Work under Mgnrega: Probe into ‘tax evasion’ on goods supplied to gram panchayats

LUCKNOW The UP state tax department has launched an investigation into irregularities in Mgnrega and other state-funded schemes managed by gram panchayats. The department will verify payments for goods supplied to gram panchayats from 2020-21 to the current year and act accordingly. Additional commissioner, state tax, Dhananjay Shukla has asked field officials to examine the issue and provide information in this regard.
The move comes after a review uncovered discrepancies in tax payments and declarations by traders and firms that supplied goods to agencies and firms executing construction and other development works in village panchayats.
The department’s scrutiny revealed multiple violations by traders/dealers under the compounding scheme and found to be charging taxes at unauthorized rates, contrary to the CGST/UPSGST Act. Regular dealers were either not charging tax on supplied goods or failing to report them correctly.
“Traders under the compounding scheme are unlawfully charging taxes at rates of 5%, 12%, 18%, and 28%, contrary to the permissible rates under Section 10(4) of the CGST/UPSGST Act,” a tax department official said.
Similarly, regular dealers are failing to charge correct tax on bills for supplied goods. Also, there is a pattern of under-declaration or non-declaration of supplied goods in tax returns by regular dealers.
“Even bogus or cancelled firms have fraudulently supplied goods to and received payments from buyers,” he revealed.
The department’s review highlighted a total expenditure of ₹12,52,782 lakh for goods under Mgnrega from 2020-21 to date, with only ₹89,307.10 lakh in taxes.
The tax department has instructed assessment officers to verify payments for goods supplied to gram panchayats from 2020-21 to the current year. They will cross-check the information against records from Mgnrega’s official website and eGramSwaraj portal with the mandate to promptly ensure compliance and integrity in the tax system, if discrepancies are identified.
“This action aims to ensure compliance and rectify any irregularities, reinforcing the integrity of the tax system within the panchayati raj framework,” the official said.