In the GST recovery rate matters related to the ITC fraud have increased in FY24 with the Directorate General of GST Intelligence (DGGI) recovering exceeding 12% of the dues against 2% to 3% in the previous years, government sources familiar with the development.
A GST Compliance Expert Said that the Commoners are Getting Trapped by the Fraudsters.
During FY24 the DGGI has detected GST frauds to the tune of Rs 21,089 crore. Rs 2,577 crore has already been recovered out of this they expressed. The new set of recovery data is anticipated to be made public shortly.
As the DGGI has initiated to choose a proactive measure to fetch the ITC cases in the initial phase the same improvement in the recovery rate shall be arrived. Distinct new modes such as artificial intelligence and data tools, have been followed by the department, and is sharing the information with the other regulators to confirm the quick GST ITC fraud detection.
“Certain previous ITC cases that were investigated were 4-5 years old. The recovery rates in such matters are almost nil. It is because the culprits alienate the ill-gotten gains, making it difficult to recover the fraud amount,” a government official cited.
Till now, 113 people have been arrested who are alleged to be the masterminds of these frauds, but clawing back the fraud money is tough. Consequently, in the last few months, the department concentrates on early detection of such frauds, he expressed.
Citizens Get Trapped in What Ways?
The process is within the generating of bogus invoices to claim the Goods and Services Tax advantage and the same action is rampant in the sectors such as manufacturing and real estate. Multiple detected cases comprise complex schemes through which the entities receive the double advantage.
Without a paper trail or paying duty raw goods required by manufacturers are furnished. A bogus invoice is furnished for the same goods so that manufacturers can claim ITC.
Goods that do not have been moved without filing the duties are being moved and are being married to fake invoices generated. In such a way, the provider of the goods is enabled to move the goods out without filing the duties while the manufacturer is enabled to claim the ITC,” said the official. “There are racketeers across the country who are creating fake invoices, he added.
In certain matters, even the commoners are getting trapped in these frauds, a GST compliance expert mentioned. From the victim, the fraudsters collect know-you-customer (KYC) documents by assuring loans or other advantages.
Without the knowledge of people, shell entities are made through the KYC and these entities produce the Bogus GST receipts.