The Punjab government has started the process to modernise its tax intelligence unit in the taxation department with funding from the World Bank to bolster the goods and services tax (GST) revenue by improving compliance and plugging loopholes.
The taxation department has received an in-principal approval from the finance department for deployment of additional manpower, especially data analysts, and technology upgrade for usage of analytics and artificial intelligence (AI) to detect frauds and curb revenue leakage. The modernisation of tax intelligence unit is one of the several objectives of the $100 million Program for Results (PforR) project covering five departments, including planning, social justice and women and child development, for which loan negotiations between the Punjab government and the World Bank are underway, persons privy to the discussions said.
A meeting was held by state officials led by principal secretary, finance, Ajoy Kumar Sinha with representatives of the World Bank and department of economic affairs (DEA) of the Union finance ministry last week to discuss the terms of the loan agreement for part funding of the project. “The loan amount is being worked out and the interest rate will be cheap. The state government will also put its share. The approval of the state council of ministers will be taken shortly,” one of the officials quoted above said.
Finance minister Harpal Singh Cheema, in his budget for financial year 2022-23 on June 27, had announced to establish a tax intelligence unit in the state to augment additional resource generation through taxpayer facilitation and communication and strengthen tax analytics capabilities. The growth in goods and services tax collection has been a matter of concern in the state. Punjab was among the states with the highest revenue shortfall in GST between 2017-18 and 2021-22 as it was able to collect only around 50% of the protected revenue under the new indirect tax regime. The states were guaranteed a 14% year-on-year growth in their GST revenue with 2015-16 as the base year and were compensated by the central government for any shortfall till June 30 this year. The situation has, however, changed with the discontinuation of the GST compensation, making efforts to shore up revenue collection all the more imperative.
{{/usCountry}}Finance minister Harpal Singh Cheema, in his budget for financial year 2022-23 on June 27, had announced to establish a tax intelligence unit in the state to augment additional resource generation through taxpayer facilitation and communication and strengthen tax analytics capabilities. The growth in goods and services tax collection has been a matter of concern in the state. Punjab was among the states with the highest revenue shortfall in GST between 2017-18 and 2021-22 as it was able to collect only around 50% of the protected revenue under the new indirect tax regime. The states were guaranteed a 14% year-on-year growth in their GST revenue with 2015-16 as the base year and were compensated by the central government for any shortfall till June 30 this year. The situation has, however, changed with the discontinuation of the GST compensation, making efforts to shore up revenue collection all the more imperative.
{{/usCountry}}A taxation official said that as the department had an intelligence unit which was also doing data analysis, the government decided to strengthen the existing set-up instead of setting up a new one. “In addition to intelligence inputs from field staff, data analytics, AI and machine learning tools will be used to curb input tax credit frauds, check fake billing, identify taxpayers posing revenue risk and detect fly-by-night business entities, besides gathering actionable insights,” he added.