More measures are needed to weed out fake input tax credit (ITC) generators from the system for checking tax evasion and increasing GST revenues, CBIC member Sanjay Kumar Agarwal said on Wednesday. He said the government has taken various steps to tackle the menace of fake ITC claims and has already launched a special 2-month-long drive to identify fake registrations under Goods and Services Tax (GST) and nab offenders.
“If we make seeding of fake ITC impossible or very very difficult, then the problem will get nipped in the bud. Towards this end, the recent validations have been introduced… There is still something more…to be done to weed out fake ITC generators from the system,” Agarwal said at a PHDCCI event here. He said that the registration under GST has soared to 1.39 crore taxpayers, from 64 lakh in the erstwhile excise and service tax regime. Many unscrupulous elements have entered the GST system to claim ITC on the basis of fake invoices, he said, adding that “the struggle of tax administration is how to eliminate them, and make the system pure again”.
Goods and Services Tax (GST), which subsumed over a dozen indirect tax levies of the Centre and states, was implemented on July 1, 2017. GST evasion has crossed Rs 1 lakh crore in 2022-23 fiscal, up from Rs 54,000 crore 2021-22 fiscal. The total number of evasion cases is also on a rise with about 14,000 cases detected in 2022-23, up from 12,574 cases in 2021-22 and 12,596 cases in 2020-21. Earlier this month, the GST Policy Wing had written to Principal Chief Commissioners of Central Tax highlighting that fake/ non-genuine registrations are being used to fraudulently pass on input tax credit to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both.
During the ‘Special All-India Drive’ from May 16 to July 15, to detect suspicious/ fake GSTINs, Central and state tax officers are conducting requisite verification and taking further remedial action to weed out these fake billers from the GST eco-system. GST Network will identify fraudulent GSTINs for state and Central tax authorities and share the details jurisdiction wise, with the concerned state/ Central tax administration for initiating verification drives and conducting necessary action subsequently.