NEW DELHI: The government may try to put in place rules to check tax evasion but trust ingenious businessmen to come up with ways to beat it. That’s precisely what’s happening with goods and services tax (GST), where protests by traders have forced the government to go slow on enforcing several elements, such as matching of sales and purchase invoices and electronic way bill, that were meant to plug evasion.
The multiple tax rates have only added to the problem. Tax officials admit that in case of garments, for instance, a number of smaller players were billing one shirt that costs upwards of Rs 1,000 and attracts 12 per cent levy as two pieces of around Rs 600 each to pay only 5 per cent levy. This is in addition to a number of garments that earlier cost more than Rs 1,000 seeing marginal price cuts to fall under the lower tax bracket, where there is nothing wrong.
Taking advantage of tax arbitrage is among the simpler ways to evade tax.
Some garment and utensils players are using railways to evade tax, consultants and officials said. Unlike goods moving by trucks, which are stopped on the way, there are virtually no checks in case of railways, making it easier to evade taxes. In the past traders have ganged up to chase tax authorities at railway stations, making officials extremely wary of conducting raids, a senior official involved with GST told TOI.
When it comes to trucks, several businessmen based in Surat seem to have perfected the art. Industry players said that sari traders often use the same set of invoices to ship goods thrice to Delhi. “I don’t know why it’s three times but it is an industry norm,” said a tax consultant. A senior official acknowledged the massive use of kutcha and pucca invoices with the latter destroyed if tax authorities do not check a truck on the way.
There are other ways of misuse of tax credit too, but they are seen to be minor violations.
