In a move to curb tax evasion and preserve the integrity of the Goods and Services Tax (GST) system, the government’s latest announcement on January 7 reveals a groundbreaking crackdown on fraudulent Input Tax Credit (ITC) claims.
GST officers have identified 29,273 bogus firms involved in dubious ITC claims, amounting to a staggering Rs 44,015 crore. This discovery was made over the eight months leading up to December 2023 as part of a dedicated effort to combat fake registrations.
The actions taken against these fraudulent entities have resulted in the preservation of revenue amounting to Rs 4,646 crore.
During the latest October-December quarter, authorities pinpointed 4,153 suspected fraudulent companies purportedly engaged in ITC evasion, amounting to approximately Rs 12,036 crore. The Central GST Authorities significantly contributed to identifying 2,358 of these flagged bogus firms.
Maharashtra emerged at the forefront of this drive, with 926 identified bogus firms, followed by Rajasthan with 507, Delhi with 483, and Haryana with 424.
During the December quarter exclusively, the discovery of illegitimate firms implicated in suspected ITC evasion safeguarded revenue totalling Rs 1,317 crore. Of this amount, Rs 319 crore has already been recouped, and Rs 997 crore has been secured by obstructing ITC.
The finance ministry disclosed that 41 individuals were apprehended in relation to these incidents, with 31 of these arrests conducted by the Central GST Authorities.
As per the official statement, “Since the commencement of the specialized campaign against fraudulent registrations in mid-May 2023, a cumulative total of 29,273 spurious firms engaged in suspected Input Tax Credit (ITC) evasion, totalling Rs 44,015 crore, have been unearthed. This has preserved Rs 4,646 crore, with Rs 3,802 crore protected by blocking ITC and Rs 844 crore recovered. A total of 121 arrests have been made in connection with these cases.”
In the state of Maharashtra, during the December quarter, the presumed tax evasion by 926 illegitimate firms reached Rs 2,201 crore. Authorities took action with 11 arrests in connection to these cases.
Likewise, in Delhi, the presumed tax evasion by 483 illegitimate firms amounted to Rs 3,028 crore, leading to 11 individuals being detained. These statistics underscore the scale of suspected fraudulent activities and the financial ramifications involved, emphasizing the necessity for robust enforcement measures to combat tax evasion within the GST system.
In Andhra Pradesh, the suspected tax evasion by 19 illegitimate firms tallied up to Rs 765 crore. In Haryana, where 424 illegitimate firms were identified, the suspected tax evasion amounted to Rs 624 crore. Uttar Pradesh saw the identification of 443 illegitimate firms involved in suspected GST evasion of Rs 1,645 crore, leading to the arrest of five individuals during the quarter in connection with these cases.
To strengthen compliance and combat fraud in the GST system, GST formations under the Central Board of Indirect Taxes and Customs (CBIC) and various State/UT governments across the country are conducting a targeted drive.
The government has implemented various measures to fortify the GST registration process, including pilot projects involving biometric-based Aadhar authentication at the time of registration.
These measures are claimed to improve the registration process, bolster security, and reduce the risks linked to fraudulent registrations within the GST system.
