NEW DELHI: With GST rate rationalisation and procedural simplification out of the way, the Centre has offered to help the states in widening the base using data analytics, with changes in the return filing system and invoice matching also likely to plug leakages.




"We have had discussions on improving the base and also quality of disclosure... We can leverage technology to increase the base without the exercise being intrusive. We can improve the analytics and work with GST Network (the back-end data arm) on the identified gaps," an official said, adding that some analysis has also been shared with the states. Currently, there are 1.7 crore registered taxpayers and officials indicated that this number can be increased.




They said with changes in returns and the invoice matching system will also help plug revenue leakages, while also making life simpler. Separately, the Centre and the states are looking to encourage e-invoicing , which is likely to be ready by April. Here, there will be an incentive for businesses to move to the new mechanism as govt looks to be "facilitative" instead of mandating things. B2C e-invoicing is also expected to provide data on all entities in the supply chain -- from suppliers to the final seller.




Currently, businesses with average annual turnover of Rs 5 crore have to mandatorily generate e-invoice for B2B sales.




Officials said that most of the changes finalised by the GST Council last week will be implemented from April as some amendments to the laws are required. But the finance ministry is also examining if the move to stop issuing notices for demand under Rs 10,000 can be done through an executive order.




Over the next few weeks officials from the Centre and the states will come together to discuss if there is a need to stop tax credits for the entire chain or only the errant entity should face action. "We will need to undertake analytics and improve coordination between states to get hold of the errant supplier," the official said. At the Council meeting, states sought a review of the proposal . Some of them were of the view that by blocking the credit, they were able to go after some of the players in the chain, which businesses have argued often leads to harassment.




Similarly, some of the states did not allow the plan to allow input tax credit on automobiles to be used by businesses claiming that this will also be claimed when vehicles were put to personal use. The Centre has argued that this may be the case with small businesses or proprietorship firms -- which account for 75% of the credits for vehicle purchases but have only 15% of the amount claimed -- but not with all businesses.