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MSME Portal Pauses Udyam Registration/Migration Due to Technical Issues

editor — Fri, 07 Jun 2024 05:54:13 +0000

The MSME Government Portal has announced a temporary halt in Udyam registration/migration services due to technical difficulties. Services will resume shortly. We apologize for any inconvenience.

Source: #MSME Portal

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Mutual funds: SEBI eases KYC formalities, withdraws PAN-Aadhaar link rule for now. Check latest rules

editor — Mon, 20 May 2024 06:00:08 +0000

Mutual fund investors can breathe easy for now. Those who were struggling with KYC non-compliance issue on account of non-linkage of PAN-Aadhaar should note that capital market regulator, SEBI, has withdrawn the clause of link PAN with Aadhaar for ‘KYC registered’ status for mutual fund transactions. For now, investors can carry on without submitting the additional documents.

Sebi, in a circular on May 14, removed the requirement for investors to link the permanent account number (PAN) with Aadhaar to obtain the ‘KYC registered’ status for mutual fund transactions.

However, it is to be noted that for ‘KYC validated’ status, one has to get the Aadhaar linked with PAN.

In October 2023, Sebi asked all mutual fund investors to link their PAN with Aadhaar by March 31, 2024. It said that failure to link would halt the KYC process, halting investment activities. KYC could also be done using a bank passbook or account statement as address proof.

Mutual fund subscribers with ‘on-hold’ account status are not allowed to sell or buy units. NRIs were mostly impacted by the SEBI directive because they are not required to obtain Aadhaar.

The regulator requested KYC registration agencies to verify mutual fund unit-holders’ KYC using PAN, name, address, mobile number, and email IDs. The goal was to cross-check investor details with official databases like Income Tax (IT) based on PAN and Aadhaar cards. Investors using other documents faced validation issues and were asked to redo their KYC.

Sebi’s revised circular on May 14 stated that investors could use documents such as passport and driving licence to complete their KYC requirements.

“SEBI’s decision to simplify the risk management framework for validating Know Your Customer (KYC) records through KYC Registration Agencies (KRAs) is a positive step, reflecting their responsiveness to stakeholders’ feedback. It demonstrates the open approach adopted by the regulator to ensure ease of transacting for investors while ensuring that companies adhere to compliance standards. KRAs can now verify PAN, name, address, email, and mobile number from official databases. If these details are found to be in order, they will be considered validated records. It is expected to address challenges faced by many investors while also ensuring the verification of investors’ digital identities. With a growing number of investors embracing digital platforms for investment, verifying digital identities has become increasingly important,” an expert said.

Source: https://www.businesstoday.in/mutual-funds/story/mutual-funds-sebi-eases-kyc-formalities-withdraws-pan-aadhaar-link-rule-for-now-check-latest-rules-429982-2024-05-17

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Ministry of Finance Updates Authorized Banks List for Customs effective from April 01, 2024

editor — Tue, 07 May 2024 10:24:11 +0000

Introduction to the Ministry of Finance Update

In the realm of international trade and commerce, the efficient processing of customs procedures is paramount. To facilitate smoother transactions, the Ministry of Finance regularly updates its list of authorized banks for customs purposes. One such recent update comes in the form of Notification No. 25/2024 – Customs, which brings significant amendments to the existing framework.

Details of Notification No. 25/2024 – Customs

Issued on May 06, 2024, Notification No. 25/2024 – Customs serves as a pivotal document outlining the alterations made to Notification No. 50/2017-Customs, originally dated June 30, 2017. These amendments primarily focus on updating Lists 34A and 34B, crucial compilations enumerating banks recognized for customs-related activities.

Changes in Lists 34A and 34B

List 34A, effective from April 01, 2024, encompasses a selection of banks authorized for customs operations. Noteworthy inclusions feature prominent institutions such as Axis Bank Limited, HDFC Bank Limited, and the State Bank of India, among others. Conversely, List 34B, also effective from April 01, 2024, introduces additional entities like Indian Overseas Bank and Punjab National Bank into the fold.

Authorized Banks List for Customs

The comprehensive enumeration within List 34A comprises a diverse array of financial institutions, ranging from private entities like Kotak Mahindra Bank Limited to multinational giants like Industrial and Commercial Bank of China Limited. Similarly, List 34B adds to this spectrum with the incorporation of esteemed names like Union Bank of India and Indian Overseas Bank.

