UP govt to crack down on tax evasion, eyes over Rs 1.4-trn revenue in FY20

Company News

Uttar Pradesh government will crack down on Goods and Services Tax (GST) evaders to improve its tax and non-tax revenue collection.
The state is targetting a tax mop-up of Rs 1.4 trillion in the current financial year, 4.4 per cent higher than the revised budgetary estimates of Rs 1.34 trillion in 2018-19.Chief Minister Yogi Adityanath has asked the commercial tax department to employ technology tools to identify tax evaders for taking action. In a review meeting held in Lucknow recently, he underlined that UP was the largest consumer state and, as such, it should top the GST collection tally as well.
He directed the state taxman to take "effective steps" to improve the state tax collection by rooting out chronic tax evasion, and noted that a bigger GST kitty would boost state revenues and provide greater leverage to the government to invest in public welfare schemes.
During April-July 2019, UP tax revenue, comprising GST, Value Added Tax (VAT), excise, stamp and registration, transport, energy and land revenue heads, stood at Rs 41,202 crore. Similarly, the state clocked a non-tax revenue of Rs 1,982 crore during the first 4 months of the current financial year under the heads of mining, minerals, irrigation, forest and wildlife, police, public works department (PWD), housing, and employment, etc.

Adityanath also exhorted the excise department to pull up its socks for posting higher excise revenue in the current financial year. Meanwhile, the CM directed the transport department to develop bus terminals on the pattern of airports, so that they could be harnessed for commercial use and to boost income.During 2019-20, UP has projected total revenue receipts of more than Rs 3.91 trillion, including tax and non-tax revenue, both emanating from state collection and its share from the tax and non-tax revenue of the Centre...Read More

Tax evasion may derail India's fiscal deficit goal as demand wanes

Company News

India’s slowing economy could easily be the fall guy for Prime Minister Narendra Modi government’s struggles with meeting tax targets. But there’s another culprit: tax evasion.A nationwide consumption tax, introduced in 2017 and widely regarded as a tool to improve tax compliance and boost economic growth, may have failed to plug evasion, according to a report by the Comptroller and Auditor General of India, the auditor of government accounts. The number of Goods and Services Tax returns filed have declined, it showed.
Poorer tax compliance adds to the government’s revenue collection woes amid a broader slowdown in the economy, where demand for everything from cookies to cars has taken a knock. Consumption, which contributes almost 60 per cent to India’s gross domestic product, has been largely hurt by a shadow banking crisis, which in turn has dragged growth down to a five-year low.
The consumption tax was expected to bring in an anti-evasive tax regime, but there are numerous cases of bogus billings, tax evasion and fake invoicing, according to tax consultancy and auditing firm PricewaterhouseCoopers LLP. “I wouldn’t expect this kind of reform and tax regime to become stable quickly,” Pratik Jain, a partner at PwC India, said.
The government’s total tax revenue in the last financial year ended March fell short of target by Rs 1.7 trillion ($24 billion), according to provisional numbers. That’s due in part to GST collection trailing monthly target for most of the year.A revenue miss again will put the fiscal deficit goal of 3.3 per cent of GDP at risk, and limit the government’s ability to spend on infrastructure and welfare programs.

The finance ministry expected GST to help boost GDP growth by as much as two percentage points...Read More

Trade mis-invoicing cost India $13 bn in tax revenues in 2016, says report

Current Affairs

India is estimated to have lost $13 billion potential tax revenue in 2016, equivalent to a staggering 5.5 per cent of total government revenue collections back then, due to simple trade invoicing.
The findings, part of a report by Washington, DC-based think tank Global Financial Integrity (GFI), are set to worry policymakers who have increasingly tried to crack down on fraudulent tax practices.
Trade misinvoicing involves both exporters and importers deliberately misreporting the value, quantity, or nature of goods or services in a commercial transaction and is treated as one of the most common forms of tax fraud by the government.Of the lost revenue, approximately $4 billion was due to deliberate misinvoicing of exports, while $9 billion was due to the same being done for imports.
The lost revenue on the import side can be further broken down by uncollected value-added tax worth $3.4 billion, uncollected Customs duties costing $2 billion, and uncollected corporate income-tax worth $3.6 billion, GFI said.
Released on Monday, the report also pointed out this trade gap for misinvoiced goods may be as high as $74 billion, equalling 12 per cent of the country’s total trade of $617 billion in the same year.
A report by the UN had earlier warned New Delhi that valuable earnings, mostly in commodity imports, were regularly vanishing and had suggested updating trade policy to counter the issue.

India should also encourage other countries to adopt a beneficial ownership registry, to fully implement financial action task force’s anti-money laundering recommendations, country-by-country reporting, tax information exchange initiatives and the Addis Tax Initiative, GFI said.Back in 2017, a similar report by GFI pegged the total illicit inflows into India between 2005 and 2014 at $770 billion.