Govt brings GSTN under PMLA, GSTN to share info with Investigating Agencies

Jul9,2023 #ED #GSTN #PMLA

LI Network

Published on: 09 July 2023 at 14:47 IST

The government has included the Goods and Services Tax Network (GSTN) in the list of entities required to share information with the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) under the Prevention of Money Laundering Act.

On Friday, the government made changes to Section 66 of the Act, adding GSTN as the 26th entity on the list. As a result, GSTN will now be obligated to provide information to the ED and FIU if an investigation falls within their jurisdiction or if the agencies require information for their own inquiries.

Furthermore, if the FIU and ED discover any suspicious foreign exchange transactions involving a GST assessee, they will also share this information with GSTN. This action follows the initiation of an investigation by the ED into a case of fraudulent GST registration. Allegedly, individuals used stolen Permanent Account Numbers and Aadhaar details to obtain GST registrations and establish shell companies for the purpose of money laundering.

Under a nationwide initiative, the central and state GST authorities have undertaken the physical verification of more than 60,000 GST Identification Numbers (GSTINs) through field tax officers. Out of these, over 50,000 numbers have already been verified. Shockingly, approximately 25% of the verified GSTINs were found to be fraudulent, leading to the suspension of over 11,000 GSTINs by the authorities.

In addition to the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU), several other entities are required to share information as well. These entities include the Competition Commission of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Serious Fraud Investigation Office, and Director General of Foreign Trade. It’s worth noting that this list is subject to periodic amendments to ensure its effectiveness.

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