Tax authorities usually pick up cases for verification based on certain risk parameters, red flags raised in the system and inputs from various other players in the ecosystem as they balance the needs for effective tax administration and ease of doing business.
Tax authorities usually pick up cases for verification based on certain risk parameters, red flags raised in the system and inputs from various other players in the ecosystem as they balance the needs for effective tax administration and ease of doing business.
PremiumNew Delhi: Federal indirect tax body, the Goods and Services Tax (GST) Council should discuss the compliance burden on small businesses and the extent of fraud that is taking place around GST, Amit Mitra, principal chief advisor to West Bengal chief minister Mamata Banerjee urged the union finance minister and GST Council Chairperson Nirmala Sitharaman.
In a letter written to Sitharaman on Friday, Amit Mitra has said he has deep concerns about the GST related frauds taking place and the "web of regulations" which he said was overpowering for micro, small and medium enterprises. Mint has seen a copy of the letter.
An email sent to the spokesperson for the finance ministry on Monday seeking comments for the story remained unanswered at the time of publishing.
Mitra also raised the issue of non-existent entities which were discovered in the recent drive by central and state GST authorities aimed at unearthing fake GST registrations. Mitra said in the letter that over 69,000 GST identification numbers verified in the last two months had led to detection of over 20,800 non-existent entities.
"May I point out that out of the 1.4 crores businesses registered with GST only 0.42% of registered tax payers were verified, which yielded the shocking 30% non-existent and fraudulent registrations. Imagine if all of the 1.4 crores businesses registered with GST were to be verified what unimaginable fraud would be detected," Mitra said in the letter.
Tax authorities usually pick up cases for verification based on certain risk parameters, red flags raised in the system and inputs from various other players in the ecosystem as they balance the needs for effective tax administration and ease of doing business.
Mitra also referred to various announcements by union ministers in Parliament about extent of GST related frauds and described the indirect tax system as "porous."
Mitra attributed cases of GST related tax evasion to what he regarded as the deviation from the original design framework of tax returns. Mitra also pointed out that numerous forms and circulars under GST which small businesses are not able to cope with.
"Though the intent of GST was to bring in the informal sector entrepreneurs into the formal arena through a simple and transparent GST system, the unfortunate fact today is that 90% of the GST is contributed by large taxpayers who can cope with this complex web of regulations," Mitra said in the letter. Mitra also urged the union finance minister to convene a GST Council meeting that exclusively focuses on tax related frauds and the compliance requirements of MSMEs.