States, Centre told to focus on data analytics, tech to widen GST base, Pg11

Key Highlights:

• The Centre and states are focusing on data analytics and technology to expand the Goods and Services Tax (GST) base.
• Measures include granular data analysis, tracking taxpayers with no cash payments, and leveraging invoice matching.
• The GST Council announced process reforms, including a Rs. 10,000 threshold for show-cause notices, to be rolled out by April 1, 2027.
• Electronic invoicing (e-invoicing) for business-to-consumer (B2C) transactions will be introduced from April 1, 2027.
• Vehicle stops for goods movement will now be restricted to tax officers from supplier or recipient states based on specific intelligence.

Detailed Insights:

• The initiative aims to move away from enforcement-led actions towards technology-driven compliance and evasion detection.
• Granular data analysis will identify misdeclared retail sales as business-to-business (B2B) transactions to wrongly claim Input Tax Credit (ITC).
• The approach mirrors the Income Tax Department's NUDGE campaign, utilizing risk analytics and behavioral insights for compliance.
• The Invoice Management System (IMS) will facilitate matching credit details between sellers and buyers to prevent mismatches.
• A proposed additional layer in IMS will allow buyers to accept, reject, or hold invoices, ensuring alignment between parties.
• The existing GST e-Invoice System requires businesses to upload B2B invoices to an Invoice Registration Portal (IRP) for validation and generation of an Invoice Reference Number (IRN).
• The GST Network will provide necessary support to states for the transition to B2C e-invoicing.
• The decision on vehicle stops aims to streamline logistics and reduce harassment, initially proposed only for supplier states.

Key Concepts Involved:

• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services across India.
• Input Tax Credit (ITC): The tax a taxpayer has already paid on inputs when they purchase goods or services.
• NUDGE: A non-intrusive campaign using data and behavioral insights to encourage taxpayer compliance.
• Invoice Management System (IMS): A system designed to match and reconcile invoice data between buyers and sellers for tax purposes.