The Central Board of Indirect Taxes and Customs (CBIC), an organisation that has helped stabilise revenue collections and took steps to decriminalise noncompliance, has stated that strengthening the taxpayer roll is the organization’s next major responsibility.

“Expanding the tax base is the next big thing. The number of taxpayers must increase. We are collaborating with the states on that. We have a plan in place that needs to be finished. We’ll carry it out discretely. Vivek Johri stated in an interview that this is a significant agenda.

The goods and services tax (GST) base, which currently numbers about 14 million taxpaying individuals, should be greatly expanded, according to the indirect tax authorities.

“If you contrast the taxpayer base of this tax with that of other taxes, for instance, income tax has a basis of around 80 million taxpayers. Thus, there is a wide gap. We must determine whether or not this gap is appropriate. According to Johri, it seems logical that there is room to expand the tax base.

The input tax credit mechanism, which aids in collecting taxes on the margins at each level, fails in the case of the unregistered vendors, the final link in a lengthy supply chain.

As a result, even though goods and services tax is collected and paid to the government up until that point in the supply chain, the government does not receive taxes on margins at that point.

The government has maintained a barrier of 40 lakh in sales for companies to register for the goods and services tax, although interstate trade required registration regardless of the sales level.

According to government statistics, there are more than 63 million unincorporated, non-agricultural micro, small, and medium-sized businesses in India, with 99% of them belonging to the micro sector, which is defined as having sales of up to 5 crore rupees.

In contrast to this, the 14 million taxpayers who are currently enrolled for GST demonstrate that many more may be recruited.

Including them in the indirect tax base might significantly increase tax revenues.

As the turnover of the firms was recorded and direct tax compliance increased, it also had a positive impact on direct tax revenues.

To increase compliance, the direct and indirect tax agencies now closely share data.

The necessity to increase audits is the other priority for CBIC, according to Johri. As the momentum for the goods and services tax has grown, the indirect tax administration is currently undertaking audits of the early years of the tax.

By reviewing the tax returns and other records kept by the business, GST audits or departmental audits are performed to confirm the accuracy of the stated sales, taxes paid, refunds claimed, and input tax credits utilised by the business. Any discrepancy in the information contained in various documents could be cause for concern.