The CVD is presently not integrated with the sale price and importers usually indulge in under-invoicing to evade tax.
With the rollout of the proposed goods and services tax (GST), the Customs department will be able to do enhanced scrutinisation of under-invoicing of imports that is done to evade additional duty of customs or the countervailing duty (CVD). Major discounts on prices of imported goods offered by e-commerce companies will come under the scanner of the tax authorities as they would qualify for undervaluation at the time of payment of customs duty, a senior CBEC official said.
Under the GST, tax authorities will be able to track the retail value of imported goods through the IT framework of Goods and Services Tax Network (GSTN). The Central Board of Excise and Customs (CBEC) will be able to track discrepancy between the prices of imported goods and their sale prices.
The CVD is presently not integrated with the sale price and importers usually indulge in under-invoicing to evade tax. Under the GST, the authorities will be able to trace the transactions with the traders availing input tax credits at every level.
“The customs department has an integrated online system with a database on bills of entry and the invoices. Integration of this system with GSTN will help in checking tax evasion,” another CBEC official said.
There will be a system of self-policing, the official said. For example, an importer having declared the MRP of an imported good as Rs 100, won’t be able to sell it at for more than Rs 100. “If an importer has under-declared the price at the time of import and sold it at a higher price, this can be tracked,” the official said.
The GSTN will get integrated with the customs online software, which at present fails to show any overvaluation at retail level. A CVD is imposed on imports that may impact domestic producers because of the cheap pricing of imports.