What is GST Evasion – Goods and Services Tax (GST) was implemented in the Indian economy from 1st July 2017 to displace the various indirect taxes and surcharges which were levied before 1st July 2017 with one customized tax structure and also to reduce the cascading effects of taxation through the input tax credit mechanism and levy the tax only on the value-added. Main purposes of GST’s implementation, one more general aim of combating evasion in tax structure was also included. Tax evasion has become a serious problem for the government of just about every country which is hard to regulate.

What is GST Evasion | GST Evasion Penalties – Taxkundali

The Centre maintains to tighten the loop around GST evaders, its repression on false invoices slowed down in recent months due to the COVID-19 recovery. About 8,000 plus cases of a fake Information tax credit of over 35,000 crores rupees were identified during 2020-21, leading to the arrest of 426 persons, which involved 14 professionals, such as CA and lawyers.

How GST Evasion Work

Tax evasion is the illegal attempt through which the taxpayers attempt to decrease their tax liability but in tax avoidance taxpayers reduce their tax debt through the legal attempt. evasion and tax avoidance both plan to reduce the tax compliance of the taxpayers and also the revenue of the government. In the past indirect tax regime, the administration of tax compliance of taxpayers was expensive and also difficult due to a multiplicity of taxes that’s why GST was implemented to rework the Indian economy into “one nation and one tax and one market. 

But the taxpayers are also creating challenges in the achievement of decreasing tax evasion in indirect tax structure by using the loopholes of the GST structure and making attempts to find better and innovative ways to evade their tax liability. This study highlights the tax evasion tactics which the taxpayers are watching after the GST’s implementation to defeat their liabilities in the GST regime. This study also indicated the easy measures which the tax administration authorities can strategically and efficiently apply to fight the evasion in GST.

Various Types of GST Evasion

  1. Evasion by Separate Registration
  2. Evasion by Bills Manipulation
  3. Evasion by Branded or Non-Branded Trading
  4. Evasion by Sales Under the report
  5. Evasion by False or wrong invoices
  6. Evasion by E-Way bill
  7. Evasion by Personnel and Business Expenditure
  8. Evasion by GST liability calculation

How Can We Stop GST Evasion

As per the senior government administrators, the government will soon be starting several steps to combat GST evasion. Field arrangements have been notified by the Central Board of indirect tax and Customs (CBIC) to proceed with GST registration cancellation concerning non-compliant taxpayers. Field arrangements have been asked to submit a status report every day until 25 November. In the majority of the cases evasion is due to errors in the composing of GST law and loopholes closing in. Law is in its developing stage and needs to be repaired by way of bills, notifications, and clarifications. Further, the Government should consider thinking of the multiple GST rates applying on one product” into a single rate so that tax avoidances through the ending of the invoices aren’t possible.

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