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The right technology can keep tax evasion in check

  • | Divita S Gupta

The right technology can keep tax evasion in check

A chartered accountant's job entails helping companies maintain their accounts. While that is the professional nature of the job, the ethical part of this profession expects them to keep companies honest. Yet it isn't uncommon for chartered accountants to help their clients slide over particularly difficult tax demands from the Government. While we aren't saying all chartered accountants are into practices that encourage tax evasion, several companies undergoing audits are more often than not found to be taking up measures to unethically and sometimes illegally reduce their tax liabilities. 

This is probably why the Government is continually coming up with robust measures to deal with tax evasion. One of the most prolific developments in this effort will be the implementation of technology to reduce tax evasion. Since the implementation of the Goods and Services Tax in 2017, India has seen massive numbers of tax fraud and tax evasion. But since last year, India has been aggressively working on implementing technology to curb tax fraud and tax evasion. And it's not just simple invoice matching and automated audits that will play a major role in curbing tax evasion. India is getting creative and is expected to expand the realms of technology to keep tax evasion in check. So, what are these measures? 

Data matching 

For starters, India wants to introduce a uniform software to conduct audits. These audits are generally conducted for companies whose turnover is over a certain threshold. This software will flag anomalies and interpolations and indicate if the accounts of a company have not been maintained contemporaneously.

Data sharing 

Now that the Central Bureau of Direct Taxation and the Central Board for Indirect Taxes and Customs have mutually agreed to share data, it will become easier for tax authorities to aggregate data of all GST assessees on one platform. This exercise will help authorities specifically look for certain data points that form patterns in correlation to tax evasion. 

Big data mining

This is one exercise that will probably help the most in keeping both direct as well as indirect tax evasion in check. From social media activity to any kind of online activity, tax authorities plan to mine data to find out which taxpayers have been untruthful about their profits or have been unethically claiming input tax credit. 

Tax evasion is a huge problem to the Government as it can cause losses worth thousands of crores. Hopefully, technology can help reduce this problem significantly, if not completely nip it in the bud.


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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