Tax officers have identified approximately 10,700 fake registrations under the Goods and Services Tax (GST), linked to tax evasion amounting to ₹10,179 crore, a senior official from the Central Board of Indirect Taxes and Customs (CBIC) said on Tuesday.
The fake registrations were uncovered as part of an ongoing all-India drive aimed at clamping down on fraudulent companies set up to defraud the government. The drive, which began on Aug. 16, will continue until Oct. 15.
CBIC member Shashank Priya, speaking at an event organised by the Associated Chambers of Commerce and Industry of India (Assocham), confirmed the findings and provided updates on the government's efforts to curb tax evasion through fake registrations.
He noted that Aadhaar authentication for GST registration is already operational in 12 states, with four more states to join by Oct. 4. Eventually, 20 states, including Madhya Pradesh, Rajasthan, Assam, Tamil Nadu, Uttar Pradesh, and Haryana, will implement Aadhaar authentication.
In his address, Priya also hinted at potential future measures to restrict new taxpayers based on their risk profiles, which may include limiting the number of invoices they can issue monthly.
“We feel very pained at the misuse of the system,” Priya said, adding that the government is employing all available methods to stop such abuses.
During the second drive, tax authorities identified 67,970 GST Identification Numbers (GSTINs) for verification. As of Sept. 22, around 59% of these, or 39,965, have been verified. Priya stated that 27% of these GSTINs were found to be non-existent, a figure similar to results from a previous crackdown.
“We have detected evasion of ₹10,179 crore, blocked Input Tax Credit (ITC) worth ₹2,994 crore, and recovered ₹28 crore during the second drive as of Sept. 22,” Priya said.
This follows the first anti-fraud operation between May 16 and July 15, 2023, where 21,791 entities with fake GST registrations were identified. The suspected tax evasion during the initial drive was ₹24,010 crore.
Addressing other issues, Priya highlighted that data mismatches in the GST system have led to more than 1 lakh show-cause notices (SCNs) being issued in the last fiscal year.
He also discussed plans for future reforms, including locking the GSTR-3B form, which is used for monthly tax payments. However, he assured that all areas of input tax will first be reflected in ledgers and returns before GSTR-3B is locked.
Once the Invoice Management System (IMS), set to launch on Oct. 1, stabilises, there will be no need to edit GSTR-3B. “Whatever figure goes in GSTR-3B gets locked in,” Priya said, adding that this would benefit both taxpayers and the tax administration.
The IMS is designed to help taxpayers match their records and invoices with those of their suppliers, ensuring accurate claims for Input Tax Credit (ITC).
Priya noted that out of the 1,12,852 SCNs issued in 2023-24, six of the seven major areas of dispute related to data discrepancies. These included short payment of GST in GSTR-3B compared to GSTR-1, excess ITC claims, non-payment of GST under the reverse charge mechanism, and discrepancies between taxable values in e-way bills and GSTR-3B returns. Only 555 SCNs pertained to classification disputes.
Priya added that CBIC is analysing these classification disputes to develop potential policy guidelines to address them, while also focusing on reducing data mismatches to alleviate disputes and reduce taxpayer pain points.
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