GST Returns and ITR Mismatch: Govt issues Notice to Businesses

The Government, in a bid to curb tax evasion and money laundering, started comparing the income tax returns and Goods and Services Tax ( GST ) returns to identify the mismatch between these returns.

The tax department has already started action against such businesses by sending notices. This cleanup operation is followed by the past exercise where potential shell firms were identified and their directors were found fake. Most of these firms were struck off.

In a statement to a national publication, the official told that this is the first time when the government is matching income tax of taxpayers and GST returns. The initial findings indicated the overstatement of GST claims and understatement of ITR. However, the action against these entities might get stringent as recently Supreme Court (SC) refused to protect the GST violators from the arrest.

Due to low GST revenue, the tax department will now focus on data analytics as some of the analysis has hinted at discrepancy on the customs front.

The national daily cited an official as saying, "So far, various tax agencies were working in silos but now it’s possible to tally data and go after evaders."  Based on preliminary data mapping, thousands of companies were identified, he further added.

The tax authorities have complained of leakages in GST but the state and the Centre's political leadership demanded more time for the new tax regime to settle down. Now that polls are over, in several cases arrests have begun where Manpasand Beverages is a prime example.

Shell companies are used to make bogus claims. The tax officials have come across instances where drivers, gardeners or even slum-dwellers were found as directors of these companies.