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Companies vanishing act on GST invites taxmen
December, 13th 2018

Taxmen may soon come knocking at the premises of companies that have registered for the goods and services tax and vanished, not having filed returns or paid their taxes.

The authorities are considering putting in place an extensive plan to hunt for these missing GST taxpayers, which includes visiting their premises.

There is a growing worry that many registered taxpayers have disappeared, a government official said. Besides, there are cases of fake invoices used to claim input tax credits.

The tax authorities will initially verify the premises of GST-registered companies and could expand the effort to include scrutiny if they find tax hasn’t been paid.

Karnataka has implemented the plan and more states are expected to follow as GST collections remain below Rs 1-lakh crore a month. GST revenue stood at Rs 97,637 crore in November, falling back after crossing Rs 1lakh crore in October.

According to the government, 6.96 million GSTR-3B forms were filed in November for the month of October. There are over 10 million businesses registered for GST.

According to a Karnataka government circular, the inspection of business premises of registered entities by the enforcement wings revealed non-compliance on the part of taxable people by not paying taxes that are legally due to the government or not filing returns.

“For effective tackling of the situation with regard to persistent non-filers, more cases are required to be visited to ensure timely payment of tax and filing of returns,” it said.

Officials are empowered under the GST law to visit registered premises to carry out scrutiny, verification and checks required for safeguarding revenue interests.

Tax experts said compliance under GST hasn’t improved and the tax authorities are expected to resort to such measures.

“Percentage of compliance in terms of filing of returns has been a major concern for the government, particularly in light of recent cases of tax evasion and fake invoices that have surfaced. Over the last several months, compliance has not improved significantly,” said Pratik Jain, national leader, indirect taxes, at PwC.

From the industry standpoint, it only means that much greater rigour needs to be put in place to ensure that their vendors are GST-compliant, Jain said.

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