CM Satheesan hears ex-CAG official's roadmap to unlock Kerala's 'hidden' tax revenues
Thiruvananthapuram, June 15
Kerala Chief Minister V.D. Satheesan on Monday heard a detailed fiscal roadmap from the state's former Principal Accountant General. Dr Biju Jacob, who suggested that the state could strengthen revenues by using advanced data analytics and Information Systems audit rather than imposing fresh taxes.
Jacob made a presentation before Satheesan. who also holds the Finance portfolio, here, in the presence of senior officials heading the Finance and Tax departments.
The meeting came at a crucial time, with Kerala facing a public debt burden of over Rs 5 lakh crore and the Chief Minister preparing to present his first Budget on June 19.
The former top audit official told IANS that the CM gave him a patient hearing and was well-versed in the points that he had put before him.
Jacob argued that Kerala's immediate challenge is not the absence of revenue sources, but the inability to fully capture taxes already legally due to the state.
"My point was focused on identifying the tax base that remains outside the current assessment framework through technology-led scrutiny," he said.
Citing pointers from a CAG-related Information Systems audit study conducted in 2014, Jacob noted that against actual tax collection of Rs 22,414 crore under KVAT, KGST, and CST, sample analysis had identified an additional Rs 12,282 crore, or nearly 55 per cent, as potential invisible tax.
He suggested that with complete data analysis, the gap could have been even higher.
"I have proposed a solution which is a comprehensive, technology-driven IS audit covering areas such as fake registration detection, shell company networks, suppression of turnover, e-way bill mismatches, GST and Income Tax data inconsistencies, refund anomalies and ERP audit trails," he added.
Jacob also cited major GST-related fraud cases in Kerala, including a Rs 1,170 crore fake registration and input tax credit fraud case and another instance involving Rs 580 crore tax evasion.
He told the Chief Minister that a coordinated audit involving tax officials, CAG experts and chartered accountants could be completed within months and help identify recoverable revenue running into crores.
The proposal offers the government a potential fiscal route at a politically sensitive juncture, mobilising resources by improving tax compliance rather than increasing the burden on citizens.
— IANS
Reader Comments
As a Chartered Accountant, I must say Dr Biju Jacob's proposal is very practical. The GST data mismatches and fake registrations are real problems. I've seen how small businesses sometimes get trapped while big players exploit loopholes. Hope the government follows through. But please ensure the audit doesn't harass honest taxpayers! 🙏
The Rs 1,170 crore fraud case is just the tip of the iceberg. I work in a small business in Kochi and we see shell companies everywhere. But I'm skeptical - government officials talk about audits but never implement. Let's see if this budget actually allocates funds for this technology. Actions > words.
Kudos to CM for listening to experts and not just populist measures. Kerala's debt is scary - Rs 5 lakh crore is no joke. But I worry how long this will take. The 2014 study mentioned is a decade old! Meanwhile, our schools and hospitals are struggling. Hope they prioritize quick wins.
Typical Kerala approach - they'll study it for months, form a committee, then nothing happens. Meanwhile, the common man pays through indirect taxes. Also, the CM is a first-time Finance Minister; let's see how he handles this. But honestly, better late than never if they actually catch the tax evaders.
This is the kind of innovative thinking we need! Instead of going to the IMF or raising taxes, they're using CAG expertise to find hidden revenues. The Information Systems audit approach could be a game-changer for all states. But please ensure the recovery process is transparent and doesn't create corruption opportunities
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