Fake Registration Drive: GST Officers Uncovers 10,700 Bogus Firms involves in Tax Evasion Over Rs.10K Crore

In a nationwide crackdown on fake companies, tax officers discovered 10,700 fraudulent GST registrations involving tax evasion worth Rs.10,179 crore. This drive, launched to combat tax fraud, targeted businesses that had been set up to exploit the Goods and Services Tax (GST) system, resulting in significant losses to the government.

Shashank Priya, a member of the Central Board of Indirect Taxes and Customs (CBIC), said that Aadhaar authentication for GST registrations is already in place in 12 states. By October 4, four more states would have implemented this method, raising the total to 20, including Madhya Pradesh, Rajasthan, Assam, Tamil Nadu, Uttar Pradesh, and Haryana.

Speaking at an Assocham event, Shashank Priya also stated that in the future, tax authorities may impose limits on new taxpayers based on their risk profile.

“We may restrict the number of invoices they can issue every month in the future. We are deeply concerned about the system’s misuse. We must use all available tools to stop them,” he said.

The CBIC official further stated that the government is taking targeted action to combat bogus GST registration and that more physical verification is being conducted. The second all-India drive against fake registration began on August 16 and will continue till October 15. He stated that the tax officials had identified 67,970 GSTINs. As of September 22, 59% of GSTINs (39,965) had been verified.

Shashank Priya stated, “27% have been discovered to be non-existent. This percentage is practically identical to the last drive. We discovered an evasion of Rs 10,179 crore. Rs 2,994 crore worth of ITC has been blocked. Also, Rs.28 crore has been recovered (through the second drive until September 22). Between May 16, 2023, and July 15, 2023, the first drive against fake registration identified a total of 21,791 businesses with GST registration that did not exist.”

During the first special drive last year, suspected tax evasion totalled Rs.24,010 crore. He stated that the GST regime had a problem with data discrepancies, which resulted in more than one lakh show cause notices being issued by tax officials last financial year.