Karnataka has recorded a dramatic five-fold surge in GST evasion detected by CGST officers in 2024-25, reaching Rs 39,577 crore, the highest in three years. Finance Minister Nirmala Sitharaman revealed the figures in a written reply in the Lok Sabha on Monday, highlighting a sharp escalation in enforcement action.
According to official data, CGST authorities registered 1,254 cases in FY25, arrested nine individuals and recovered Rs 1,623 crore through voluntary tax payments.
Centre Denies UPI-Based GST Notices
The disclosure comes amid ongoing protests by traders in Bengaluru, who allege they are being unfairly targeted with GST notices based solely on digital transaction data, including UPI records.
FM Sitharaman clarified that the Central GST authorities have not issued any notices based on UPI transactions, noting that such notices were sent by State GST field offices. This distinction is significant, as it shifts responsibility for the recent wave of notices to state-level authorities.
Year-Wise Trends Show Sharp Fluctuations
The surge in FY25 far outpaces the Rs 7,202 crore detected in FY24 from 925 cases, which saw only two arrests and Rs 1,197 crore in voluntary recoveries.
It also exceeds FY23 levels, when CGST officers uncovered ₹25,839 crore in evasion from 959 cases, making two arrests and collecting Rs 1,705 crore voluntarily.
Economic and Political Implications
The steep rise in evasion detection is expected to intensify debates around GST enforcement and compliance, particularly for small businesses. Karnataka, a leading contributor to GST revenues, has been under scrutiny for its tax enforcement practices, with local trader bodies accusing authorities of harassment.
With GST collections playing a pivotal role in state and central revenues, the balance between effective enforcement and easing compliance burdens for small traders is set to remain a politically sensitive issue.
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