Tax Evasion of Rs. 24,000 crore and 21,791 fake GST Registrations detected in a Special Drive: FM

Finance Minister Nirmala Sitharaman said on Tuesday that during a two-month special campaign, GST authorities discovered 21,791 fake GST registrations and nearly Rs. 24,000 crore in suspected tax evasion.

In a written response to a Rajya Sabha question, the minister stated that in order to protect the interests of honest taxpayers and avoid extreme hardship to taxpayers, instructions have been issued from time to time directing officers to exercise due caution and care in the exercise of powers such as summons, provisional attachment of property, blocking of tax credit, and so on.

“A total of 21,791 entities with GST registration (11,392 entities under state tax jurisdiction and 10,399 entities under CBIC jurisdiction) were discovered to be non-existent. During the special effort, a total of Rs 24,010 crore of suspected tax evasion was discovered (state – Rs 8,805 crore + Centre – Rs 15,205 crore),” Sitharaman added.

The minister was responding to a question about the number of companies identified as having fake registrations and the total amount of evasion discovered during the Central Board of Indirect Taxes and Customs (CBIC) special drive against fake GST registrations from May 16 to July 15, 2023.

In response to a question about whether the government has considered the challenges faced by e-commerce enterprises in obtaining GST registrations, particularly those operating in virtual spaces, Sitharaman stated that, due to the unique nature of e-commerce operators, a simplified procedure for e-commerce operator registration has already been notified.

It states that when an e-commerce operator files for registration in a state or Union Territory where he or she does not have a physical presence, he or she may do so by providing information about the major place of business situated in another state or Union Territory.

Furthermore, modifications to the GST Rules have been implemented to tighten the registration process, including biometric-based Aadhaar authentication for high-risk registrants, as well as the verification of the original copy of the documents.

Gujarat has initiated a pilot experiment in this regard. The trial scheme was expanded to Puducherry in July and Andhra Pradesh in November.

Furthermore, the registered person’s bank account details, name, and PAN must be provided within 30 days of registration or before submitting the statement of outward supply, whichever is sooner.

Entities who do not provide the data of valid bank accounts within the time frame specified will be immediately suspended by the system. However, if the registered people later comply with this requirement, the system will automatically revoke the system-based suspension.