were not filed. Last week, the indirect tax wing of the revenue department blocked the credits within four hours, CBIC chairman John Joseph said at an event on Monday.
Companies are entitled to credits on tax paid on inputs in the production chain so that there is no cascading effect of taxes. But major discrepancies in returns and instances of a large number of frauds prompted the government to crack the whip.
There have been multiple ways in which frauds have been taken place. Sources said, the department had collected data on mismatch of over 20% in the initial GSTR-1 filing for the month and the final GSTR-3B returns. Subsequently, the bar was lowered to a difference of 10% and the government used various red flags to then identify companies, while completely relying on data instead of sending tax inspectors to premises to check for books.
The standard operating procedure developed by the revenue department is to share the data with the state governments, which then move in, first asking them to make the corrections or pay up.
But the scrutiny of the data has revealed that several flyby-night operators were misusing the benefit. There were entities which were set up just for the sake of showing bogus turnover and relied on a web of shell companies. These companies, many of which used forged documents, then vanished from the scene, prompting the government to tighten norms for GST registration.
“In many cases it has been found that traders purchased iron and steel scrap but raised GST bills for garments to exporters, who in turn claimed refund of IGST (integrated GST) paid on export,” said a tax lawyer.
Source- Times of India.
The post Government blocks Rs 40,000 crore GST claims on returns mismatch appeared first on GST Station.
Click here for more...
from #Bangladesh #News aka Bangladesh News Now!!!