Tax authorities in India are taking significant steps to tighten compliance for the Goods and Services Tax (GST) and crack down on tax evasion. They have identified nearly 15,000 entities involved in fraudulent activities related to GST and detected evasion of over Rs 38,000 crore over the years.
Some of the key findings and actions taken are as follows
1. Fraudulent GST Registration
The central GST administration detected 5,070 cases of fraudulent GST registration between July 1, 2017, and June 30, where individuals misused PAN and Aadhaar details of others to claim Input Tax Credit (ITC). In these cases, a total evasion of Rs 27,246.16 crore was detected, and authorities managed to recover Rs 922.58 crore. Additionally, 331 arrests were made in connection with these cases.
2. Identification of Bogus Entities
Tax authorities identified 9,369 bogus entities suspected of fraudulent activities, specifically involving the claiming of fake ITC amounting to Rs 10,902 crore. In these cases, Rs 45 crore was recovered, and seven arrests were made.
3. Biometric-Based Aadhaar Authentication
In response to the growing instances of fraudulent GST registration, the GST Council recommended the inclusion of sub-rule (4A) in rule 8 of CGST Rules, 2017. This sub-rule aims to implement risk-based biometric-based Aadhaar authentication for registration applicants. The project is being trialed in three states and union territories to enhance security and prevent misuse of identity.
4. Geo-tagging of Business Addresses
The Goods and Services Tax Network (GSTN) has introduced the functionality of geocoding the address of the principal place of business of GST registrants. This measure may help in identifying suspicious entities and ensuring the accuracy of business addresses provided during registration.
5. All-India Drive to Weed Out Fake Registrations
The Central Board of Indirect Taxes and Customs (CBIC) carried out a special all-India drive between May 16 and July 15 to identify and eliminate fake GST registrations.
6. New Requirements for Bank Account Details
In its 50th meeting, the GST Council introduced measures to combat fake entities and evasion, including a requirement for registrants to furnish their bank account details within 30 days of registration or before filing GSTR-1. This step may help in verifying the authenticity of registrations and preventing misuse.
These efforts demonstrate the government's commitment to curbing tax evasion and improving compliance with GST regulations in India. By implementing biometric-based authentication and other measures, they aim to deter fraudulent activities and protect the integrity of the tax system.
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