Centre brings GST Network under PMLA; move gives ED more powers

The Centre on Saturday brought out a notification saying the Goods & Services Tax Network (GSTN) will come under the purview of the Prevention of Money Laundering Act (PMLA). The GSTN is now among the entities that have been mandated to share information with the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) under the PMLA Act.

These changes have been made under Section 66 of the PMLA, which provides for disclosure of information. With this move, it will be possible to take strict action against those involved in tax evasion and manipulation of documents, the notification said. Crimes under GST like fake input tax credit (ITC) and fake invoices will be included in the PMLA. 

Also read: Karnataka Budget highlights strains from BJP govt failures, Central aid shortcomings

Besides the ED and the FIU, agencies that share information to spot and probe financial fraud include the Competition Commission of India (CCI), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Serious Fraud Investigation Office (SFO), and Director General of Foreign Trade (DGFT). This list is updated from time to time.

Highly sensitive information

Quoting Nagendra Kumar, Senior Advisor at Deloitte, MoneyControl said GSTN contains highly sensitive data at a detailed level, and this can be put to use for investigations. The inclusion of GSTN under the PMLA will likely help the ED immensely, he said.

Also read | India’s equity market: Bull run cheers investors; what’s the long-term view?

According to the government notification, the FIU and the ED will also share information with the GSTN in case they find that any GST assessee is involved in suspicious forex transactions.

The GSTN is an information technology system that manages the GST portal. The government is aided by private players in its efforts to monitor domestic financial activity with the GSTN.

Scope of PMLA

PMLA seeks to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.

The GSTN provides a shared IT infrastructure and services to Central and State governments, taxpayers and other stakeholders for implementation of GST.  It makes available standard software for small traders to store their accounts such that straight away it can be uploaded as their monthly returns on the GSTN website.