• Notification Date: 17-05-2023
• Notification No: N/A

GST Dept Seeks Access to Banking Transactions to Detect Fake Invoices

The Goods and Services Tax Department is looking to gain real time access to banking transactions of the taxpayers. As per reports, the department plans to use this to detect fake invoices and excess use of input tax credit (ITC) by sections of businesses. 

The action was taken in response to recent investigations that showed fraudulent invoices were being used to accumulate unauthorised tax credits for hawala operations. Additionally, it was discovered in several instances that the money was ultimately returned to the individuals who produced the phoney bills by taking detours. Money has also been found to be transferred through phoney invoicing by shell firms. 

According to department officials, at the time of GST registration, the taxpayer gives details of only one bank account, while a business can be using several accounts. It is important to ensure that all details are made available on time. But by the time the details are made available, the company or person generating the bogus invoices has already vanished. 

Like how income tax officials may acquire data on banking transactions, GST authorities are also eager to do the same. 

It may be noted that the income tax department has access to data related to high value transactions, suspicious transactions as well as cash deposits above a certain threshold to keep a tab on possible tax evasion. 

Reports say that issue is now being taken up by the Central Board of Indirect Taxes and Customs (CBIC) as well in a bid to curb tax evasion. However, it would require more discussions internally as well as with the Reserve Bank of India.