Implications of the Update

These updates bear significant implications for customs proceedings, ensuring that businesses engage exclusively with authorized banking channels. Such adherence not only fosters regulatory compliance but also streamlines financial transactions, fostering efficiency and transparency within the customs domain.

Accessing the Notification

For stakeholders seeking detailed insights into the revised banking landscape, accessing Notification No. 25/2024 – Customs is imperative. The document, available for reference here, provides a comprehensive overview of the regulatory amendments enacted by the Ministry of Finance.

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Blocked Input Tax Credit (ITC) under GST: Key Points You Need to Know

editor — Thu, 25 Apr 2024 05:48:46 +0000

In the realm of Goods and Services Tax (GST) in India, understanding Input Tax Credit (ITC) is crucial for businesses to ensure compliance and optimize their tax liabilities. However, not all GST paid on purchases can be claimed as ITC. There are certain scenarios where the Input Tax Credit is blocked, preventing businesses from claiming it against their output tax liability. In this comprehensive guide, we delve into the concept of Blocked Input Tax Credit under GST, highlighting key points and recent rulings.

What is Blocked Input Tax Credit (ITC)?

Blocked Input Tax Credit, as per GST laws, refers to specific goods and services on which GST is paid but businesses are ineligible to claim them as Input Tax Credit. These items are deemed ineligible because they are not considered as inputs directly utilized in the production or provision of taxable goods or services.

Recent Rulings and Clarifications:

Introduction:

In the complex landscape of Goods and Services Tax (GST) in India, the eligibility of Input Tax Credit (ITC) plays a significant role for businesses. The recent ruling by the Maharashtra Appellate Authority for Advance Ruling regarding Las Palmas Co-Op. Housing Society sheds light on crucial aspects of ITC denial. Let’s delve into the details to understand the implications of this ruling.

Facts of the Case:

Las Palmas Co-Op. Housing Society sought to avail Input Tax Credit for lift installation charges paid to the lift contractor. However, the Maharashtra Appellate Authority upheld the ruling of the Maharastra Advance Ruling Authority, denying the society’s eligibility for ITC. Citing sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017, the authority emphasized that ITC would only be available for tax paid on works contract services when such services are utilized as input for further supply of works contract service.

Issue:

The central issue revolves around the eligibility criteria for Input Tax Credit under the CGST Act. The appellant, Las Palmas Co-Op. Housing Society, failed to fulfill the conditions outlined for availing ITC on works contract services. The authority highlighted that the society, not being a works contract service provider, did not provide any works contract service to its members, thereby rendering it ineligible for ITC.

Held:

The Maharashtra Appellate Authority for Advance Ruling affirmed the decision of the Maharastra Advance Ruling Authority, ruling that Las Palmas Co-Op. Housing Society is not eligible to avail Input Tax Credit in respect of the GST paid on lift installation charges. The authority emphasized that the appellant did not meet the criteria outlined in sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017. Consequently, the appeal filed by the appellant was deemed not maintainable and liable to be rejected.

Introduction

The case of Malabar Cements Limited, brought before the Authority for Advance Ruling in Kerala, sheds light on the complexities surrounding input tax credit under the Goods and Services Tax (GST) regime in India. This case revolves around the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by a service provider for hiring buses or motor vehicles with a seating capacity of more than 13 persons for employee transportation. Understanding the outcome of this case is crucial for businesses navigating the nuances of GST regulations.

Facts of the Case

Malabar Cements Limited, a government-owned Public Sector Company in Kerala, sought an advance ruling regarding the admissibility of input tax credit on GST charged by a service provider for providing transportation facilities to its employees. The company operates its factory round-the-clock in remote areas where public transportation is limited. To ensure the commuting needs of its employees are met, Malabar Cements Limited engages a service provider to provide non-air-conditioned buses with a seating capacity exceeding 13 persons. The service provider levies a GST of 5% on the hiring charges, leading to the question of whether Malabar Cements Limited can avail input tax credit on this GST.

Issue

The central issue in this case is twofold. Firstly, it concerns the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by the service provider for hiring buses or motor vehicles with a seating capacity exceeding 13 persons for employee transportation. Secondly, it delves into the extent to which the input tax credit can be availed by Malabar Cements Limited, particularly considering the portion of the transportation cost borne by the company itself.

