For the financial year 2023-24, CGST officials identified ₹2.30 lakh crore in GST evasion across 20,582 cases. As a result of these investigations, authorities made 132 arrests and successfully recovered ₹20,128 crore.
Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha that
between April and December 2024, Central GST (CGST) officers detected tax evasion exceeding ₹1.88 lakh crore.
This substantial evasion was primarily attributed to fraudulent claims of Input Tax Credit (ITC), which were uncovered in 72,393 cases during this period.
In comparison, evasion figures for previous years stood at ₹1.32 lakh crore in 2022-23 and ₹73,238 crore in 2021-22, highlighting a significant increase in tax fraud cases over time.
Rising GST Evasion Trends
- Recent data highlights the growing challenge of GST tax evasion.
- In the 2023-24 financial year, ₹2.30 lakh crore in evasion was detected across 20,582 cases.
- This led to the recovery of ₹31,758 crore and 223 arrests.
- In comparison, ₹1.32 lakh crore in evasion was detected in 2022-23.
- The previous year, ₹73,238 crore in GST evasion was identified in 2021-22.
- This shows a clear upward trend in fraudulent activities under the GST system.
Government’s Crackdown on Fake GST Registrations
To address fraudulent GST registrations and bogus claims, CGST and state GST officials carried out two large-scale national drives. The first took place from May to August 2023, while the second was conducted from August to October 2024.
- First drive (May-August 2023): Officials identified 21,808 fake GST Identification Numbers (GSTINs), uncovering tax evasion worth ₹24,357 crore. This effort led to the arrest of eight individuals.
- Second drive (August-October 2024): Authorities discovered 68,393 fraudulent GSTINs, exposing tax evasion amounting to ₹25,346 crore. As a result, 19 individuals were arrested.
These enforcement measures underscore the government’s determination to clamp down on tax fraud and improve compliance under the GST framework.
GST Structure and Tax Rates
The Goods and Services Tax (GST) system in India is structured into four primary tax slabs: 5%, 12%, 18%, and 28%. In addition to these standard rates, some goods and services are taxed at special rates:
- Gold, silver, diamonds, and jewellery: 3%
- Cut and polished diamonds: 1.5%
- Rough diamonds: 0.25%
A GST compensation cess is also levied on specific products such as tobacco, aerated beverages, and certain automobiles. These cess rates vary depending on the product category and are designed to offset revenue losses incurred by states after the implementation of GST.
Strengthening GST Compliance To Avoid GST Evasion
The increasing frequency and scale of GST evasion cases have reinforced the need for stricter enforcement and enhanced digital monitoring. The government has been leveraging advanced technologies such as artificial intelligence (AI) and data analytics to track tax discrepancies, identify fraudulent activities, and improve overall compliance.
Furthermore, authorities are continuously implementing stricter measures to curb fake registrations and fraudulent input tax credit claims. These efforts aim to boost revenue collection, enhance tax transparency, and ensure that businesses comply with GST regulations effectively.
Conclusion
The government’s ongoing crackdown on tax evasion highlights the scale of fraudulent activities within the GST system. With evasion cases surpassing ₹2.30 lakh crore in 2023-24, it is evident that stronger regulatory measures and enforcement strategies are essential. The introduction of AI-driven monitoring and data analytics, combined with stringent legal actions against defaulters, will play a crucial role in strengthening compliance. By addressing these challenges effectively, authorities aim to create a more transparent and efficient taxation system that supports the country’s economic growth.
Vakilsearch helps businesses streamline their GST processes, reduce the risk of errors, and mitigate the chances of falling foul of regulations. Our services are designed to make your GST filing hassle-free, transparent, and aligned with the latest tax reforms, ensuring that your business remains on the right side of the law as the authorities enforce stricter compliance measures.
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