Introduction:

In an intensified effort against tax evasion, the Goods and Services Tax (GST) formations, led by the Central Board of Indirect Taxes and Customs (CBIC) and State/UT Governments, have unearthed 29,273 sham firms involved in suspected Input Tax Credit (ITC) evasion amounting to Rs. 44,015 crore since May 2023. This crackdown, aimed at non-existent taxpayers, has resulted in 121 arrests, marking a significant stride in curbing GST fraud.

Detailed Analysis:

1. Magnitude of Fraud:

• Since May 2023, a targeted initiative against fake registrations has unveiled a staggering 29,273 bogus firms.
• Suspected ITC evasion stands at a substantial Rs. 44,015 crore, emphasizing the need for stringent measures to combat fraudulent practices.
• Effective actions have saved Rs. 4,646 crore, including Rs. 3,802 crore blocked in ITC and Rs. 844 crore recovered.

2. Quarterly Breakdown – December 2023:

• In the quarter ending December 2023, 4,153 bogus firms involved in suspected ITC evasion of around Rs. 12,036 crore were detected.
• Central GST Authorities were instrumental in identifying 2,358 of these fraudulent entities.
• Protective measures have safeguarded revenue, with Rs. 319 crore realized and Rs. 997 crore protected by blocking ITC.
• Notably, 41 arrests have been made during this period, with 31 attributed to Central GST Authorities.

3. Government Initiatives:

• The government, committed to enhancing GST compliance, has implemented biometric-based Aadhar authentication in Gujarat, Puducherry, and Andhra Pradesh during registration.
• Ongoing efforts include measures like sequential filing of GST returns, data analytics, and risk parameters to detect fake ITC and reconcile gaps in tax liability.

4. State-wise Insights:

• The analysis provides a breakdown of the number of bogus firms detected, suspected tax evasion, ITC amounts blocked or recovered, arrests made, and the ratio of fake firms per lakh registered firms for each state/UT.

Conclusion:

The revelation of 29,273 bogus firms involved in substantial ITC evasion emphasizes the importance of robust measures against GST fraud. The quarterly breakdown highlights ongoing efforts, with arrests signaling a stern stance against non-compliance. Government initiatives, including biometric authentication, underscore the commitment to fortify the GST registration process. As the crackdown continues, collaboration between GST formations and stringent actions are crucial to maintaining tax integrity and protecting revenues.

*****

Ministry of Finance

29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs. 44,015 crore detected in a sustained drive against non-existent taxpayers by GST formations across the country since May 2023; 121 arrested

To curb frauds in Goods and Services Tax (GST) and increase compliance, the GST formations, under the Central Board of Indirect Taxes and Customs (CBIC) and the State/UT Governments, across the country are carrying out a focused drive on the issue of non-existent / bogus registrations and issuance of fake invoices without any underlying supply of goods and services.

Since the initiation of the special drive against fake registrations in mid-May 2023, a total of 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs. 44,015 crore have been detected. This has saved Rs. 4,646 crore of which Rs. 3,802 crore is by blocking of ITC and Rs. 844 crore is by way of recovery. So far, 121 arrests have been made in the cases.

In the quarter ending December, 2023, 4,153 bogus firms that involved suspected ITC evasion of around Rs. 12,036 crore were detected. 2,358 of these bogus firms were detected by the Central GST Authorities. This has protected revenue of Rs. 1,317 crore of which Rs. 319 crore has been realised and Rs 997 crore has been protected by blocking ITC. 41 persons were arrested in these cases. 31 of these arrests were by Central GST Authorities. State wise details are annexed.

The Government has taken various measures to strengthen the GST registration process. Pilot projects of biometric based Aadhar authentication at the time of registration have been launched in the States of Gujarat, Puducherry and Andhra Pradesh.

Besides, the Government has endeavoured to curtail evasion of tax through measures such as sequential filing of GST returns, system generated intimation for reconciliation of the gap in tax liability in GSTR-1 & GSTR- 3B returns and of the gap between ITC available as per GSTR-2B & ITC availed in GSTR-3B returns, use of data analytics and risk parameters for detection of fake ITC, etc.

Action against bogus firms during Quarter ending in December 2023

****