Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: VAT Audit :: VAT RATES :: due date for vat payment :: ACCOUNTING STANDARDS :: form 3cd :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: cpt :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT
Service Tax »
 Why is the successful roll-out of the e-way bill necessary?
 How service tax became revenue lifeline for the Govt
 Three simple tricks to save income tax without investing fresh funds
 Goods and Services Tax (Compensation to States) Amendment Act, 2017.
 Services sector need to brought under Section 72A of the Income-Tax Act
 Simplifying GST: Creating a Grand Simple Tax
 The way ahead for goods and services tax
 Goods & Service Tax (GST): Recent Clarifications
 Tax payers can see status of returns filed on GSTN portal
 Export And Import Of Goods Under GST
 The Finance Resolution And Deposit Insurance Bill, 2017

Massive tax evasion can hit GST rollout
July, 26th 2010

While the government is lobbying hard with Opposition parties to implement Goods and Services Tax (GST) from April next year, a study carried out to assess the current tax base in states and the compliance level could upset its gameplan. The study revealed rampant evasion to the extent of 50% in half of the 23 states where tax audits were carried out.

The study, conducted by the Comptroller and Auditor General (CAG), assumes significance as the finance ministry is yet to fix the threshold turnover limit and come up with a concrete assessee base and estimated revenue collection once the new indirect tax regime is rolled out. The report was submitted to the finance ministry last week.

The report also confirms states' fear that once the indirect tax regime is rolled out, it may lead to fall in their revenue. Of the 23 states studied, it was found that in 10 states, there was a dip in the average growth of revenue during the post-VAT regime against those relating to pre-VAT period. Those included major states like Gujarat and Tamil Nadu. Though the report attributed the loss of revenue despite increase in tax base to tax evasion, these states may raise the issue and seek more time to implement GST.

The CAG investigation found that at least 50% of the one lakh dealers who were taken up for tax audits engaged in tax evasion. An additional demand of Rs 783 crore was raised against these evaders during the test checks in 2009. This amount is without the penalty.

The report called for 100% scrutiny of the returns of dealers and manufacturers to detect evasion. It said low percentage of scrutiny of returns left scope for leakage of revenue.

For instance, it said, tax evasion of Rs 873 crore was detected from scrutiny of only 2,600 returns in 15 states. Dealers were granted tax exemptions of Rs 1,000 crore on a turnover of Rs 25,500 crore from sale of tax paid goods, without any proof of documentation.

In another startling revelation, three states allowed exempted manufacturers to collect tax from the purchaser but also retain the tax without remitting it to the state. The idea was that this will in effect be an exemption to the manufacturers and the VAT chain will also not be broken. It, however, enriched the manufacturers and the purchaser claimed input tax credit (ITC) on tax paid, which was an additional tax outgo for the state governments.

The study found that manufacturers in these three states had thus collected Rs 6,400 crore and did not remit tax in four years, with Reliance group of companies accounting for more than 90% of it.

Besides, two manufacturers in one state were allowed ITC of Rs 8 crore. Since no output tax was paid by the preceding dealers, this amount was paid from the government coffers, the report said.

The report suggested that in future, the percentage of tax audits must be benchmarked to the results of 100% scrutiny of assessments. The extent of evasion flagged by such scrutiny should be the basis for fixing the percentage. The department should also set up a database of dubious dealers on the basis of past history which could form the basis of selection for audit sample. This database should also be made online, the report recommended.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions