**Executive Summary:**
This document outlines the Indian Government's measures to enhance indirect tax compliance and reduce tax evasion, as answered in Lok Sabha Unstarred Question No. 3545 on August 11, 2025. It details policy measures and technological advancements, including AI, ML, and data analytics, used to monitor GST compliance and detect potential tax evasion. Key measures include mandatory Aadhar authentication, GSTR-1 filing prerequisites, e-way bill blocking, risk-based refund processing, and e-invoicing integration.
**Key Points / Main Content:**
**Policy Measures to Increase Compliance and Reduce Tax Evasion:**
* Mandatory Aadhar-based authentication for new GST registrations.
* Centralized suspension of registrations for those defaulting on timely return filings.
* Mandatory filing of GSTR-1 before GSTR-3B submission since October 2022.
* Automatic blocking of E-Way Bill generation for regular taxpayers failing to file GSTR-3B for two consecutive months.
* Risk-based assignment and detailed verification of high-risk GST refund claims via data analytics.
* Implementation of e-invoicing for automatic invoice reporting, ITC reconciliation, e-Way Bill generation, and real-time compliance validation.
* Nationwide special drives against fraudulent ITC availment and passing based on fake invoices.
* Progressive reduction in the threshold limit for e-invoice issuance for B2B transactions: from Rs. 20 crore to Rs. 10 crore (effective October 1, 2022), and further to Rs. 5 crore (effective August 1, 2023).
**Technology Leveraging for Enhanced Efficiency:**
* AI, ML, and Data Analytics are used to monitor GST compliance and proactively detect potential tax evasion.
* Advanced data analytics and AI are used to enhance compliance monitoring and prevent tax evasion.
* High-risk taxpayers are targeted for processes like registration, scrutiny, and audit, based on data analysis and risk parameters.
**Impact Analysis:**
**Taxpayers:**
* *Impact:* Increased scrutiny of GST filings, potential suspension for non-compliance, changes in e-invoicing applicability, and potential detailed verification of refund claims.
* *Action Required:* Ensure timely and accurate filing of GST returns (GSTR-1 and GSTR-3B), comply with e-invoicing regulations based on turnover, and provide necessary documentation for refund claims if identified as high-risk.
**Government (Tax Authorities):**
* *Impact:* Enhanced capabilities for monitoring GST compliance, detecting tax evasion, and streamlining processes through technology.
* *Action Required:* Implement and maintain the technological infrastructure for data analytics, AI, and ML; conduct special drives against fraudulent activities; and refine risk parameters for targeted actions.
**GSTN (Goods and Services Tax Network):**
* *Impact:* Responsibility for implementing and maintaining the technological infrastructure supporting GST compliance monitoring.
* *Action Required:* Continue developing and refining AI, ML, and data analytics capabilities to improve compliance monitoring and ease of compliance for taxpayers.
Key Entities Referenced
Ministry of Finance: A department of the Government of India responsible for financial matters.
Department of Revenue: A department under the Ministry of Finance responsible for tax collection.
LOK SABHA: The lower house of the Parliament of India.
SHRI ANOOP PRADHAN VALMIKI: A member of the Lok Sabha who raised a question about indirect tax compliance and tax evasion.
SHRI PANKAJ CHAUDHARY: Minister of State in the Ministry of Finance who answered the question.
GST Council: A constitutional body responsible for making recommendations on GST-related issues.
GST: Goods and Services Tax, an indirect tax in India.
GSTR3B: A monthly return form for taxpayers under the Goods and Services Tax (GST) system in India.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION No. 3545
ANSWERED ON MONDAY, AUGUST 11, 2025
“INDIRECT TAX COMPLIANCE AND REDUCTION IN TAX EVASIONS”
3545. SHRI ANOOP PRADHAN VALMIKI:
Will the Minister of FINANCE be pleased to state:-
(a) whether the Government has taken any steps to increase the indirect tax compliance and
reduce tax evasion, including monitoring of GST returns filed by taxpayers;
(b) if so, the details thereof;
(c) whether any technology is being leveraged in to enhance efficiency and simplify compliances
in GST;
(d) if so, the details thereof; and
(e) whether the Government is leveraging advanced technologies such as AI, ML and Data
Analytics to monitor the compliance of GST and proactively detect any potential tax evasion?
ANSWER
MINISTER OF STATE IN MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (d): Yes, the Government on the basis of recommendation of GST Council has taken
several measures from time to time to increase indirect tax compliance and reduce tax evasion.
Some of the major policy measures taken by the Government are as under:i. Mandatory Aadhar based authentication for new GST registrations as well as
centralised suspension of registrations of registered persons who default in timely filing
of returns.
ii. The filing of statement for outward supply in GSTR-1 has been made mandatory
before the filing of monthly return in GSTR-3B submission for the same period since
October 2022 to ensure accurate input tax credit (ITC) reporting and availment.
iii. E-Way Bill generation is blocked automatically when regular taxpayers fail to file
GSTR-3B for two consecutive months.
iv. GST refund applications are assigned risk ratings through data analytics, with high-
risk refund claims undergoing detailed verification.
v. E-invoicing integration is implemented to enable automatic invoice reporting, input tax
credit (ITC) reconciliation, e-Way Bill generation, and real-time compliance validation.
vi. Carrying out two nationwide special drives against unscrupulous entities for availing
and passing on input tax credit (ITC) fraudulently on the strength of fake/bogus invoices.
vii. Progressive reduction in threshold limit for issue of e-invoice for B2B transactions
from Rs. 20 crore to Rs. 10 crore w.e.f from 01.10.2022 and further to Rs. 5 crore w.e.f
from 01.08.2023.
(e):- Yes, the Government on the recommendation of GST Council, is leveraging advanced
technologies such as AI, ML and Data Analytics to monitor the compliance of GST and
proactively detect any potential tax evasion. The GST system uses advanced data analytics and
artificial intelligence to enhance compliance monitoring and to prevent evasion of tax. Thus,
based on data analysis and risk parameters various processes under GST like registration,
scrutiny, and audit etc. target only high-risk taxpayers to avoid burdening compliant taxpayers.
GSTN's implementation of Machine Learning and Data Analytics enables department to
effectively monitor GST compliance while improving overall ease of compliance for taxpayers.
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