GST tax evaders beware! New spy unit keeping watch

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The Directorate General of GST Intelligence will keep an eye on tax evaders and invoke anti-profiteering measures once GST kicks in.

The government has set up a new sleuthing unit — Directorate General of GST Intelligence (DGSTI) — empowered to keep an eye on tax compliance as part of plans to crackdown on evaders and invoke anti-profiteering measures once GST kicks in.

There will be at least one unit of DGSTI in each state, which will replace the existing Directorate General of Central Excise Intelligence (DGCEI).

DGSTI will be mandated to collect and disseminate intelligence relating to GST evasion. It will study the price structure, marketing patterns and classification of commodities and advise the GST authorities in plugging loopholes.

The existing DGCEI units in Jaipur, Ludhiana, Bhubaneshwar, Vizag and Kochi Regional Units being upgraded to “Zonal” DGSTI Units. A new zonal unit in Patna is also proposed.

The DGSTI network will be increased to eight more regional and sub-regional units, a source, who did not wish to be identified, told Moneycontrol.

“In effect, each state will have one unit of DGGSTI,” the source said.

DGSTI will be headed by a principal director general in Delhi who will be assisted by four sub-national directors general.

The Central GST and state GST laws include an anti-profiteering clause to disincentivise non-passing of price reduction benefits to consumers.

GST, which promises to stitch together a common national market by consolidating a web of local and central levies, is scheduled for roll-out from July 1, 2017.

According to Section 171 of the CGST/SGST Act, a company is bound to pass on any reduction its tax outgo to consumers in the form of lower prices.

Taxes on companies after GST may fall because of a lower GST rate (compared to the existing effective rate) or because of benefits of input tax credit.

Input credit means at the time of paying tax on a good, a producer, trader or service provider can reduce the tax already paid on inputs.

An authority may be constituted by the government to examine whether input tax credits availed or lower tax rates have actually lower prices of goods and services.

The government has maintained that any instance of undue profiteering will be dealt with sternly.

“Let us try to pass down the actual tax rate (benefit from receiving input tax credit) to consumers. We will try to operationlise the machinery for anti-profiteering. The machinery can ask any big company to ask its costing and balance and ask them why did you increase 3 percent in the last 3 months only? Those questions can be asked any time,” Revenue Secretary Hasmukh Adhia said in Srinagar on Friday.

The government has already reorganised the Central Board of Excise and Customs (CBEC) into a Central Board of Indirect Taxes and Customs (CBIC).

Moneycontrol had reported on October 6, 2016 about the government’s plans to overhaul the indirect tax administration to ensure a glitch-free GST rollout.

The newly formed CBIC will have 21 zones, 101 GST tax payer services commissionerates comprising 15-sub commissionerates, 768 divisions, 3969 ranges, 49 audit commissionerates and 50 appeals commissionerates.

Each commissionerate will have oversight rights over 15,000-20,000 assessees with combined revenues of about Rs 5,000 crore.

Every state, except those with very small assessee-base, will have at least one commissionerate, which will be broken down into five divisions and 50 ranges for each.

Sources said that DGSTI, the new intelligence unit, will also function as think-tank to CBIC. It will examine cases of suspected tax evasion and pass on its inputs to CBIC.

DGSTI will also study the modus-operandi of evasion and issuance of alert notices, and co-ordinate and share information about tax evasion with other enforcement agencies.

The existing Customs and Service Appellate Tribunal (CESTAT), however, a judicial body, will continue to run concurrently to deal with legacy cases, some which go back more than a decade.

For the purposes of administration, the country will be divided into 24 zones and 107 GST commissionerates.

Each commissionerate will have oversight rights over 15,000-20,000 assessees with combined revenues of about Rs 5000 crore.

Every state, except those with very small assessee-base, will have at least one commissionerate, which will be broken down into five divisions and 50 ranges for each.

The existing Customs and Service Appellate Tribunal (CESTAT), a judicial body, will continue to run concurrently to deal with legacy cases, some which go back more than a decade.

Source: http://www.moneycontrol.com/news/business/economy/gst-tax-evaders-beware-new-spy-unit-keeping-watch-2285843.html

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