India's GST norms are getting tougher to decimate growing incidents of Tax Evasions that are illegally being done claiming Input Tax Credits (ITC) with false invoices and bogus channels. Based on the statement as published by the GST Council Secretariat on Wednesday December 23, 2020, a number of preventive measures are introduced to check these cases. One such major tool is the mandatory payment of 1% GST Tax in cash by those businesses of Goods and Supplies having taxable items traded for more than INR 50 lakh in a month.
According to this rule, every month any GST registered taxpayer whose supplies of GST eligible items have exceeded the threshold of INR 50 lakh can use 99% of available electronic credit ledger balance to make output tax payment. Remaining 1% tax liability should be paid by cash. This rule will be active from January 1, 2021 onwards.
The rule does not apply for the entities where the managing director or any partner has paid income tax of more than INR 1 lakh. Also, it excludes those GST taxpayers receiving INR 1 lakh refund past financial year in against of unutilised Input Tax Credit.
Through this process, Central Board of Indirect Taxes and Customs (CBIC) is expecting to track those businesses taking aid of fraudulent channels, such as bogus ITC operators who generate false invoices for gaining Input Tax Credit benefits. The Department is already too serious to find the best possible way of covering huge revenue loss out of excess ITC claims made with fake means. There are around 12,000 ITC fraud cases detected by CBIC and 365 related arrests are done.
As assured by CBIC sources, this current GST rule wont be of any risk for the genuine GST taxpayers and devised to scan only those doubtful units that are making excessive Input Tax Credit claims.
-Arkaprava Das
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