Held

Upon thorough examination of the relevant legal provisions and the arguments presented by Malabar Cements Limited, the Authority for Advance Ruling concluded that the company is indeed eligible to avail input tax credit on the GST charged by the service provider. However, the extent of this credit is restricted to the cost of transportation borne by Malabar Cements Limited. This ruling provides clarity on an important aspect of GST compliance for businesses engaged in employee transportation services and underscores the need for meticulous adherence to statutory provisions.

Introduction

The recent ruling by the Authority for Advance Ruling (AAR) in Madhya Pradesh has significant implications for businesses in the amusement park industry, particularly regarding Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The case of Atriwal Amusement Park sheds light on the eligibility criteria for claiming ITC on various components and services utilized in the construction of water parks, offering crucial guidance to businesses operating in this sector

Facts of the Case

Atriwal Amusement Park, a company specializing in the construction of water parks, sought clarification from the AAR regarding the eligibility of Input Tax Credit (ITC) on several aspects of its construction activities. The key components and services under scrutiny included the purchase of water slides, site development services, and the construction of swimming pools or wave pools, all of which are subject to taxation under GST regulations.

Issue

The central issue in this case pertains to the eligibility of Atriwal Amusement Park to claim Input Tax Credit (ITC) on specific components and services utilized in the construction of water parks. The inquiry seeks clarification on whether these elements qualify as ‘Plant and Equipment’ under GST provisions, thus enabling the applicant to avail of ITC benefits.

Held

Upon careful consideration of the facts and legal provisions, the Authority for Advance Ruling (AAR) in Madhya Pradesh arrived at the following decisions:

Water Slides: The AAR ruled in favor of Atriwal Amusement Park, affirming its eligibility to claim Input Tax Credit (ITC) on the purchase of water slides made from durable PVC material. This decision is based on the classification of water slides as ‘apparatus, equipment, and machinery,’ thereby meeting the criteria for ITC under GST regulations.

Site Development Services: However, the AAR denied ITC claims on goods and services related to site development and preparation where water slides are installed. The rationale behind this decision lies in the exclusion of land-related services from the definition of ‘Plant and Equipment’ eligible for ITC benefits.

Swimming Pools or Wave Pools: Similarly, the AAR ruled against the eligibility of ITC on the construction of swimming pools or wave pools. Despite being integral components of amusement parks, these structures were deemed civil in nature and not considered part of the supportive framework or foundation of the plant, thus falling outside the scope of ‘Plant and Equipment’ for ITC purposes.

Introduction

The integration of solar power systems has become increasingly common as businesses seek to adopt sustainable and eco-friendly energy solutions. This article examines a specific case, the ruling in the matter of Unique Welding Products Pvt. Ltd. vs. GST AAR Gujarat, to explore the eligibility of Input Tax Credit (ITC) for the installation and commissioning of a roof-top solar system.

Facts of the Case

Unique Welding Products Pvt. Ltd., a welding wires manufacturing and sales company based in Anand, Gujarat, installed a roof-top solar system with a capacity of 440 KW on its factory roof for captive power generation. The company sought clarification on its eligibility for ITC under the Central Goods and Services Tax (CGST) Act, 2017.

Issue

The main issues raised in the case were whether Unique Welding Products Pvt. Ltd. is eligible for ITC on the purchased roof-top solar system with installation & commissioning and whether the roof-top solar system, along with its installation and commissioning, constitutes plant and machinery, making it eligible for ITC under section 17(5) of the CGST Act.

Held

The ruling authority concluded that unique Welding Products Pvt. Ltd. is eligible to avail ITC on the roof-top solar system with installation & commissioning under the CGST/GGST Act and the roof-top solar system, with installation and commissioning, qualifies as plant and machinery for the company, making it eligible for ITC under section 17(5) of the CGST/GGST Act.

Introduction

The West Bengal Appellate Authority for Advance Ruling recently tackled the question of Input Tax Credit (ITC) eligibility concerning the construction of immovable property subsequently leased out for commercial purposes. This article provides an overview of the ruling, its implications, and the legal context surrounding it.

Facts of the Case

M/s. Mindrill Systems and Solutions Private Limited, hereinafter referred to as “the Respondent,” constructed a warehouse and leased it to a commercial entity. GST was duly paid on this supply of service. Subsequently, the Respondent sought an Advance Ruling from the West Bengal Authority for Advance Ruling (WBAAR) regarding the availability of Input Tax Credit (ITC) for capital expenses incurred during the warehouse’s construction. The question pertained to whether these expenses could offset tax liabilities arising from renting out the warehouse.

