Blockchain technology will assist tax authorities in combating GST fraud.

In 2020-2021, tax authorities uncovered Rs 40,000 crore in goods and services tax evasion over a period of more than a year, mainly due to false invoices and fraudulent input tax credit claims.

Blockchain technology will assist tax authorities in combating GST fraud.

A government insider told Business Today that the Indian Revenue Agency plans to soon start testing blockchain technology to avoid fraudulent tax invoices and track the supply of goods, among other things.

Because an invoice is the most basic document required at every stage of the GST supply chain, from purchase to submission of returns, blockchain technology can serve as an automated settlement medium, validating and matching documents between suppliers and buyers.

In 2020-2021, the tax authority found Rs 40,000 crore in tax evasion on goods and services, mainly due to false invoices and illegal input tax credit claims.

According to a government official, “The Central Indirect Tax and Customs Board (CBIC) and the National Information Centre (NIC) are identifying special cases that may be experimented with through the GST network.”

Governments aim to deploy blockchain's decentralized, distributed ledger's digital, immutable record-keeping system to close loopholes and prevent abuse. "Some cases of forged invoices and GST claims must be uncovered." The person added: "We want to use blockchain technology to prevent misappropriation."