The Indian government is set to undertake a two-month crackdown on fraudulent practices related to the Goods and Services Tax (GST) starting May 16. The special drive aims to combat unscrupulous elements, including individuals, professionals, and firms who engage in the misuse of input tax credit by using fake identities and forged documents, all without actually providing any goods or services. This measure seeks to ensure that the GST system operates with transparency and fairness, benefiting legitimate businesses and taxpayers. In this blog post, we will delve deeper into the government’s efforts to curb it.
Finance Ministry Issues Directive to Prevent Revenue Leakages
According to an anonymous official from the finance ministry, a directive was issued on Thursday.
The directive was relates to all field formations to prevent revenue leakages.
The directive includes comprehensive standard operating procedures (SOP) and safeguards to ensure transparency in the process.
The move is aimed at plugging revenue leaks.
It is also aiming in ensuring that the benefits of tax revenue reach legitimate sources without any outreach.
You can also search important details about GST Registration by Company Name.
To learn the process visit: How to check GST registration by company name?
Or, you can also consult a professional CA.
GST Department Plans special drive to detect fake GST Registrations
In a special drive to detect fake GST Registration done by various businesses, the Goods and Services Tax (GST) department in India has announced a coordinated drive to detect and eliminate fraudulent entities.
The drive is set to begin on May 16, 2023, and run until July 15, 2023. The decision was taken during the National Coordination Meeting of state and central GST officers held on April 24, 2023.
Consequently, common guidelines will be issued to ensure uniformity in the action taken by field formations.
Thus, enabling effective coordination and monitoring of the operation.
Fraudsters Obtain Fake GST Registrations Using Forged Documents and Stolen Personal Information
According to the officials, individuals have been found to use fake registrations through fake documents.
This include proof of their principal place of business using forged documents . For example, property tax receipts, electricity bills, and rent agreements.
Interestingly, a case was recently discovered by the Gujarat tax authorities.
In the case, fraudsters obtained fake GST registrations by using the PAN and Aadhaar numbers of people from economically weaker sections, without their knowledge.
These fraudsters then modified their phone numbers and Aadhaar details using cash obtained under the guise of a government scheme at a local Aadhaar Seva Centre.
GST Network to Detect Fake GST Identification Numbers and Share with Tax Authorities for Action
The GST Network, responsible for providing the IT infrastructure for GST administration, will be tasked with detecting counterfeit GST Identification Numbers (GSTINs).
The GSTIN will also provide this information as per drive to detect fake GST Registrations to state and central tax authorities for appropriate action.
In addition to this, field formations will be able to enhance this list through data analysis using various analytical tools, human intelligence, the Aadhar database, and other local knowledge.
Time-Bound Verification of Suspicious GSTINs to Help Curb Fraudulent Activity
Firstly, field officers will receive a list of suspicious GSTINs and will be required to conduct verification within a specified timeframe.
Moreover, if the taxpayer is found to be fictitious after a detailed verification, the tax officer may take action to suspend or cancel the taxpayer’s registration.
Lastly, the GST department has already discovered GST fraud worth Rs. 1.01 lakh crore and recovered Rs. 21,000 crore in taxes in the fiscal year 2022-23.
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