“The transit states will no longer have the right to conduct routine checks under law. They can intercept such vehicles only on specific intelligence. This makes it more difficult for interception,” a finance ministry official said, requesting anonymity.
In a major deregulation move as part of process reforms, the GST Council, at its 57th meeting last week, recommended that only the source and destination states would be able to inspect goods in transit. No inspection, detention or seizure of goods/conveyances can be carried out by transit states.
The official said the newly constituted single standing committee of officers, following the abolition of the fitment committee, would have representatives from 12 states, comprising five major states, four medium-sized states and three small states, with rotational representation every two years. The size of states has been defined by GST collections and the number of GST payers. “Even though every state may not be a member of the committee at a given point of time, every subject discussed will be circulated among all states,” the official said.
The official said that with GST rates and processes almost stabilising after nine years of the GST rollout, the Centre's and states' tax officers had been told to work towards deepening the taxpayer base, increasing cash tax collections and using intelligence and deeper data analytics to nab evaders.
They said e-invoicing for B2C transactions would come into effect from April 1, 2027, with GST Network providing the support system to states to move towards it. GST officers will act as facilitators for businesses and tell them about the audit benefits of the tax department having granular data.
The official further said that some of the process reforms, including the Rs 10,000 threshold for sending notices, approved by the 57th GST Council meeting, required only changes in rules and could be rolled out sooner.
With the economic benefits of last year's GST rate rationalisation showing results, GST officers will now follow a more "facilitative approach" rather than "mandatory compliance" to show trust in taxpayers.
"We have asked GST officers to increase cash tax collections and use deeper data analytics instead of being too intrusive. Although we have a good number of taxpayers registered under GST, there is scope to widen the base. We have asked states to widen the base," a source said.
Currently, there are about 1.68 crore taxpayers registered under GST.
Sources said state tax officers should ensure that cash tax collections increased and that the output tax liability of businesses was not equal to their input tax credit claims.
"We need to strengthen our tech system and adopt a non-intrusive approach. We have to improve data analytics, find gaps and increase outreach to taxpayers to make them understand the benefits of compliance," the official said, while drawing a parallel to the Income Tax Department's 'Nudge' campaign.
The official said B2C e-invoicing would be rolled out on a voluntary basis from April 1, 2027, which would ensure the availability of data till the last mile in the supply chain, starting from suppliers to the final buyer. Currently, businesses with an average annual turnover of Rs 5 crore have to mandatorily generate e-invoices for B2B sales.
"We are encouraging states to use the GSTN system for B2C e-invoicing. As regards the businesses, we will show them the benefits of B2C e-invoicing and the impact it will have on audit compliance. Since tax officers will be getting granular data with B2B and B2C e-invoices, they will be treated better in tax administration," the official said.
The official further said that currently there were many instances in which B2C sales were misused, with suppliers instead being rerouted to claim ITC benefits.
"We need intelligence and analytics to act as a deterrent. We want taxpayers to feel the benefits of compliance by acting as a facilitator," the official added.
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