
The Directorate General of GST Intelligence (DGGI) has uncovered a massive tax evasion scheme amounting to Rs 1.2 trillion through the use of fake input tax credit (ITC) since 2020. The Finance Ministry highlighted that significant efforts are being made to identify and apprehend the masterminds behind these operations, as well as to dismantle the syndicates involved, which are operating across the country.
Identification of Fake Firms and Apprehensions
The Goods and Services Tax (GST) intelligence department has identified approximately 59,000 potential fake firms for further verification and inquiry. To date, 170 individuals involved in these fraudulent activities have been apprehended. This revelation was made during the national conference of enforcement chiefs of GST, which preceded the release of the ministry’s statement.
Nationwide Special Drive Against Fake Registrations
The discovery of this widespread tax evasion comes amidst a special drive launched by both the Centre and State governments to identify and eliminate fake GST registrations. The two-month all-India drive, which began on August 16, aims to detect suspicious or fake GST Identification Numbers (GSTINs), conduct necessary verifications, and take remedial actions to remove these fake entities from the GST system, thereby protecting government revenue.
Revenue Secretary Emphasizes Balanced Enforcement
During the conference, Revenue Secretary Sanjay Malhotra underscored the importance of balancing enforcement actions with the ease of doing business. He urged both Central and State GST formations to prioritize the identification of fake registrations during this special drive and emphasized the need to track down the masterminds and beneficiaries of the fake ITC operations to ensure strict action is taken, serving as a deterrent.
GST Reforms to Strengthen Anti-Evasion Efforts
Malhotra also pointed out that recent changes in GST returns, such as the introduction of GSTR-1A, will support systematic efforts to combat GST evasion.
CBIC Chairman’s Advice on Enforcement Focus
Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), advised enforcement units to concentrate on genuine tax evasion rather than getting caught up in interpretative issues or general industry practices. The ministry’s release noted that best practices and guidelines to ensure uniformity in enforcement actions and facilitate ease of doing business were also discussed during the conference.