The Commercial Taxes Department in Karnataka has recently cracked down on a number of culprits who were using GSTINs to evade tax. The department has seized incriminating documents and initiated proceedings for recovery of the evaded tax amount.
In one case, the department found that a contractor was using two GSTINs, one of which had been canceled in 2019. The contractor was underreporting the value of taxable supplies by using the canceled GSTIN. This resulted in a loss of revenue to the government exchequer of Rs 2.5 crore.
The department has also found that some businesses are using GSTINs of shell companies to evade tax. Shell companies are companies that are set up only to evade tax. They do not have any real business activity and do not file any returns.
The Commercial Taxes Department is taking a serious view of tax evasion and is committed to bringing the culprits to book. The department has warned that anyone found evading tax will be severely punished.
The department has also urged taxpayers to be aware of the modus operandi of tax evaders and to report any suspicious activity to the department.
Sure, here is a blog post on the tips for taxpayers to avoid being duped by tax evaders:
How to Avoid Being Duped by Tax Evaders
Tax evasion is a serious crime that can have a number of negative consequences, both for the individual taxpayer and for society as a whole. By following these tips, you can help to protect yourself from being duped by tax evaders:
- Always verify the GSTIN of the supplier before making a payment. The GSTIN is a 15-digit alphanumeric code that is uniquely assigned to every registered GST taxpayer in India. You can verify the GSTIN of a supplier on the GST website.
- Do not deal with suppliers who do not have a valid GSTIN. If a supplier does not have a valid GSTIN, it is likely that they are not registered with the GST authorities and are therefore not paying taxes.
- Be wary of suppliers who offer discounts if you do not ask for a GST invoice. This is a common tactic used by tax evaders to avoid paying taxes. If a supplier offers you a discount for not asking for a GST invoice, it is best to walk away.
- Report any suspicious activity to the Commercial Taxes Department. If you suspect that a supplier is evading taxes, you can report it to the Commercial Taxes Department. They will investigate the matter and take appropriate action.
By following these tips, taxpayers can help the government crackdown on tax evasion and ensure that everyone pays their fair share of taxes.
The penalties for tax evasion under GST are divided into two categories:
- Penalties for non-fraudulent cases: These penalties are imposed for cases where there is no intention to evade tax. The penalties for non-fraudulent cases are as follows:
- A penalty of 10% of the tax amount due, subject to a minimum of Rs. 10,000.
- A late fee of Rs. 100 per day per Act for late filing of returns. The maximum late fee is Rs. 5,000.
- Interest at 18% per annum on the tax due and unpaid.
- Penalties for fraudulent cases: These penalties are imposed for cases where there is an intention to evade tax. The penalties for fraudulent cases are as follows:
- A penalty of 100% of the tax amount evaded, subject to a minimum of Rs. 10,000.
- Imprisonment for up to 3 years.
- Denial of registration under GST.
- Suspension of registration under GST.
- Cancellation of registration under GST.
The penalties for tax evasion under GST are quite severe, and they are intended to deter people from engaging in this illegal activity. If you are found guilty of tax evasion, you could face a significant financial penalty, imprisonment, or a combination of both.
In addition to the penalties listed above, the GST law also provides for the compounding of offenses. This means that the offender can pay a fine to the government and avoid criminal prosecution. However, compounding is not available for all offenses, and the amount of the fine is determined by the seriousness of the offense.
If you are unsure about your GST obligations, you should consult with a tax advisor. They can help you understand the law and ensure that you are complying with your obligations.
The Commercial Taxes Department is committed to taking strong action against tax evaders. Taxpayers should be aware of the penalties that can be imposed and should take steps to avoid being caught.