GST-ITC fraud cases surged 41%, amount detected jumped 28% in Apr-Jan over full FY24
Total number of Input Tax Credit (ITC) fraud cases and amount detected in first 10 months of current fiscal has exceeded full year number of last fiscal by 41 per cent and 28 per cent respectively. However, the voluntary deposit is still lower than last fiscal.
Data sourced from GST Intelligence Wing for written response in the Lok Sabha showed that over 13000 ITC fraud cases cam into light during April-January period of current fiscal.
The number of over 9000 during full fiscal of 2023-24. Similarly amount detected in ITC fraud cases during first 10 months was over ₹46000 crore as against over ₹36000 crore for last full fiscal. Data also revealed just over ₹2000 crore was deposited voluntarily during current fiscal as against over ₹3400 crore for full fiscal last year.
ITC fraud is mainly done through fake invoice. Under such mechanism, there is no real supply of goods or services but simply invoice issuance, which is used fraudulently to avail ITC (ITC).
Unscrupulous elements misuse the identity of other persons to obtain fake/ bogus registration under GST to defraud the Government.
Such fake/non-genuine registrations are used to fraudulently pass on ITC to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both. Fake registrations and issuance of bogus invoices for passing off fake ITC have become a serious problem, as fraudulent people engage in dubious and complex transactions, causing revenue loss to the Government.
In a written response, Minister of State in the Finance Ministry, Pankaj Chaudhary said listed various steps / measures taken by Central Government & GSTN to help in improving compliance and preventing tax evasions such as digitization through E-invoicing, GST analytics such as automated risk assessment based on compliance attributes of taxpayer beside others.
There are systems which help in identifying anomalies in taxpayer behaviour (such as potential tax evasion, fraudulent registration, and suspicious e-way bill activity etc.) and selection of returns for scrutiny and selection of taxpayers for audit based on various risk parameters.
“These measures are helpful in safeguarding the revenue and nabbing the evaders. Certain projects were also undertaken such as “Project Anveshan” (Analytics, Verification, Shortlisting of Anomalies) whereby newer techniques like Facial Recognition System (FRS), E-way bill data etc. were used for early identification of GSTINs with propensity for fake/ fraudulent activity to generate Intelligence reports,” he said.
Earlier, Chaudhary had highlighted 12 steps taken by the government to curb the ITC frauds. These include risk based biometric-based Aadhaar authentication of registration applicants who appear to be risky based on data analytics beside physical verification in high-risk cases, even when Aadhaar has been authenticated restriction on availment of ITC to invoices and debit notes furnished by the supplier in their statement of outward supplies
Other measures include filing of FORM GSTR-1 made mandatory before filing of FORM GSTR-3B for a tax period and filing of FORM GSTR-1 made mandatorily sequential.
Also, there is provision of making the beneficial owner liable for penal action and prosecution similar to that of actual supplier/recipient, in cases where a supply has been made without the issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed or distributed.