Issue

The central issue at hand revolved around whether Input Tax Credit (ITC) could be claimed in relation to the construction of immovable property subsequently let out for commercial purposes.

Held

The West Bengal Appellate Authority for Advance Ruling, in Appeal No. 04/WBAAAR/Appeal/2023, deliberated on the matter. It observed that clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Act, 2017 (“the CGST Act”), dictate that ITC is not available for works contract services or goods or services received for the construction of immovable property. Therefore, such transactions fall within the purview of blocked credit.

Furthermore, the Authority noted that the explanation provided in clause (d) of Section 17 specifies that credit is also blocked for reconstruction, renovation, additions, alterations, or repairs capitalized in the books of accounts. However, it clarified that the condition of capitalization in the books of accounts applies solely to the mentioned activities related to immovable property.

In conclusion, the West Bengal Appellate Authority for Advance Ruling held that no Input Tax Credit (ITC) is available concerning the construction of the warehouse subsequently leased out by the Applicant.

Introduction

The recent ruling by the GST AAAR Tamilnadu has shed light on a crucial aspect of Input Tax Credit (ITC) concerning structural support for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited brought forth an appeal challenging the existing orders of the Advance Ruling Authority, Tamil Nadu, seeking clarification on the applicability of ITC in this scenario.

Facts of the Case

Coral Manufacturing Works India Private Limited constructed a warehouse and let it out for commercial purposes, paying GST on the service provided. The company filed an application for Advance Ruling, questioning whether ITC could be availed for the capital expenses incurred on the construction of the warehouse. The West Bengal Authority for Advance Ruling held that ITC was not admissible for expenses capitalized in the books of account. Dissatisfied with this ruling, the Revenue Department appealed against it.

Issue

The primary issue revolved around the eligibility of Input Tax Credit (ITC) concerning structural support erected for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited sought clarification on whether the Integrated Factory Building itself could be considered as plant and machinery under the CGST Act.

Held

The GST AAAR Tamilnadu held that while the overhead crane and its structural support qualified as plant and machinery, the Integrated Factory Building itself did not. Consequently, Coral Manufacturing Works India Private Limited was only eligible for an ITC proportional to the structural support for the overhead crane, but not for the construction of other civil structures like the building’s side walls and roof.

Introduction

In the case of Raminfo Limited, the GST AAR Telangana has made a significant determination regarding the eligibility of Input Tax Credit (ITC) on the purchase of a 7-seater vehicle, which will be converted into an ambulance for onward supply. This article explores the details of the ruling, its implications, and the broader context of GST regulations.

Facts of the Case

Raminfo Limited has secured a work order from the Government of Tripura to supply ambulances, specifically Mobile Common Service Centres. To fulfill this order, they are procuring Maruti Suzuki Eeco (7 seater) vehicles and modifying them in their workshop located in Hyderabad, Telangana State. Seeking clarity on GST rates and ITC admissibility, Raminfo Limited filed an advance ruling before the AAR Telangana.

Issue

The primary issue at hand is whether Raminfo Limited is eligible to claim Input Tax Credit (ITC) on the purchase of Maruti Suzuki Eeco (7 seater) vehicles, which will be transformed into ambulances for onward supply to the Government of Tripura.

Held

The AAR Telangana, in its order TSAAR Order No.02/2023, concluded that Raminfo Limited is indeed eligible to avail ITC on the purchase of vehicles used for further supply. Citing Section 17(5)(a) of the CGST Act, the AAR noted that ITC on such purchases is not blocked. Therefore, Raminfo Limited can claim ITC on the tax paid for the purchased vehicles. Additionally, the AAR clarified that GST at the rate of 28% will be applicable on the supply of ambulances to the Government of Tripura.

Understanding Blocked Input Tax Credit under GST is paramount for businesses to avoid unnecessary tax liabilities and ensure compliance. By staying updated with recent rulings and clarifications, businesses can make informed decisions regarding their tax planning strategies. It’s imperative to consult with tax experts to navigate the complexities of GST laws effectively.

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Income Tax Alert: 5 High-Value Transactions That May Come Under Scrutiny

editor — Sat, 20 Apr 2024 10:59:44 +0000

In recent times, a misconception has been prevalent among the people regarding the traceability of cashless transactions by the Income Tax Department (ITD). However, contrary to popular belief, the ITD utilises advanced tools to scrutinise transactions, leaving no room for evasion. Transactions exceeding specified thresholds, whether through card payments, UPI transactions, or cash deposits and withdrawals, are promptly reported to the tax offices by banks and financial institutions.

