Centre Empowers ED by Bringing Goods & Services Tax Network Under PMLA

The Centre on Saturday issued a notification to bring the Goods and Services Tax Network (GSTN) under the purview of the Prevention of Money Laundering Act (PMLA). As per the notification, information stored on GSTN can now be shared in accordance with the provisions of the PMLA Act.

The Ministry of Finance, Department of Revenue said the notification has been issued in exercise of the powers conferred by clause (ii) of sub-section (1) of section 66 of the Prevention of Money Laundering Act, 2002.

The Prevention of Money Laundering Act (PMLA) was enacted to address the issues of terror funding and drug trafficking. Offenses related to GST such as fake invoices and fraudulent input tax credits will now be covered under PMLA.

Nagendra Kumar, Senior Advisor at Deloitte told Moneycontrol.com that GSTN contains highly sensitive data at a detailed level, which can greatly assist in investigations. The inclusion of GSTN under the PMLA is expected to be immensely helpful for the Enforcement Directorate (ED) in conducting more effective investigations, he said.

The sharing of incriminating information with GSTN will enable the authority to limit the activities of suspicious businesses, according to Rajat Mohan, Senior Partner at AMRG & Associates. This enhanced capability will assist the government in identifying and apprehending the primary source of fraudulent transactions, ultimately fostering a more compliant ecosystem, he said.

According to the report, the Goods and Services Tax (GST) has made significant progress in the span of six years. The number of taxpayers has doubled, increasing from approximately 68 lakh in 2017 to around 1.4 crore. Concurrently, the average monthly revenue has also experienced substantial growth, nearly doubling from nearly Rs 90,000 crore in 2017-18 to Rs 1.69 lakh crore in the present financial year.

This development follows the geocoding of 1.8 crore addresses of registered businesses by the GST Network. Geocoding enables the identification of the precise location of registered entities, thereby facilitating the detection of bogus registrations.

The Central Board of Indirect Taxes and Customs (CBIC) has already conducted a pilot project for geocoding in select states. GSTN on Friday informed businesses that the functionality for geocoding the principal place of business address is now active for all states and union territories.