GST Evasion in Construction and Works Contracts surpasses Rs.10,000 Crore in FY24:

The Narendra Modi government is cracking down on Goods and Services Tax (GST) evasion across the country.

Government's Crackdown on GST Evasion Intensifies

PRATEEK MAURYA

May 23, 2024

Last update on May 23, 2024

GST Evasion in Construction and Works Contracts surpasses Rs.10,000 Crore in FY24. The Narendra Modi government is cracking down on Goods and Services Tax (GST) evasion across the country. Last year, over Rs.10,000 crore in GST was evaded in works contracts and construction services, according to sources. The Directorate General of GST Intelligence, which monitors such evasion, says that more than Rs.8,900 crore of this amount is still unpaid by taxpayers. Sources said the most GST evasion in services last year came from construction services and works contracts. The main reasons were using fake Input Tax Credit (ITC), wrongly claiming exemptions or ITC, undervaluing services, and not paying taxes. The DGGI found 1,813 cases of tax evasion, totalling about Rs.10,600 crore. During investigations, taxpayers voluntarily paid around Rs.1,640 crore. For GST on works contracts and construction services, the rules say you can’t claim Input Tax Credit (ITC) for construction of immovable property, except for plant and machinery or if it’s part of another works contract service. You also can’t claim ITC if you’re building property for yourself. A government circular from the 47th GST Council meeting stated that the GST rate for these services increased from 12% to 18% starting July 18, 2022.