Leveraging sophisticated data analytics, the income tax department verifies this information with various sources, constructing a detailed financial profile to detect any disparities between declared income and expenses. The ITD’s proactive measures in scrutinising financial transactions underscore the government’s commitment to combating tax evasion and promoting transparency.

Triggering Scrutiny: Common Transactions Flagged by ITD

Large Cash Deposits: Any cash deposit exceeding Rs 10 lakh in a financial year across savings accounts draws the attention of the income tax department. Even if deposits are spread across multiple accounts, the cumulative amount beyond the threshold triggers scrutiny.

Fixed Deposits: Surpassing the Rs 10-lakh limit in fixed deposits within a financial year prompts inquiries regarding the source of funds, aligning with efforts to prevent tax evasion. If you deposits over Rs 10 lakh in FDs, the tax department may inquire about the source of the money, if needed.

Investments in Securities: Cash investments in shares, mutual funds, and bonds exceeding Rs 10 lakh may lead to tax notices, highlighting the importance of transparency in financial dealings.

Credit Card Bill Payments: Cash payments towards credit card bills exceeding Rs 1 lakh are subject to scrutiny, highlighting the need for clarity on the source of funds.

Property Transactions: Property acquisitions above Rs 30 lakhs mandate disclosure of the fund’s origin, with stricter thresholds in certain regions, aiming to curb tax evasion and money laundering.

Compliance Measures and Consequences

Ensuring compliance with tax regulations is paramount to avoid penalties and investigations. Proper documentation substantiating the source of funds, including bank statements and investment records, is crucial when addressing ITD inquiries.

Expert Recommendations

Tax experts states the importance of aligning tax returns with income and expenses to prevent unwarranted scrutiny. Transparent disclosure of financial activities ensures compliance with tax laws, fostering a culture of accountability and integrity in financial dealings.

Source: https://news.abplive.com/business/personal-finance/income-tax-alert-i-t-notice-5-high-value-transactions-that-may-come-under-i-t-scrutiny-1680700

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GSTN Issues Advisory on Automatic HSN-wise Summary Population in GSTR-1 Table 12 from e-Invoices

editor — Wed, 10 Apr 2024 05:22:53 +0000

The GSTN has released an important Advisory No. 630 dated April 09, 2024, regarding the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1.

GSTN is pleased to announce the introduction of a new feature that enables the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1 on the GST portal. This feature facilitates the direct drafting of HSN data into Table 12 based on e-Invoice data.

It is important to note that the HSN-wise summary data automatically populated into Table 12 is provided for your convenience. However, it is advised to reconcile this data with your records before final submission.

Any discrepancies or errors identified should be manually corrected or added to Table 12 before the final submission.

For further details, please refer to the Advisory accessible at: Link to Advisory

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Collaborative Audits by Central and State GST Authorities Targeting Businesses

editor — Tue, 09 Apr 2024 06:48:00 +0000

Beginning this fiscal year, there will be a collaborative effort between Central and State Goods and Services Tax (GST) authorities to conduct audits within the indirect tax framework.

This joint approach is expected to bring significant advantages to taxpayers by eliminating repetitive notifications and inquiries. Current industry data suggests that around 11,000 cases are either duplicated or entangled in legal disputes due to investigations by both Central and State agencies. Various Central GST zones have issued internal communications instructing officials to collaborate with their state counterparts on audits to ensure better coordination, as per sources.

The concept of conducting audits collaboratively was proposed during a national coordination meeting last month to streamline tax enforcement processes. The directives indicate that Central GST officers should also participate in audits conducted by State GST teams to improve SGST officers’ audit capabilities and facilitate the exchange of crucial compliance information. To support these joint audit efforts, the Central Board of Indirect Taxes and Customs (CBIC) has instructed each zone to devise a specific framework.

The responsibility for implementation, delegated to zonal heads, aims to optimize time and resources. Experts in the industry believe this initiative will enhance the fairness and efficiency of the audit process, providing a more comprehensive examination that benefits both tax authorities and taxpayers. It will help in avoiding redundant procedures and shield taxpayers from undergoing multiple audits for the same issues.

Furthermore, the CBIC has directed its officers to halt investigations into offenses already under scrutiny by state GST officials or for which notifications have been issued.

