GST Evasion of ₹1.88 Lakh Crore Uncovered by CGST Officers
The fight against GST evasion has intensified, with Central GST (CGST) officers detecting fraudulent activities worth ₹1.88 lakh crore between April and December 2024. This marks a significant challenge in India’s tax administration, revealing deep-rooted input tax credit (ITC) fraud and fake registrations. But what does this mean for businesses and taxpayers?
Breaking Down the GST Evasion Figures
| Financial Year | GST Evasion Detected (₹ Cr) | Cases Identified | Recoveries (₹ Cr) | Arrests Made |
|---|---|---|---|---|
| 2024-25 (Apr-Dec) | 1,88,000 | 72,393 | 20,128 | 132 |
| 2023-24 | 2,30,000 | 20,582 | 31,758 | 223 |
| 2022-23 | 1,32,000 | – | – | – |
| 2021-22 | 73,238 | – | – | – |
The scale of GST fraud has seen a sharp rise, leading to increased vigilance by tax authorities. The introduction of AI-driven analytics and e-invoicing mandates has played a key role in exposing fraudsters who exploit loopholes in the GST system.
Key Trends in GST Evasion and Fraudulent Practices
1. Rise in Fake GST Registrations
Two special enforcement drives were conducted in 2023 and 2024 to detect bogus GSTINs (Goods and Services Tax Identification Numbers). The findings were alarming:
- 2023 Drive: 21,808 fake GSTINs, ₹24,357 crore in evasion, 8 arrests.
- 2024 Drive: 68,393 fake GSTINs, ₹25,346 crore in evasion, 19 arrests.
2. ITC Fraud Continues to Be a Major Concern
A significant portion of GST evasion stems from fake ITC claims, where businesses claim credits on non-existent transactions. The government has ramped up scrutiny using AI and data cross-verification.
3. Sectoral GST Compliance Gaps
GST fraud is more prevalent in high-value goods and services, particularly in:
- Tobacco and aerated drinks (subject to GST compensation cess)
- Gold and jewellery (1.5% and 3% special GST rates)
- Automobile sector (varied GST rates based on vehicle type)
4. Tighter Enforcement and Legal Action
The enforcement measures in 2024 have seen over 130 arrests, with aggressive recovery actions against defaulters. The use of AI-backed GST analytics has helped authorities pinpoint fraud patterns and strengthen compliance checks.
How Businesses Can Stay Compliant
Avoiding GST fraud is crucial for businesses to maintain regulatory compliance and avoid hefty penalties. Here are some proactive measures:
- Ensure GSTIN validity: Regularly verify suppliers’ GSTINs to avoid transactions with fake entities.
- Accurate ITC claims: Claim Input Tax Credit only on genuine invoices.
- Use e-invoicing: Businesses with turnovers above the threshold must comply with e-invoicing norms.
- Stay updated on tax rules: Follow changes in GST laws and enforcement trends to mitigate risks.
- Regular tax audits: Conduct internal GST audits to detect any discrepancies before authorities do.
Conclusion: A Tougher Stance Against GST Evasion
The rise in GST evasion detection reflects improved tax intelligence and compliance measures. As the government strengthens enforcement, businesses must proactively align with GST norms to avoid legal complications. Transparency, proper documentation, and timely tax payments are the keys to staying compliant.