Fake ITC Claims: Over 29,000 Bogus Firms Nabbed, Saving Rs. 4,646 Crore in GST Frauds

In the last quarter ending in Dec 2023, Maharashtra had the highest number of identified fake firms of 926, and suspicions of tax evasion amounting to Rs. 2201 crores.
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The Goods and Services Tax (GST) authorities had nabbed over 29,000 fake firms involved in fake invoice creation to claim the Input Tax Credit (ITC). As per available reports, these efforts have resulted in savings of Rs. 4,646 crores since May 2023.

Since the initiation of the special drive against fake registrations in mid-May 2023, a staggering 29,273 bogus firms engaging in suspected Input Tax Credit (ITC) evasion amounting to Rs. 44,015 crore have been identified.

This strategic intervention has saved a significant Rs. 4,646 crore, with Rs. 3,802 crore saved through the blocking of ITC and an additional Rs. 844 crore through recovery. Notably, 121 arrests have been made in connection with these cases, underscoring the severity of the issue.

In the quarter ending December 2023, 4,153 bogus firms engaging in suspected ITC evasion totaling around Rs. 12,036 crore were detected. Central GST Authorities accounted for the discovery of 2,358 of these entities, protecting revenue to the tune of Rs. 1,317 crore. Of this, Rs. 319 crore has been realised, and Rs. 997 crore has been safeguarded through the blocking of ITC. The operations led to the arrest of 41 individuals, with 31 of these arrests executed by Central GST Authorities. Detailed state-wise information is provided in the annex.

In a bid to fortify the GST registration process, the government has implemented pilot projects involving biometric-based Aadhaar authentication during the registration process. This initiative has been rolled out in the states of Gujarat, Puducherry, and Andhra Pradesh.

Comprehensive Measures:

To further combat tax evasion, the government has introduced a series of measures, including the sequential filing of GST returns, system-generated intimation for reconciliation of tax liability gaps in GSTR-1 & GSTR-3B returns, and reconciling the gaps between ITC available as per GSTR-2B & ITC availed in GSTR-3B returns. Additionally, the use of data analytics and risk parameters for the detection of fake ITC has been integrated into the system, showcasing a multifaceted approach to tackling GST fraud.

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