Department is using Artificial Intelligence to send you GST notices and advisories

With government going all-out to plug GST loopholes to contain evasion and bolster collections, taxpayers are frequently receiving notices and advisories for a range of issues including sudden spike in input tax credit (ITC) claim, lower

GST payment over the previous year and mismatch in return forms.

A GST Commissioner said that there is no human intervention in it and system picks up the cases by comparing the input tax credit reflecting in the returns in two years.

"If it (ITC claim) is quite high or low this year compared to previous year one will have to explain," he said, adding that outliers are being red-flagged by the system.

Miffed over frequent messages and advisories from the tax department, a trader said that even if explanations are sent to the department there is no communication or certificate stating that the demand is nil and the case is closed.

Vivek Jalan, Partner, Tax Connect Advisory Services LLP, said that one of the major issues facing the industry is blockage of input tax credit without giving notice. He said that ITCs are blocked in case of suppliers making a mistake in filing the return.

"Most of the time this data analytics itself is wrong because it is not considering imports and not considering other purchases," Jalan said.

Talking about the kind of notices being received by companies, Jalan said in one case the GST authorities asked a company to explain 17 per cent increase in turnover while GST payment going up by only 5 per cent.

"When we analysed the case we found that the company was rendering two kinds of services. While one was taxable at 5 per cent while the other was taxable at 18 per cent. So, the ratio of 5 per cent service went up and hence the difference in GST payment," he said.

Rajat Mohan, Senior Partner, AMRG & Associates said that communications from the department are coming more in the form of advisories for a number of reasons.

"In majority of the cases, notices come for claiming higher ITC. In case of sudden jump in profits also, explanations are being sought," he said.

Using data analytics and artificial intelligence, the revenue department has been taking targeted action to stop tax evasion. It has identified the areas and the entities which were indulging in under-reporting of revenue or over-invoicing. This has helped the department augment GST collection in recent months