Finance Ministry Current Affairs

Government constitutes GoM to resolve IT challenges faced in GST implementation

Union Finance Ministry has constituted Group of Ministers (GoM) to monitor and resolve IT challenges faced in implementation of Goods and Services Tax (GST). It also Committee on Exports to look into issues of exports.

Both committees were constituted following the decision taken in 21st GST Council meeting in Hyderabad, Telangana.

Key Facts

Group of Ministers (GoM): It will be headed by Bihar Deputy Chief Minister Sushil Kumar Modi. It will be assisted in its work by Chairman, Goods and Services Tax Network (GSTN) and Chief Executive Officer, GSTN. It was formed after states had raised issue of glitches being faced by taxpayers in filing their GST returns on GSTN.

Committee on Exports: Its mandate is to look into issues of exports and recommend GST Council suitable strategy for helping the sector in the post-GST scenario. It will be headed by Revenue Secretary Hasmukh Adhia.

Background

Exporters raised concern related higher cost of working capital owing to difficulties in availing input tax credit and refunds after implementation of GST regime. Before GST, exporters enjoyed upfront tax exemption on goods to be exported, but now, they have to pay GST before procurement of goods and services.

Moreover, exporters also need to pay IGST on imported inputs. However, they can avail input tax credit after sale within domestic tariff area or after sending their shipments outside country. The exporters can then claim unutilised credit as refund, process in which their capital gets blocked with government and resulting in raising of their operating cost.

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Government to launch Project Insight

The Union Finance Ministry is planning to launch ‘Project Insight’ from October 2017 to monitor high value transactions and detect tax evaders using technology with a view to curbing circulation of black money.

To implement the project government has signed contract with Information Technogolgy major L&T Infotect Ltd.  The project will add to list of efforts made by government to curb black money like Operation Clean Money’ after demonetisation, Income Disclosure Scheme, GST implementation, amendment DTAA with other countries etc.

Project Insight

It will use data mining, big data analytics to scoop out tax evaders from social media platforms to deduce mismatches between spending pattern and income declaration. The linking of PAN (Permanent Account Number) with Aadhaar will be key identifier to be used by IT Department to link and analyse various transactions relating to tax payers.

The integrated information technology platform will help in catching tax evaders in non-intrusive manner using technology and without traditional intrusive methods like search and seizure. It will use technology to allow government collate databases of IT forms, IT returns, TDS/TCS statements and Statement of Financial Transactions received from financial institutions.

Its reporting compliance management system will ensure that third party reporting entities like banks and other financial institutions is timely and accurate. It will also set up streamlined data exchange mechanism for other government departments.

It will also be leveraged for implementation of Foreign Account Tax Compliance Act Inter Governmental Agreement (FATCA IGA) and Common Reporting Standard (CRS). IT Department is going to set up new Compliance Management Centralised Processing Centre (CMCPC) for handling preliminary verification, campaign management, generation of bulk letters/notices and follow-up.

Benefits

Project Insights will play key role in widening of tax base and data mining to track tax evaders. It will help in catching tax evaders in non-intrusive manner like search and seizure. It will help to promote voluntary compliance and also enable taxpayers to resolve simple compliance related issues in online manner without visiting Income tax office.

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