CBIC Looking At Stricter Checks And Scrutiny To Intensify Tax Compliance

The government would be focusing on widening of tax base by incorporating checks and increasing scrutiny through more administrative processes to boost indirect tax collections, Central Board of Indirect Taxes and Customs (CBIC) member Rama Matthews told Outlook Business in a post-budget interaction. 

“We are now looking at putting systemic checks in place so that compliance primarily happens not through enforcement, but processes. Simplifying of processes would also be a part of it which would eventually widen the tax base. Moving forward, we need to look at effective audit and using systems for enforcement. We are already on that but it would be further refined,” Matthews said. 

Union Budget 2023-24, presented on Wednesday, pegged GST revenue at Rs 9.56 lakh crore for FY24, an increase from the revised estimates of Rs 8.54 lakh crore for FY23.  

In November, the government launched nationwide action to haul unscrupulous entities on charges of fraudulent issuing of fake invoices for passing on Input Tax Credit (ITC) in order to evade Goods and Services Tax (GST). As many as 700 were arrested as GST authorities detected fraud to the tune of Rs 55,575 crore over the last two years. 

The CBIC has been taking steps to curb evasion through various processes like e-way bill requirement, validation for filing GST returns, and verification of registration. It also enforced restrictions on the amount of ITC that businesses can use for GST payment.  

These measures have curbed several malpractices. “Through compliance processes, we have ensured that certain things don’t happen. Things like auto-filing of your return processes ensures you cannot play around with data. And these have ensured that certain kinds of activities have reduced. We have been able to bring some discipline around blatant racketeering,” Matthews said. 

As far as GST is concerned, the issues now pending for resolution are more challenging as it would be difficult to arrive at a consensus. Goods like high-speed diesel, crude oil, petrol, aviation turbine fuel, natural gas, alcohol, and electricity are still outside the ambit of GST. The GST Council is trying to levy tax on casinos and online gaming and had agreed to impose a 28 per cent tax on the sector.  

At present there is an 18 per cent GST on online gaming. The tax is levied on gross gaming revenue, which is the fee charged by online gaming portals. But the council failed to arrive at a consensus on whether GST has to be levied just on the fees charged by the portal or the total sum, which would include the bet amount participants received. The GST Council formed a panel of state ministers to look into taxation of the sector, and the panel has also submitted its report to Finance Minister Nirmala Sitharaman. 

“The report has to be taken up in GST Council meeting but there is no clarity yet on when would it be taken up. It will take time to resolve issues that are now with GST Council because consensus would have to be built on those,” Matthews said. 

The budget tweaked the basic customs duty on 32 items. Duty was slashed on inputs for several goods, including television panels, mobile phones, and lithium-ion batteries with an aim to boost local manufacturing. The duty changes have been done in alignment with the larger policy push for Make in India and would help manufacturing under the production-linked incentive schemes.  

There has been an increase in duty on 14 items and the number of duty rates has been reduced to 13 from 21 on goods, except textiles and agriculture. The 2022-23 revised estimates for customs duty revenue collection arrived at Rs 2.1 lakh crore and FY24 collection is pegged to increase by 11 per cent at Rs 2.33 lakh crore. All the changes are geared towards either simplifying processes for business or for removal of confusion. The rate changes in customs have been done to deepen the value chain in India. 

Matthews added, “Components, parts of capital goods, components for infrastructure development, even raw materials for infrastructure if it’s not available in India, rates for all those have been slashed. Finished goods, to the extent possible, have been kept up the value chain. The duty structure has been created in a way that finished goods are always taxed higher and raw materials are taxed lower.”