GST Crackdown Leads To Over 10,000 Shell Companies Involved In ₹10,179 Crore Evasion

A major crack down on shell companies has led tax official to 10,700 fraudulent Goods and Services Tax (GST) registrations involving tax evasion amounting to Rs 10,179 crore. 

The second phase of the all India drive against fake GST registration to curb tax fraud on firms set up to exploit the GST input credit claims causing substantial losses to the exchequer was launched on 16 August and will continue till 15 October. Last year special drive on bogus registration of shell companies led to detection of Rs 24,010 crore tax evasion. 

According to Central Board of Indirect Taxes and Customs (CBIC) member Shashank Priya, Aadhaar authentication for GST registrations is operational in 12 states and by October first week four additional states will implement Aadhar authentication bringing the total to 20 states  including Madhya Pradesh, Rajasthan, Assam, Tamil Nadu, Uttar Pradesh, and Haryana. 

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Shashank Priya disclosed that in future, the tax authorities may put certain restrictions on new taxpayers based on their risk profile. 

“How many invoices they can issue in a month, we may also put some restriction on that in the future. We feel very pained at the misuse of the system. We have to use all methods that are at our command to ensure that those are stopped,” he said at a Assocham event. 

He further disclosed that the government is taking targeted action to check fake GST registration and more physical verification is taking place. 

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The second all-India drive against fake registration identified 67,970 GSTINs of which 39,965 were verified. 

"27 per cent entities were found to be non-existent and almost similar compared to the last drive. GST evasion of Rs 10,179 crore was detected and Rs 2,994 crore bogus ITC blocked with recovery of Rs 28 crore till date,” said the senior tax official. 

In the first drive against fake registration last May led to detection of 21,791 entities having GST registration to be non-existent.