Govt to raise arrest and criminal prosecution threshold in GST evasion cases from Rs. 2 cr to Rs. 3 cr

To improve the ease of doing business and reduce harassment, the Center may soon raise the threshold for arrest and criminal prosecution in Goods and Services Tax (GST) evasion cases to Rs. 3 crore from the current Rs. 2 crore.

According to the story, which cited a government official, the business had originally requested an exemption of up to Rs 5 crore.

Furthermore, the Centre may change the rules for issuing summonses to violators. The Central Board of Indirect Taxes and Customs (CBIC) may not modify rules in situations of fraudulent invoicing.

According to the report, the official stated that While compliance has clearly improved, the number of fraudulent invoice cases remains high, therefore now may not be the time to relax.

The Centre will undertake a new programme to combat input tax credit fraud in November 2022. It discovered 1,040 cases of GST evasion a total of Rs. 1.36 trillion in the first half of 2023-24. Input tax credit fraud accounts for Rs. 14,000 crore of this total.

So far this year, 96 people have been arrested for GST evasion. It is lower than the previous years’ figures of 460 in FY21, 342 in FY22, and 190 in FY23.

100,000 small and medium-sized companies are not in compliance with the GST regime‘s e-invoicing norms, which are a necessary requirement for businesses with an annual turnover of more than Rs. 5 crore.

E-invoicing allows for real-time access to invoices issued by the supplier on the purchase of goods, allowing for speedier access to input tax credit and preventing the manipulation of fake credit because it must be generated prior to the transaction. Defaults have been reported primarily in business entities with a turnover of Rs. 5 crore to Rs. 20 crore.

According to the official, 20-30 % of businesses with a turnover demand are not yet compliant. The authorities have issued cautionary letters to such establishments, warning them of “consequences” if they do not comply.