Credit fraud

CGST Authorities Destroy Over Rs 31,000 Input Tax Credit Fraud Involving Over 7,200 Cases In FY 2020-21

Goods and services tax authorities have uncovered over Rs 31,000 crore in tax evasion committed through the misuse of the input tax credit (ITC) provision under the tax system. products and services (TPS) in fiscal year 2020-21 and recorded over 7,200 cases involving bogus ITCs. This is what the Minister of State for Finance of the Union, Shri Pankaj Chaudhary, said today in a written response to a question put to Rajya Sabha.

Giving details, the Minister declared the input tax credit (ITC) fraud detected by the CGST formations under the Central Council of Indirect Taxes and Customs (CBIC) as follows:

S. No. Period Number of cases Quantum involved (in crore rupees)
1 2020-21 7,268 31,233,40

The minister said the government has taken many measures to prevent such fraud, such as:

  • Introduction of AADHAR authentication for processing new registration requests;
  • Ease to verify canceled / existing registrations of applicants seeking new registrations;
  • Arrangements for suspending / canceling the registration of taxpayers found in the unfavorable opinion of the department;
  • Mass suspension of registration by GSTN on the basis of commercial information and subsequent monitoring by CBIC;
  • Additional grounds for cancellation of registration have been introduced in the event of a mismatch between FORM GSTR1 and FORM GSTR 3B (rule 21) of the CGST law, 2017, etc. ;
  • To prevent bogus resellers and shell companies from transmitting bogus credits, without filing their GSTR3B returns and paying taxes, provision has been made to block the provision of an outgoing supply statement in FORM GSTR-1 by a taxpayer, if 2 or more GSTR 3B returns are not filed by said taxpayer.
  • Electronic invoices have been made mandatory for all B2B transactions with turnover above Rs. 50 crore.
  • The generation of electronic invoices by taxpayers who have not provided a return for a consecutive two-month period has been restricted.
  • The ITC credit block under Rule 86A of the CGST Act of 2017 has been introduced if the competent officer has reason to believe that the ITC has been used fraudulently.

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