CBIC uncovered fraudulent Input Tax Credit (ITC) amounting to Rs. 36,374 crore, involving 9,190 cases in the FY 2023-24.
The Central Tax formations under the Central Board of Indirect Taxes and Customs (CBIC) uncovered fraudulent Input Tax Credit (ITC) amounting to Rs. 36,374 crore, involving 9,190 cases in the Financial Year (FY) 2023-24. This was disclosed by Union Minister of State for Finance, Shri Pankaj Chaudhary, in a written response to a query in the Lok Sabha.
Detailed Statistics of Fake ITC Cases
The following are the details of fake ITC cases detected by Central Tax formations for FY 2022-23 and FY 2023-24:
| FY | Number of Cases | Detection (Rs in Cr) | Voluntary Deposit (Rs in Cr) | Persons Arrested |
| 2022-23 | 7231 | 24140 | 2484 | 153 |
| 2023-24 | 9190 | 36374 | 3413 | 182 |
Government Measures to Curb ITC Frauds
To combat ITC frauds, the government has implemented several measures:
1. Biometric-Based Aadhaar Authentication:
Introduced sub-rule (4A) in rule 8 of the CGST Rules, 2017 for risk-based biometric Aadhaar authentication for registration applicants flagged as risky through data analytics.
2. Physical Verification for High-Risk Cases:
Amended rule 9 of the CGST Rules, 2017 to mandate physical verification for high-risk cases, even if Aadhaar authentication is completed.
3. Bank Account Verification:
Amended rule 10A of the CGST Rules, 2017 requiring bank accounts used for registration to be in the name of the registered person, linked with PAN and Aadhaar (for proprietorships), with details provided within 30 days of registration or before filing GSTR-1.
4. ITC Restriction:
Restricted ITC claims to invoices and debit notes submitted by suppliers in their statement of outward supplies.
5. Sequential Filing of GSTR Forms:
Mandated the filing of FORM GSTR-1 before FORM GSTR-3B for a tax period, enforcing sequential filing.
6. Penal Action for Beneficial Owners:
Made beneficial owners liable for penalties and prosecution similar to actual suppliers/recipients in cases of supply without invoices, invoices without supply, or excess ITC claims.
7. Provisional Attachment of Property:
Amended Section 83 of the CGST Act to allow provisional attachment of property for any person benefiting from such fraudulent transactions.
8. E-Way Bill Restrictions:
Imposed restrictions on e-way bill generation for non-compliant taxpayers.
9. Lower E-Invoice Threshold:
Reduced the threshold for mandatory e-invoicing for B2B transactions from Rs. 10 crore to Rs. 5 crore effective August 1, 2023.
10. Data Analytics for Risk Tracking:
Regularly employs data analytics to identify and track risky GST registrations to detect tax evasion.
These steps are part of a comprehensive effort by the government to strengthen the GST framework and curb tax fraud, ensuring a more transparent and compliant tax system.
To Access the related press release of MoF CLICK HERE
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