Maharashtra in Top Spot for GST Evasion: 926 Bogus Firms involved in suspected ITC Evasion of Rs. 2,201 Cr

The Minister of State in the Ministry of Finance Shri. Pankaj Chaudhary has stated in response to a question raised in Lok Sabha that Maharashtra is in the Top Spot for GST Evasion as 926 Bogus Firms of Maharashtra are involved in suspected ITC Evasion of Rs. 2,201 Crore.

The Ministers asked the following questions in Lok Sabha:

Will the Minister of FINANCE be pleased to state:

(a) whether the Goods and Services Tax (GST) authorities have detected 4,153 bogus firms involved in suspected evasion of input tax credit (ITC) worth around Rs. 12,036 crores during October-December 2023 and if so, the details thereof;

(b) whether Maharashtra is in the top spot among 36 States and Union Territories (UTs) with the highest number of 926 bogus firms with suspected tax evasion of Rs. 2,201 crores and if so, the details thereof;

(c) whether this detection has helped in the protection of revenue of Rs. 1,317 crores out of which Rs. 319 crores has been realised and Rs. 997 crores has been protected by blocking input tax credit and if so, the details thereof;

(d) whether 41 persons have been arrested in these cases so far and if so, the details thereof; and

(e) the steps taken/being taken by the Government to prevent such financial crimes in the country?

The Minister of State in the Ministry of Finance Shri. Pankaj Chaudhary replied:

(a) & (b) Yes Sir. As reported in the press release issued by the Ministry of Finance on 07.01.2024 (Annexure 1) 4,153 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs 12,036 crore were detected in a sustained drive against non-existent taxpayers by GST formations across the country during October-December 2023. A total of Rs.12,036 crore (Rs.3,619 crore (State) + Rs.8,417 crore (Centre)) of bogus ITC has been discovered. In the state of Maharashtra, 926 fictitious entities (282 by Central GST Authorities and 644 by State GST Authorities) implicated in suspected Input Tax Credit (ITC) evasion of Rs.2,201 crore were identified.

(c) & (d) Yes Sir. This detection has helped in the protection of revenue of Rs.1,317 crore of which Rs. 319 crore has been realised and Rs.997 crore has been protected by blocking ITC. 41 persons were arrested in these cases.

(e) The GST registration process includes strong inspections such as physical verification of premises and Aadhar identification. The aforementioned procedures have enabled the early detection of fraudulent registrations and have significantly reduced fraudulent registrations. Further pilot projects using biometric-based Aadhar authentication at registration have been initiated in Gujarat, Puducherry, and Andhra Pradesh to reinforce the registration process.

Furthermore, to reduce tax evasion, the government has implemented measures such as sequential filing of GST returns, system-generated notifications for reconciling the gap in tax liability in GSTR-1 and GSTR-3B returns, as well as the gap between ITC available under GSTR-2B and ITC availed in GSTR-3B returns, and the use of data analytics and risk parameters for detecting fake ITC.

To curb fraud in Goods and Services Tax (GST) and increase compliance, the GST formations, under the Central Board of Indirect Taxes and Customs (CBIC) and the State/ UT Governments, across the country regularly take action to detect and take action against non-existent/ bogus registrations and issuance of fake invoices without any underlying supply of goods and service.