In a major success for tax authorities, GST officers have unearthed around 18,000 fake companies involved in a large-scale tax evasion scheme, totalling approximately ₹25,000 crore. The findings come from the recently concluded second all-India drive against fraudulent GST registrations, in which over 73,000 GST Identification Numbers (GSTINs) were flagged for verification.
The drive, which spanned from August 16 to October end, revealed that these 18,000 companies were set up solely to claim ITC without legitimate transactions or sales. This practice of creating shell companies to exploit ITC has become a significant concern, and the government has intensified physical verifications to curb such fraudulent activities.
An official stated, "We had identified around 73,000 GSTINs for verification in the second all-India drive against fake registrations. Out of these, around 18,000 were found to be non-existent, contributing to a tax evasion estimate of ₹24,550 crore." In addition, companies voluntarily paid around ₹70 crore in GST liabilities during the drive, reflecting increased awareness and compliance efforts.
This action follows a previous drive from May 16 to July 15, 2023, where 21,791 non-existent entities were identified, accounting for a suspected tax evasion of ₹24,010 crore. These nationwide crackdowns align with the government's broader strategy to tighten GST compliance and combat fraudulent practices that strain the exchequer.
As the government ramps up efforts to scrutinize GST registrations, industry insiders believe that these measures will enhance transparency and discourage tax evasion, further strengthening India's tax infrastructure. More physical verifications and targeted actions are expected in the coming months to maintain compliance and uphold the integrity of the GST system.
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