In a recent interview, Revenue Secretary Sanjay Malhotra unveiled the government's proactive stance towards curbing Goods and Services Tax (GST) evasion, emphasizing measures to prevent abuse of corrective flexibility granted to businesses. Malhotra underscored the necessity of implementing stringent validation processes for transactions and claims while safeguarding genuine taxpayers' interests.
The government's strategy aims to bolster tax revenue collection, surpassing the economic growth rate in nominal terms. Malhotra outlined plans to integrate IT platforms utilized by customs and GST authorities, leveraging data analytics to amplify tax compliance efforts. Presently, each authority operates distinct IT systems, hindering seamless data integration.
The interim budget for FY25 forecasts a revenue buoyancy exceeding one, signifying accelerated tax revenue growth compared to the economic expansion rate. Projected figures indicate the Centre's gross tax revenue to surge by 11.5% over the revised estimates for FY24, juxtaposed with a nominal GDP growth of 10.5%, culminating in a tax buoyancy forecast of 1.1.
Malhotra emphasized leveraging existing data reservoirs on direct and indirect taxes, stressing the imperative of optimizing data utilization to sustain tax revenue buoyancy. In this vein, the government intends to clamp down on manipulative practices exploiting corrective flexibilities within the GST framework.
Elaborating on potential abuses, Malhotra elucidated scenarios where entities exploit the system's flexibility to rectify errors and augment tax credit claims. For instance, unscrupulous sellers may underreport tax liabilities by manipulating transaction details, capitalizing on corrective allowances. Conversely, dishonest buyers may falsely assert errors in invoices to inflate input tax credit entitlements.
To counter such malpractices, Malhotra highlighted plans to restrict downward revisions in tax liabilities by sellers and curb unwarranted increases in input tax credit by buyers. Such measures aim to uphold tax compliance integrity while mitigating avenues for fraudulent activities within the GST regime.
The government's concerted efforts underscore a commitment to fortify tax administration efficacy, fostering a conducive environment for sustainable revenue growth. By leveraging technology, data analytics, and stringent oversight mechanisms, authorities aspire to instill confidence in the taxation framework, ensuring equitable participation and adherence to regulatory norms among stakeholders.
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