The Government has taken a series of comprehensive measures to improve indirect tax compliance and curb tax evasion, particularly under the Goods and Services Tax (GST) framework. These steps have been implemented on the recommendations of the GST Council and leverage advanced technology to ensure ease of compliance while targeting high-risk cases.
This information was shared by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, in a written reply to Rajya Sabha Unstarred Question No. 1847 on “Improving Indirect Tax Compliance” answered on 16th December 2025.
Key Measures to Enhance GST Compliance
The Government has introduced several policy and system-based interventions to strengthen compliance and reduce tax evasion, including:
- Mandatory Aadhaar-based authentication for new GST registrations and system-driven suspension of registrations of taxpayers who default in timely filing of returns.
- Mandatory filing of GSTR-1 (statement of outward supplies) before filing the monthly return in GSTR-3B since October 2022, ensuring accurate reporting and availment of Input Tax Credit (ITC).
- Automatic blocking of E-Way Bill generation for regular taxpayers who fail to file GSTR-3B returns for two consecutive months.
- Risk-based processing of GST refunds, wherein refund applications are assigned risk ratings through data analytics and high-risk claims are subjected to detailed verification.
- Integration of e-invoicing systems to enable automatic invoice reporting, ITC reconciliation, E-Way Bill generation and real-time compliance validation.
- Nationwide special enforcement drives conducted against fraudulent entities involved in availing and passing on ITC through fake or bogus invoices.
- Progressive reduction in the threshold for mandatory e-invoicing for B2B transactions from ₹20 crore to ₹10 crore (w.e.f. 01.10.2022) and further to ₹5 crore (w.e.f. 01.08.2023).
Use of Advanced Technologies
The Government is also leveraging Artificial Intelligence (AI), Machine Learning (ML) and Data Analytics to monitor GST compliance and proactively detect potential tax evasion. Advanced analytics tools are being used across key GST processes such as registration, scrutiny and audit to identify high-risk taxpayers, thereby reducing unnecessary compliance burden on honest and compliant taxpayers.
The implementation of machine learning and data-driven risk parameters by GST Network (GSTN) has significantly enhanced the effectiveness of compliance monitoring while improving the overall ease of doing business under GST.
These measures reflect the Government’s continued commitment to building a robust, technology-driven tax administration system that promotes voluntary compliance, checks evasion and ensures a fair and transparent indirect tax regime.
The Reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/Improving-Indirect-Tax-Compliance.pdf
