HomeLegal AdviceGST Authorities Expose 29,273 Bogus Firms in Massive Crackdown

GST Authorities Expose 29,273 Bogus Firms in Massive Crackdown

In a significant move against tax evasion, the government revealed on January 7 that GST officers have exposed a staggering 29,273 bogus firms involved in fraudulent Input Tax Credit (ITC) claims. These entities were identified during an extensive effort to combat fake registrations in the eight months leading up to December 2023.

This crackdown on suspected tax evasion, particularly in the October-December quarter, has resulted in the identification of 4,153 suspected bogus firms allegedly engaged in ITC evasion, with a total value of ₹ 12,036 crore. The actions taken against these entities have already protected revenue amounting to Rs 1,317 crore, with ₹ 319 crore recovered and ₹ 997 crore protected by blocking ITC.

Maharashtra led the list of states with 926 identified bogus firms involved in suspected ITC evasion, followed by Rajasthan, Delhi, and Haryana. The December quarter alone saw the detection of 926 bogus firms in Maharashtra, contributing to suspected tax evasion amounting to ₹ 2,201 crore. Similar scenarios unfolded in Delhi, with 483 bogus firms and ₹ 3,028 crore in suspected tax evasion.

Andhra Pradesh, Haryana, and Uttar Pradesh also witnessed significant numbers of identified bogus firms and suspected tax evasion amounts. In response to these findings, 41 individuals have been arrested, with the majority of the arrests made by the Central GST Authorities.

The finance ministry reported that since the initiation of the special drive against fake registrations in mid-May 2023, a total of 29,273 bogus firms involved in suspected ITC evasion of ₹ 44,015 crore have been detected. This not only saved ₹ 4,646 crore but also emphasized the government’s commitment to curbing tax evasion and maintaining the integrity of the Goods and Services Tax (GST) system.

As part of ongoing efforts to combat fraud within the GST system, the Centre has implemented measures to strengthen the registration process. Pilot projects involving biometric-based Aadhar authentication have been launched to enhance security and reduce the risks associated with fraudulent registrations. These initiatives underscore the importance of robust enforcement measures to ensure the integrity of the GST system and protect government revenue.

Rugmini Dinu