6 years of GST: Fake invoices, tax evasions still a worry

New Delhi: Six years after the rollout of the biggest indirect tax reform in India, Goods and Services Tax (GST) revenue of Rs1.5 lakh crore every month has become a new normal and tax officers are focusing on dealing with fraudsters who are adopting newer modus operandi to game the system, causing loss to the exchequer.

To apprehend black sheep, who operate as syndicates and create fake entities on the basis of forged documents to claim input tax credit (ITC), tax officers have started using data analytics, artificial intelligence (AI) and machine learning (ML) aiming to curb evasion, which was over Rs3 lakh crore since inception of GST. It was over Rs1 lakh crore in 2022-23.

Thinktank Global Trade Research Initiative (GTRI) said the most critical pending GST reform is upgradation of GST Network to prevent fake supplies and fraudulent claims of Input Tax Credit (ITC).

“Data analysis and physical checks alone can’t completely solve the problem. The GSTN should enable linking of invoice level information filed for claiming ITC by buyer (from GSTR 3B) with the information provided by input suppliers (GSTR 2A and GSTR 2B),” Srivastava said. Even after six years, the GSTN is unable to connect the supplies in a value chain, resulting in significant revenue loss to the government and causing problems for honest businesses, Srivastava added. Issues like rationalisation of tax rates and slabs, levying GST on petrol, diesel and ATF, are still hanging fire. Tax experts are of the opinion that the GST Council must pursue these reforms to make GST more inclusive.

However, in an election year, it is unlikely that the Centre and states will go ahead with these reforms.