Government probes Income Tax and GST mismatching in crackdown against Tax evaders

The Modi government is set to take up the next stage of action against tax evasion and money laundering with data analysis helping detect thousands of overstated goods and services tax (GST) claims that don’t match up with income tax returns.

This is the first time the government is matching income tax and GST returns and initial findings have pointed to overstatement of GST claims and understatement of income in tax returns.

The action against such entities might be tough with the Supreme Court recently refusing to protect GST violators from arrest.

For long, tax authorities have complained of leakages in GST but the political leadership at the state and the Centre wanted more time for the new regime to settle down.

Arrests have begun in several cases, with Manpasand Beverages being a prime example.

Recent court rulings have also strengthened the tax department’s case to crack the whip.

One of the most glaring gaps noticed by tax officials is the use of shell companies to make bogus claims. In several cases of fraudulent claims, identity theft was also noticed.

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