Vanshika verma | Nov 21, 2025 |
When Can the GST Department Freeze Your Bank Account? A Complete Guide for Taxpayers
The Income Tax Department and the GST Department tracks every financial transactions. If the Department finds that a business is doing something wrong, such as claiming fake GST input credit, evading tax, or issuing bills without actual goods or services, they have the power to freeze the business’s bank account.
The department can take this strict step in these six major situations, as per GST rules:
1. Failure to pay GST on time
Not depositing the GST you collected from customers to the government by the deadline.
2. Issuing bills without supplying goods
Creating invoices even without any actual supply of goods or services.
3. Fraudulently claiming Input Tax Credit (ITC)
Taking ITC even though you didn’t actually purchase the goods or services or don’t have valid bills for it.
4. Fake forms or bogus companies found during investigation
The department finds that some invoices, documents, or companies used for GST purposes are not real.
5. Not cooperating during a departmental investigation
Refusing to share documents, avoiding questions, or not helping GST officers when they check your records.
6. Irregularities found during a departmental audit
During an official check such as audit, the GST Department finds mistakes or suspicious activities in your records.
In case your account gets frozen, you must take clear steps without any delay.
1. File a DRC-22A Complaint Immediately
If you get a notice saying your account has been frozen, you must quickly file a complaint using the DRC-22A form. (You must finish this task within seven days)
2. Fix Issues and Submit Proof
You must proof that you did not do anything wrong or that any mistakes found have already been corrected. To explain this, you need to submit all required documents to the Commissioner’s office.
3. Reopen Account Using a Bank Guarantee
If you request the Commissioner to unfreeze your account and they agree, they may allow the account to be reopened if you give a bank guarantee as security.
4. Contact Higher GST Officials
In case your account is still unfreeze even after doing everything asked then you can also file a complaint with senior officials in the GST Department.
5. Approach the High Court
You can file a writ petition in the High Court, if nothing else works.
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