GST Officials detected Tax Evasion of Rs.44.1K Crore in Karnataka in Last 4 Years

The Central Tax Officials found that GST evasion in Karnataka had increased to Rs. 44,170 Crore, leading to the arrest of at least 30 individuals between April 2019 and October 2023. However, the sum recovered will only be Rs. 9,187 crore, or 20% of the money that was evaded.

The administrative authority of registrants did not impede the central tax administration’s efforts to detect and recover, according to statistics from the Ministry of Finance. This implies that the erroneous registrations handled by the Centre as well as those under state jurisdiction were covered.

Using information from the Directorate General of Analytics and Risk Management (DGARM), the Ministry emphasised its commitment to reducing GST evasion. Furthermore, steps taken by the Central GST field units and the Directorate General of GST Intelligence (DGGI) were outlined. These included monitoring tax evasion via the e-way bill system and responding to specific intelligence.

The largest evasion of Rs. 25,839 crore was recorded in 2022–2023; of the total reported evasion of Rs. 44,170 crore, Rs. 5,043 crore happened between April 1, 2023, and October 31, 2023. The first seven months of the current financial year saw a recovery of Rs. 612.1 crore, with the maximum recovery of Rs. 4,435 crore occurring in 2021–2022. Notably, 76% of the allegedly embezzled Rs. 5,850 crore was successfully recovered by the administration in 2021–2022.

The Central GST Act enforcement measures carried out by the central administration are expressly mentioned in the report, a Karnataka commercial taxation officer said. They highlighted ongoing challenges with recovery, pointing to a drawn-out adjudication procedure that frequently modifies preliminary assessments of evasion as a result of document submissions by assessors or registrants, resulting in decreases in the ultimate penalty or recovery amounts.

The GST official highlighted a targeted focus on organised unlawful operations and emphasised the increasing efficiency of enforcement actions at both the central and state levels. This drive has also included surprise raids that are carried out in response to specific intelligence.

Authorities recovered approximately Rs 1.1 lakh crore, or 25% of the total, after discovering GST evasion exceeding Rs 4.4 lakh crore nationwide. On the other hand, the recovery rate in Delhi is about 28%, and it is only 19% in Maharashtra. Recovery rates are 25.8% in Gujarat and 39.8% in Tamil Nadu.

The recovery rate over the specified timeframes is less than 50% in the majority of states and union territories, with certain states exhibiting improvements over a period of one or two years.