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Measures taken by the Government to plug tax evasion :

1Lottery System : In order to make the small GSTN registered traders like restaurants, beauty parlours, grocery shops GST compliant, the Government is thinking to introduce a lottery system for Business to Consumers(B2C) sales. Now in many cases neither the small trader issue tax invoice nor the consumer demand it, and hence, such a turnover escaped from payment of GST.

Under the lottery system the consumers should demand tax invoice from the traders and upload the tax invoice details in a dedicated portal, winner will be picked-up from the uploaded invoices. The lottery amount will be significant and that will be held on monthly and yearly. This will make the consumer to force the trader to issue tax invoice and become GST compliant.

In the pre-GST VAT regime such a lottery scheme was operated by the Delhi Government in "Bill Banao, Inaam Pao scheme". The prize amount was five times of the taxable value subject to the maximum of Rs. 50000/-. This had helped Delhi Government to find the dealers who had manipulated their records

Government blocked E-way bill generation: The Government has notified that if the GST registered tax payers failed to file GSTR3B monthly return for two consecutive months then their E-way bill generation will be blocked. The seller cannot move the goods to the buyer. This has come into effect from 3rd Dec 2019. Nearly 3,00,000 entities were affected by this action, all of them were forced to rush to pay the tax and file the GSTR3B return to get their E-way bill generation unblocked. In Karntaka within 3 days of introduction of this action plan more than 8000 taxpayers filed their return and paid the tax.

Tax man will freeze your bank account and attach property if the GST return is not filed: Approximately one crore tax payers are not filing the GST return in time. Now the Government has released a standard operating procedure (SOP) to enable the tax authorities to attach the property and bank account of tax payers if the tax payers failed to file GSTR3B return even after repeated reminders and follow-up.

As per the SOP, three days before the due date for filing the return that is 20th of every month, a SMS will be sent to the authorised signatory, proprietor, partner and the directors reminding them to file return in time. If the return is not filed on the due date of 20th then after 5 days a system generated notice will be served to file the return within next 15 days. If even after 15 days no response is received, then the tax authorities will make best judgement assessment based on the available data and issue a demand notice to respond it within 30 days. If the tax payer failed to respond the assessment order, then after 30 days the tax authorities will start to process attaching the bank account and properties.

Blocking Input Tax Credit: The GST council has decided to block the input tax credit of fake invoices. If the tax authorities come to know that any tax payer is receiving fake invoices and availing input tax credit without receipt of goods, then the input tax credit of the tax payer in GSTR3B/Electronic credit ledger will be blocked. Having the input tax credit is blocked, the tax payer cannot use the input tax credit to adjust his GST liability on sale of goods or for claiming refund of the same.

Restriction in availing Input Tax Credit: In order to nudge the taxpayers to file their statement of outward supplies in GSTR-1 return in time, the Government has restricted the input tax credit of the recipient of goods.

If some of the supplier of goods have not filed their GSTR-1 return and, therefore, not uploaded invoice details, then the input tax credit of recipient of goods of the invoices not uploaded by the supplier should not exceed 20% of the eligible invoices uploaded by other suppliers under section 37(1). This 20% restriction was from Oct 2019, now from 1st Jan 2020 it will become 10%.

Example: If A is the recipient of goods from suppliers P,Q,R,N&M. The input tax credit of all the five suppliers for A in Oct 2019 is Rs. 1,00,000. Assume that all the suppliers except R has filed their GSTR-1 return in time and uploaded the invoices, the input tax credit from all the four suppliers is 80000/- then A can not avail input tax credit more than Rs. 96000/- (Rs. 80000+ 20% of Rs. 80000) even though A has received all the goods from all the 5 suppliers the input tax credit from them is Rs. 1,00,000. Because R has not filed the return A is suffering and therefore this will make A to force R to file the return.

6) New Return Filing system from 1st April 2020: From April 2020 a new single GST-RET1 monthly return with two annexures GST-ANX1 and GST-ANX2 will be implemented. This will replace the present system of filing two monthly returns GSTR-1 and GSTR-3B.

Under the new system, Input Tax Credit is allowed only on the invoices uploaded by the supplier which will be visible for the recipient under in the GST ANX-2. The recipient of goods will lock all the eligible invoices for which goods is received, if any uploaded invoices of suppliers is not related to him then he will reject that invoice. Invoice is uploaded by the supplier but goods is not received then the recipient mark such invoices in GST-ANX2 as pending. If goods is received by the recipient but invoice not uploaded by the supplier in GST ANX-2 then the recipient can avail just 20% of input tax credit of missing invoices. This system will eliminate fake invoices.

E-Invoices: E-Invoice is mandatory for registered person, whose aggregate turnover in a financial year exceeds Rs. 100 crores w.e.f 1st April, 2020. The tax payer will transmit the E-Invoice details in JSON file to E-Invoice Registrar to obtain QR code and digital signature on all B2B invoices then it will be transmitted to GST portal to allot a unique invoice reference number, invoices with this number only will be considered for input tax credit. The same data will be captured in GST ANX-1. If the aggregate turnover exceeds Rs. 500 crores, then QR code is mandatory on all B2C invoices also. This will eliminate availing input tax credit on fake invoices.

18-January 2020



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