Srinagar, Oct 3 (KINS):While the recent Goods and Services Tax (GST) reforms aimed at simplifying compliance and reducing costs on essential commodities have received widespread appreciation from both industry and consumers, experts have voiced growing concern over alleged tax evasion practices in certain key sectors, including cement and automobiles.
The reforms, introduced last month, featured rate reductions on essential goods and a simplified return-filing system — measures intended to boost transparency and ease of doing business.
However, industry insiders and tax professionals caution that some manufacturers may be exploiting loopholes in the Input Tax Credit (ITC) mechanism to evade taxes. “There are reports that certain factories underreport their actual production volumes to show reduced output on paper,” sources revealed. “The unaccounted portion is then sold without proper invoicing, causing significant revenue losses to the government,” they added.
Experts believe that such practices not only distort market competition but also undermine the core objectives of the GST reforms. Manipulation of ITC claims remains one of the most common methods used for tax evasion, they said.
The automobile sector, too, has faced past scrutiny over ITC misuse and classification discrepancies, though no major cases have surfaced under the current reform framework.
Sources emphasized the need for strict monitoring and enforcement mechanisms to detect and prevent such fraudulent activities. “A robust vigilance system and timely investigation are essential to ensure that the intended benefits of GST reach the economy and honest taxpayers,” they said.(KINS)
