GST Authorities issues Demand Notice of Rs.1.45 Lakh Crore for FY18 in December

In a massive move, Goods and Services Tax (GST) authorities sent demand notices worth Rs.1.45 lakh crore to roughly 1,500 businesses in December. According to officials, the notices contained penalties and interest because of irregularities in annual returns filings and input tax credit claims for the financial year 2018.

The increase in notices was mostly due to the December 31, 2023 deadline for serving notices relating to the 2017-18 period. GST officials found evasion worth approximately Rs.1.51 lakh crore in the current financial year, but the recovery stood at Rs.18,541 crore as of December 30, falling severely short of the internal target of Rs.50,000 crore.

Only a small percentage of the 72.5 lakh GST returns filed in 2017-18 were scrutinised for suspected tax underpayment. By December 30, about 48,000 GST returns from 2017-18 and 2018-19 had been selected for review due to system errors or flags.

As the attention switches to the financial year 2018-19, officials believe that the number of notices will increase in the following days. The deadline for filing demand notifications pertaining to inconsistencies in returns for the 2018-19 and 2019-20 seasons has been extended to April 30, compared to the earlier deadline of March 31.

Simultaneously, the government claimed that GST authorities had discovered 29,273 bogus firms involved in fake Input Tax Credit (ITC) claims totalling Rs.44,015 crore during an eight-month crackdown on fake registration. The scheme, which aimed to reduce fake ITC claims, saved Rs.4,646 crore.

In the October-December quarter alone, 4,153 fictitious entities engaged in suspected ITC evasion totaling Rs.12,036 crore were discovered, with 2,358 of them discovered by the Central GST Authorities. These steps highlight the government’s commitment to increasing tax compliance and avoiding loss of revenue through fraudulent means.