GST investigation wing unearths Rs 2000 crore tax evasion in two months

The GST investigation wing has detected tax evasion of over Rs 2,000 crore in two months, and data analysis reveals that only 1% of over 1.11 crore registered businesses pay the bulk of the taxes - 80%, a senior official said on Wednesday.

Central Board of Excise and Customs (CBIC) member John Joseph said like small businesses which make mistakes while filing GST returns, multinationals and big corporates too have slip-ups.

“If you look at the way tax revenues are paid, it gives an alarming picture. We have registration of more than 1 crore businesses. But if you look at where the tax is coming from, it is less than 1 lakh people paying 80% of the tax, one does not know what is happening in the system, it is an important thing to study,” Joseph said at an Assocham event in New Delhi.

Joseph, who is also the Director General of Goods and Services Tax Intelligence (DG GSTI), said the analysis of composition dealers data shows that most of them have an annual turnover of Rs 5 lakh. “This shows that a lot of compliance is required.”

Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1%, while restaurant owners have to pay at 5% rate. The scheme is open for manufacturers, restaurateurs and traders whose turnover does not exceed Rs 1.5 crore.

Joseph said investigation has revealed that a modus operandi is being followed whereby fake invoices are being generated for goods which have not been supplied at all.

Based on these invoices, some entities are claiming input tax credit. Besides, without actually exporting goods, some entities are claiming GST refunds based on fake invoices.

“Government revenue is being taken away. We in a short period of 1-2 months have detected over Rs 2,000 crore evasion which could be only the tip of the iceberg,” Joseph said, adding the GST Intelligence wing will step up efforts in the days ahead.