Tax Evasions lead to deceleration in VAT revenues-study

Amid states claim that switch over to VAT has resulted in substantial growth of revenues, government auditor CAG has found tax evasion leading to deceleration in tax receipts in many states post VAT, that is touted as predecessor of proposed national-level GST.

Lacunae like deviation from agreed rates have also come into light in a study report compiled from Accountants General of 23 states and deficiencies noticed in other compliance audit exercises.

This prompted CAG core team, that conducted the study, to recommend that a mechanism should also be installed to monitor any deviations from GST rate, which could distort the national-level indirect tax system, implementation of which has seen delay of two years from the original schedule.