GST dept to get access to banking transactions

May 15, 2023

Goods and Services Tax authorities are seeking near real-time access to banking transactions of the taxpayers, as a means to detect fake invoices and excess use of input tax credit (ITC) by sections of businesses.

The move follows recent investigations that revealed that undue tax credits accumulated through fake invoices are being used for hawala transactions. In several cases, it was also found that through circuitous routes, the funds finally returned to the persons generating the fake invoices. Shell companies too have been found routing money through fake invoices.

“Money trail is very important in these cases. While at the time of GST registration, the taxpayer gives details of only one bank account, a business can be using several accounts,” said a source, adding that it is difficult to get data on banking transactions in a timely manner at present.

Often, by the time the details are made available, the company or person generating the bogus invoices has already vanished, the source further explained.

GST authorities are now keen on getting faster data on banking transactions, akin to the access the income tax authorities have.

The income tax department gets data on high value transactions, suspicious transactions as well as cash deposits above a certain threshold to keep tab on possible tax evasion.