The GST was designed to simplify India's complex indirect tax structure, to formalize businesses and fight the 'shadow' economy. Photo: Reuters

India’s Goods and Services Tax (GST) has been beset with teething troubles in regard to implementation and compliance among the business community.

The government now suspects that businessmen may have evaded taxes on a massive scale – up to 340 billion rupees ($5.2 billion), reports Times of India.

Tax officials found variance in the filings made from July 2017 to December 2017 by many businessmen and the issue was flagged at a recent GST Council meeting.

Tax authorities may focus on those who have shown a wide variation in their two filings (GSTR 1 and GSTR-3B) and may share details of ‘suspects’ with states for action. GSTR-1 is the base document upon which the entire compliance structure for the tax was based, while GSTR-3B includes detailed filings of payment based on input tax credit and use of their previous balance.

The filings data analyzed by customs authorities reveals that in several cases the value of imported products was shown to be lower. Tax officials suspect this was done to pay lower GST at every stage of the sale process.

GST collections have remained flat as the government has failed to implement several planned anti-evasion measures such as invoice matching to track the value of sales and purchases, or e-way bills to keep tabs on the movement of goods from factories to showrooms.

However, tax consultants said that there could be valid reasons for the variation in people’s data since at the time of payment of taxes, input tax credit accumulated over months is used, along with that from the current period. But such details were not provided when the GSTR-1 was submitted, they argued.

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