The next GST Council meeting to be held in Goa on Friday will focus on shutting down leaks and prevent evasions by adopting new provisions. Frauds close to ₹ 50, 000 crores have been detected by the Centre. Hence, it has decided to tighten the processes that include ITC claim process too.
The major agenda of the 37th GST Council meeting this week will be devising ways on how to boost GST collections and improve revenue. Rate cut for the automobile sector will also be discussed.
Businesses pay 20% of their tax as cash and the remaining amount is paid using the tax credit available. The finance ministry is planning to implement a mechanism where the taxpayers will require to pay 20% as the margin money during an enhancement in the limit to claim ITC.
Say, A’s turnover is ₹ 50 lakhs and he wants the limit ₹ 60 lakhs, in this case, A will pay ₹ 2 lakhs as margin money.
In the words of an officer, “This is like linking your loan limit to your credit history. If a business has received orders, it will have to convince our officers about a higher limit or talk to banks and get 20% extra. The entire process will be automated to avoid any discretion.”
Tax evasion is now becoming a big cause for concern. Last week, the Govt. found bogus claims of over ₹ 450 crores. New businesses come into the picture, claim ITC and then disappear right away. In some instances, even Aadhaar and bank details of terminally ill patients have been misused. Therefore, the Govt. would be coming up with stringent measures to plug in the leakages.
The process to check evasion has already begun with Aadhaar authentication becoming mandatory for GST. Furthermore, technology and data mapping have enabled tax authorities to crack down on businesses showing inflated sales with the purpose of claiming a higher ITC.