Budget 2019
Expecting Broad-Mindedness from Budget 2019
July 3, 2019
Input Tax Credit
No Input Tax Credit for Expenses Incurred on Promotional Schemes
July 5, 2019

GST Department Takes Strict Action Against Fake GST Invoices

GST Invoices

The government, on Monday, warned businesses against generating fake invoices to evade GST, saying tax officers will take strict action against such cases. Speaking on the second anniversary of the implementation of the GST, Minister of State for Finance Mr. Anurag Thakur said “the menace of the fake invoice needs to be checked to ensure that honest taxpayers do not suffer and the government does not lose revenues. The government will take adequate action against those involved in generating fake invoices. The menace of fake invoices is required to be checked as the actions of few unscrupulous traders make the majority of honest taxpayers uncompetitive and bring loss to revenue. The government is now serious about curbing this menace”.

An Appeal

He also urged GST officers to be serious to the concerns of honest taxpayers saying their interaction with trader molds public opinion about GST. Mr. Thakur, said further, “Therefore, I urge all GST authorities to remember at all times that as public servants, they serve the trade by being sensitive to their concerns and resolving their genuine difficulties in accordance with the law. It is only through this partnership that we can achieve the goal of one nation, one market, one tax”. Hoping that trade and industry will urge their constituents to shun wrong practices and comply with the law, Thakur said the policy of the government would be: “imandaar trader se bair nahi, fake invoices walon ki khair nahi” (no honest trader will be troubled but those generating fake invoices will not be spared).

Action Against Defaulters

Nirmala Sitharaman, The Union Finance Minister, in a written reply in the Lok Sabha on Monday said GST officers have booked 535 cases of fake invoices involving a total fraudulent claim of ₹ 2,565 crore of Input Tax Credit and arrested almost 40 persons so far in the current financial year.

In FY 2018-19, 1,620 cases of fake invoices were registered involving fraudulent ITC claim of ₹ 11,251 crore under the GST. As many as 154 persons were arrested.

The Present Scenario

The GST Council, chaired by Union finance minister and comprising state counterparts, last month decided to launch a pilot project under which businesses above a specified threshold will have to generate e-invoice for B2B sales from 1st January.

As per the plan of e-invoice being worked out by the tax officers, entities with a turnover of more than ₹ 50 crore will be required to generate electronic invoices on a government portal for B2B sales. GST, which subsumed 17 local taxes, was rolled out on 1st July 2017. It currently has four slabs – 5%, 12%, 18% and 28%. On top of the 28% slab, a cess is levied on automobiles, luxury, and demerit and sin goods.

Penning a Facebook post on the second anniversary of the GST rollout, former Finance Minister Mr. Arun Jaitley Monday said the 12% and 18% tax slabs in the Goods and Services Tax could be merged going forward as revenues increase, thereby effectively making it a two-tier tax. Mr. Jaitley said as many as 20 states are already showing more than a 14% increase in their revenues and do not require the Centre to compensate them for revenue loss arising out of GST implementation. Monthly GST collection data released by the finance ministry showed that revenue mop-up in June 2019 fell to ₹ 99,939 crore, down from over ₹ 1 lakh crore in the previous month. The collection was ₹ 95,610 crore in June 2018.

Mr. Thakur exuded confidence that the government will meet the Budget target of GST revenue mop-up. “Even if there is any shortfall in a particular month’s collection, we will achieve the budget target at the end of the fiscal. I can assure you that in the coming months, you will see an increase in GST collections”.

Speaking about improving compliance, Revenue Secretary Mr. Ajay Bhushan Pandey said the information technology system will ensure that the honest taxpayers are completely given a fair treatment. Further, he stated “But at the same time, if somebody is not complying, the situation will be such that there will be more motivation for compliance. That is the kind of system that is being worked out”.

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