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Centre brings Goods and Services Tax Network under PMLA | Here is why

GST network brought under anti-money laundering law to plug tax evasion.

Arushi Jaiswal Edited By: Arushi Jaiswal New Delhi Published on: July 09, 2023 9:30 IST
Govt brings GSTN under PMLA
Image Source : INDIA TV Govt brings GSTN under PMLA

The Central government has included the Goods and Services Tax Network (GSTN) under the purview of the Prevention of Money Laundering Act (PMLA) with an aim to plug tax evasion through fake billing. With this decision of the government, the Enforcement Directorate (ED) will be given more power to act against tax evasion within GSTN. 

The government through a gazette notification, notified changes to Section 66 of the Act to add GSTN as the 26th entity to the list.  The move to include GSTN under the money laundering law comes amid rising cases of GST fraud and fake registrations. 

GST offences will be included in PMLA Act

The information stored on GSTN can be now shared under PMLA Act. Due to this, GST offences like fake input tax credits, fake invoices etc. will be included in the PMLA Act. The exchange of information between ED and GSTN PMLA will help in such kinds of investigations.

“In the exercise of the powers conferred by clause (ii) of sub-section (1) of section 66 of the Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government, being satisfied that it is necessary in the public interest to do so, hereby makes the following further amendment in the notification of the Government of India, in the Ministry of Finance, Department of Revenue, published in the Gazette of India, Extraordinary, Part II, “Section 3, Sub-section (i), vide number G.S.R. 381(E), June 27, 2006,” the official notification read. “In the said notification, after the serial number (25) and the entry relating to it, the following serial number and entry shall be inserted, namely (26) Goods and Services Tax Network,” it added.

CBIC on tax evasion

In order to stop tax evasion, the Central Board of Indirect Taxes and Customs (CBIC) has been optimistic. CBIC chairman Vivek Johri had said last month that the government is serious towards curbing the practice of fake billing and fake invoicing and also identifying fake businesses.

PMLA was enacted to tackle terror funding and drug trafficking. The notification will now facilitate sharing of information or material in possession between ED and GSTN, to check any violations of GST provisions.

(With agencies input)

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