AI and data analysis on legal interpretation result in a deluge of GST notifications, according to officials

 AI and data analysis on legal interpretation result in a deluge of GST notifications, according to officials

AI and data analysis on legal interpretation result in a deluge of GST notifications, according to officials

Following the Rs 1.5 lakh crore notifications to shipping industries and the Rs 1.4 lakh crore GST notices for online gambling, the airline industry is also under scrutiny.

The government claims that the improved data obtained from the use of analytics and artificial intelligence in taxes is what led to these notifications.

In talks with the Finance Ministry, stakeholders expressed concerns about notices being sent to various industries depending on how the law is interpreted; the government claims this is because of data analysis and artificial intelligence in taxes.

Following the Rs 1.5 lakh crore notifications to shipping industries and the Rs 1.4 lakh crore GST notices for online gambling, the airline industry is also under scrutiny.

Concerns over the most recent tax notifications have been voiced by stakeholders. He was looking for tax certainty. According to someone with knowledge of the development, DGGI (Directorate General of the tax on goods and services Intelligence) is on a mission to deliver alerts on interpretation concerns. Moneycontrol was informed of this development.

AI in taxes

The government claims that the improved data obtained from the use of analytics and artificial intelligence in taxes is what led to these notifications.

"At this point, the analysis is becoming more specific. That's why GST notifications are owed. Let's go on to the details. Tax administration is now at a complex stage, and it will continue to develop in this manner. Legal interpretation has been uniform because case law has been implemented. A senior government source told Moneycontrol, "We now know what the loopholes are, elsewhere a business should have paid tax and the circumstances under which it was not eligible to take credit."

Companies may now hide in fewer places thanks to data analytics. The majority of firms operate in the spaces between databases and information. Data gaps are filled up when databases exchange information with one another.

Since all transactional data is available online, analytics is what's causing this to happen automatically. Any data falsification or tampering is promptly identified. Legally speaking, these companies are liable for taxes. Making ensuring the required taxes are paid is the responsibility of the tax department.

Stabilization of the GST law's interpretation

But it will take three to five years to settle the way the GST regulations are interpreted in order to make it clearer what is and isn't taxed.

"The interpretations will become more widely applicable if the GST tribunal is established and enacted into law. It will take many years for it to stabilize and become evident that it is subject to taxes. Within the next three to five years, the ambiguities around the interpretation of the GST legislation would be resolved, the official said.

Businesses adapted to the new system throughout the first three years of the GST. After three years, the government launched an offensive against fictitious challans and registrations. GST has now passed that point.

GST notification

In November, InterGlobe Aviation—the company that runs IndiGo, the biggest airline in the nation—received a GST demand of almost Rs 1,666 crore. Other airlines are also being investigated.

He stated that the GST department considers the provision of services to the airlines to have occurred, and that the relevant party's examination revealed that services unique to India were not invoiced here.

Transactions between the Indian business and its head office fall within the purview of the tax system since the two are legally regarded as distinct entities under the GST. Tax law treats a supply as occurring even if it occurs between a company's head office and branch office without regard.

"The point of supply is also the point of taxes under GST. If the supplier is located overseas, payment is made using a reverse charge system. Taxability is present if the airline offers services in India but its headquarters are outside, he added.

Similarly, the official said that while the firms listed the services as exported, the services were really rendered inside India according to the GST notifications received to the shipping industry.