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ET EDIT=Let Analytics Firms Raise GST Collection

December 07, 2019 05:47 AM

The Centre and the states are under pressure to raise tax collections. Ending evasion of the goods and services tax (GST) is a priority. GST throws up a mine of information; revenue authorities must deploy data analytics to analyse and make sense of the data to chase the physical volumes of key raw materials along their trail into tax-evaded goods. Steel and petrochemicals are intermediate goods. Basic input-output relationships link these raw materials with the end products bought by retail consumers. If the final taxed goods add up to a lower volume than can be expected from the quantities of raw materials produced, it points to leakage. This leakage should be plugged.

Data analytics should not be limited to analysing the data uploaded to the GST Network. There are Indian business process outsourcing firms that identify consumers of natural gas who have moved without paying their gas bills in London. They use multiple correlates to zero-in on truant customers. Such skills have to be brought to bear to identify the gap between, say, the value of synthetic garments on which GST should be paid, given the total amount of polyester fibre produced, and the actual sales of synthetic garments on which GST is paid. If input and output volumes do not match up, volume trails must be followed to track down the source of the leak. This is in addition to the obvious case for identifying and cracking down on fake claims of input tax credit.

Let the tax department bid out the task of identifying the source of tax leakage in different sectors. Suppliers of bulk raw materials should be held to account for every gram of their output sold, and their customers, those customers’ customers, and, in turn, their customers, down the chain. Set Indian analytics firms on this trail.


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