CBIC Uncovers Rs 26,543 Crore GST Evasion in Nationwide Drive Against Fake ITC

In a sweeping crackdown on GST evasion, the Central Board of Indirect Taxes and Customs (CBIC) has unearthed fraud amounting to Rs 26,543 crore during its second nationwide operation against fake input tax credit (ITC). Beginning August 16, CBIC officials scrutinized 68,903 high-risk taxpayers flagged by the GST Network (GSTN). Shockingly, 18,472 entitiesapproximately 27% - were found to be non-existent.

Key Findings

1. Massive Evasion Uncovered: Fraud worth Rs 26,543 crore was detected, with an average evasion of Rs 1.5 crore per fake entity.
2. State-Specific Trends: Maharashtra, Gujarat, and Delhi reported the highest number of fake entities, underscoring systemic vulnerabilities in these regions.
3. Pending Verifications: Out of 74,070 flagged taxpayers, around 5,000 cases remain to be verified, with 3,300 pending investigations in Delhi and 765 in Maharashtra.

Challenges in Recovery

Despite uncovering significant fraud, recovery efforts are constrained as fake ITC is often utilized before detection. "In many cases, recovery becomes challenging once the fraudulent ITC has been used," a CBIC official stated.

Next Steps

The findings from the second drive will be presented at the upcoming GST Council meeting on December 21, 2024. The Council is expected to discuss measures to enhance compliance and combat fake invoicing and ITC fraud. Recommendations may include:

• Strengthening verification processes for new GST registrations.
• Enhancing the use of AI and local intelligence to identify high-risk taxpayers.
• Imposing stricter penalties for fake ITC fraud.

Nationwide Drive Gains Momentum

This operation follows the success of CBIC's first drive conducted from May 14 to July 14, during which 77,200 entities were verified, and 20,800 were found bogus. The current drive has further solidified CBIC's focus on rooting out GST fraud, ensuring a level playing field for genuine taxpayers.

With over 5,000 cases still under verification and mounting pressure to tighten GST compliance, the outcome of the December 21 GST Council meeting will be critical in shaping the future of India's indirect tax regime.