Source: https://economictimes.indiatimes.com/news/company/corporate-trends/central-state-gst-officials-to-conduct-joint-audits-of-firms/articleshow/109143298.cms?from=mdr

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Merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer

editor — Tue, 09 Apr 2024 05:43:22 +0000

Introduction:

The Hon’ble Delhi High Court, in the case of Anhad Impex v. Assistant Commissioner, addressed the issue of whether the misplacement of a Show Cause Notice (SCN) in the “Additional Notices” category instead of “Notices” on the GST portal constitutes sufficient intimation to the taxpayer. This analysis examines the court’s findings and the implications for similar cases.

Facts of the Case:

Introduction:

Facts of the Case:

M/s. Anhad Impex ("the Petitioner") received an Impugned Order dated November 29, 2023, from the Assistant Commissioner ("the Respondent"), creating a demand under Section 73 of the CGST Act.
The Petitioner asserted that they never received the SCN, which formed the basis of the Impugned Order, thus depriving them of the opportunity to respond or participate in adjudication proceedings.
SCNs are typically uploaded under the "Notices" section on the GST portal, but in this instance, it was placed in the less accessible "Additional Notices" category, leading the Petitioner to miss it.
The Respondent contended that uploading the notice on the GST portal suffices as per Section 169 of the CGST Act.

Issue:

Whether the misplacement of the SCN in “Additional Notices” rather than “Notices” warrants the invalidation of the demand order?

Held:

The court noted that the Petitioner's lack of response to the SCN indicated a lack of proper and timely intimation.
Placing the SCN under "Additional Notices" instead of "Notices" made it less accessible, infringing upon principles of natural justice and provisions of the CGST Act.
Referring to precedents such as East Coast Constructions & Industries Ltd. v. Asstt. Commissioner and Murugesan Jayalakshmi v. State Tax Officer, the court emphasized the importance of proper categorization on the portal.
Consequently, the Impugned Order was set aside, with directions for the Petitioner to respond to the SCN, and the Respondent to re-adjudicate the matter with a personal hearing within four weeks.

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New GSTR-1 Update: GSTN enables Auto HSN Summary Import from E-Invoices for Efficient Filing

editor — Tue, 09 Apr 2024 05:20:38 +0000

In a recent update to the GSTR-1 filing system, a new functionality has been added to “Table 12 – HSN wise summary of outward supplies” specifically aimed at taxpayers who generate e-invoices. This new feature enables taxpayers to directly transfer HSN (Harmonized System of Nomenclature) data from their e-invoices to their GSTR-1 form. The purpose of this enhancement is to simplify the return filing process by minimizing manual data entry requirements. Taxpayers utilizing e-invoicing can now automatically populate the HSN summary in their GSTR-1 with pertinent information from their electronic invoices. This advancement is particularly advantageous for those engaged in B2B (Business-to-Business) transactions, as it significantly reduces the time needed for HSN data entry, eliminating the necessity for manual data input in transactions where e-invoices were generated.

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Recovery of Fraudulent GST Input Credit Surges to 12% in FY24

editor — Tue, 09 Apr 2024 05:13:07 +0000

The recovery rate in Goods and Services Tax (GST) cases concerning input tax credit (ITC) fraud has significantly increased in FY24. Government sources familiar with the matter informed that the Directorate General of GST Intelligence (DGGI) has managed to recover over 12 percent of the dues, a notable rise from the previous 2-3 percent.

Enhanced Recovery Efforts

The DGGI has detected GST frauds amounting to Rs 21,089 crore during FY24, with Rs 2,577 crore already recovered.
These improvements come as the DGGI adopts a proactive approach to identify ITC cases early on.
Utilizing new tools such as artificial intelligence and data analytics, the department is sharing information with other regulatory bodies for swift fraud detection.
The recovery data is anticipated to be publicly disclosed soon.

Challenges in Recovery

Modus Operandi and Common Traps

The prevalent modus operandi involves the creation of counterfeit invoices to avail GST benefits, particularly rampant in sectors like manufacturing and real estate.
Fraudulent schemes often entail the creation of shell entities using unsuspecting individuals' Know Your Customer (KYC) documents.
These entities then generate fake GST receipts, exploiting loopholes to claim double benefits.
Common citizens are also ensnared as fraudsters lure them with promises of loans or other incentives, using their KYC details to establish fraudulent entities.

Conclusion

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