The Role Of GST In Curbing Tax Evasion In India: A Critical Analysis
- IJLLR Journal
- Mar 30
- 2 min read
Deewanshu Yadav, Manav Rachna University
Tanu Tanwar, Manav Rachna University
ABSTRACT
The introduction of GST in India on July 1st, 2017, was a major move under the tax regime primarily intended to address the issue of tax evasion and further enhance tax transparency. Before GST was put in place, the Indian tax system worked under several indirect tax solutions such as VAT, service tax, excise duty, and entry tax which operated at different rates and in different states. Due to the complexity, definite loopholes were there that tax evaders exploited due to practices such as cascading of taxes, fabricating invoices, and causing underreporting in the unorganized sector.
The essence of GST was conceived: To consolidate different tax structures so that compliance mechanisms are streamlined and the clear administration of taxes could be practiced, thereby minimizing any possibility of evasion. Important developments were the Input Tax Credit system via invoice matching, e-way bills to keep movement of goods digitally, and regular data tracking through the GST network, which seemed to have increased tax compliance enormously. Also, the use of data analytics and artificial intelligence (AI) tools has led to the identification of suspicious transactions and fraudulent claims more effectively.
Thus, this paper seeks to critically assess the role of GST in preventing tax evasion through its impact, challenges, and the effectiveness of current tax enforcement. GST has been effective in enhancing tax enforcement in practice, whereas computer glitches, compliance burden, and fraud still pose problems for this fulfilment today. The analysis further reviews the GST success rate with preventing tax evasion and proposes policy suggestions to improve its effectiveness within the tax regime.
Keywords: Goods and Services Tax (GST), tax evasion, input tax credit, invoice matching, GST Network (GSTN), e-way bill, digital taxation, compliance.
