The bogus claims for the tax credits called ITC fraud challenge India’s GST heads. It arrives even as the department takes on distinct Goods and Services Tax frauds, including bogus registrations and tax evasion.
Authorities till now in the ongoing FY (2023-24), have noticed nearly ₹19,690 crore in bogus ITC claims across 1,999 cases – a significant increase of 49% compared to ₹13,175 crore detected in 1,940 cases at the time of the previous year (2022-23). This information is related only to cases booked by the Directorate General of GST Intelligence ( DGGI ) and excludes those managed via central and state GST authorities.
Gujarat and West Bengal witnessed the highest number of fake ITC cases, and Haryana and Delhi topped the list concerning the value implicated. These two states accounted for over half (55%) of the total fake ITC amount detected this year (₹10,851 crore), even after having a smaller share (14.5%) in the number of cases.
Government officials regard issues and take steps to address them. The same comprises stringent registration methods with the bank and address verification to eradicate bogus entities. The heads are concentrating on fetching and targeting the masterminds behind these intricate fraud schemes.
Issuing fake invoices without an actual supply of goods or services and routing invoices via a network of shell firms to raise the ITC with bogus means is the most common procedure used for bogus Input Tax Credit claims.
Certain sectors like Construction, metals, tiles, pharmaceuticals, and manpower supply are majorly affected by fake ITC claims. Large businesses are indeed affected by this practice.
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Data analysis tools are used by the authorities to detect these activities, but the recovery rate is sluggish because of longer investigations and the difficulty in outlining the offenders.
Arrests & Recoveries:
Authorities even after such challenges, have made some progress. In 2023-24, 105 individuals were arrested, and ₹2,504 crore was recovered from the detected fake ITC of ₹19,690 crore. This corresponds to 68 arrests and ₹1,597 crore recovered in the previous year.
For an effective GST regime, the fight against the bogus ITC is to be continued.
