1271099 SIP myths you must know!

Armed with past liabilities, the taxman is at the door. Just in the month of December, GST (Goods and services tax) authorities have dispatched demand notices amounting to a whopping Rs 1.45 lakh crore – almost equal to a full month’s collection – to nearly 1,500 businesses. The demands have been raised over alleged discrepancies in annual returns and claims for input tax credit six years ago ie. FY17-18, The Economic Times has reported.

GST is hailed as the single biggest tax reform in the country since Independence and it was introduced on July 1, 2017.

Saurabh Agarwal, tax partner, EY said, “Notices for 2018-19 are currently being issued for recovery of tax liabilities on both factual and interpretation issues.”

An official, who preferred to remain anonymous, told the newspaper that the quantum is big since the last date for serving notices for 2017-18 was December 31, 2023. He described it as ” deadline factor”. He also said that the amount included both penalty and interest.

It might be mentioned that 72.5 lakh GST returns were filed in 2017-18. The officials claimed that only a fraction was selected for scrutiny.

He said that only 48,000 GST returns were scrutinised and these pertained to the two financial years of FY18 and FY19. He said discrepancies were observed in these returns.

The official also indicated that the number of notices might rise in the near future. for scrutiny, 8,000 are due for further scrutiny,” said this official. The government has already extended the deadline for issuing demand notices to those who filed returns for FY19 and FY20 to April 30 from March 31.

Officials also indicated that they have detected evasion of the indirect tax to the tune of Rs 1.51 lakh crore in this fiscal, with more than 10 weeks yet to go.

As on December 30, 2023, the recovery amounted to Rs 18,541 crore – a pathetic 37% of the “internal target” of Rs 50,000 crore. This also partially explained why the recovery drive has become aggressive.

On January 7, 2024, the Union finance ministry said that since mid-May 2023, they managed to identify 29,273 bogus firms which engineered possible tax credit evasion of Rs 44,015 crore. So far, as many as 121 persons have been arrested in these cases.

The finance ministry stated that they managed to save Rs 4,646 crore – Rs 3,802 crore by blocking input tax credit and Rs 844 through recovery. In FY23, GST officials detected evasion to the tune of Rs 1.31 lakh crore and managed to recover Rs 33,226 crore.