Unveiling the Shocking Reality: Over Rs 2 Lakh Crore GST Evasion in FY24

In a surprising turn of events, authorities have uncovered GST evasion amounting to over Rs 2 lakh crore during the fiscal year 2023-24, nearly equivalent to 10% of the total GST collections. Despite a commendable 11.6% increase in gross GST collections from the previous financial year, this staggering revelation underscores the persistent challenges faced in combating tax evasion.

The focus of GST authorities during FY24 was to bust fake input tax credit syndicates/rackets by catching the masterminds engaged in these frauds which has resulted in loss of revenue to the government. The GST authorities arrested 113 masterminds involved in fake ITC during the year ended March 31. There were 147 overall arrests.

The Directorate General of GST Intelligence (DGGI), the enforcement arm under the Ministry of Finance’s Department of Revenue, has identified various sectors where the majority of alleged tax evasion occurred. Among these, sectors such as online gaming and casinos, co-insurance/re-insurance, and secondment have been particularly implicated, with significant sums involved.

The FY24 data reveals a substantial surge in detected cases of duty evasion, totaling around Rs 2,01,931 crore across 6,074 cases—a staggering 99% increase from the previous financial year. Moreover, voluntary payments towards the evasion have also risen, amounting to Rs 26,598 crore, representing approximately 1.3% of total GST collections in FY24.

Wrongful availment of input tax credit (ITC) or fake ITC claims has emerged as a major concern for GST authorities. Special drives have been conducted to counter this menace, resulting in the detection of numerous cases involving fraudulent ITC claims. Notably, the focus has been on dismantling fake input tax credit syndicates and apprehending masterminds behind these schemes, leading to a significant number of arrests.

In addition to domestic tax evasion, investigations have been initiated against offshore online gaming entities that fail to comply with GST laws. The crackdown on tax evasion has been relentless, with authorities issuing a slew of notices to entities across various sectors, including banking, insurance, online gaming, and more.

To strengthen enforcement efforts, GST authorities are leveraging advanced technologies such as Big Data Analytics and Artificial Intelligence to detect evasion. The DGGI has bolstered its cyber forensics infrastructure and established digital forensic laboratories across strategic locations in India.

In a bid to streamline investigations and ensure effective enforcement, the Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines outlining standard operating procedures for GST officers. These guidelines aim to expedite investigations, particularly in cases involving major industrial houses or multinational corporations, while maintaining a strict deadline for concluding inquiries.

The revelation of such significant GST evasion underscores the critical importance of robust enforcement measures and technological advancements in combating tax fraud. As authorities continue to intensify their efforts, it remains imperative for businesses to adhere to GST regulations and uphold integrity in tax compliance.