The Centre has detected Rs 1.31 lakh crore evasion in goods and services tax (GST) in FY23, reflecting a sharp rise in dubious activities in the indirect tax system over the previous two years.
In FY22 and FY21, the Centre had detected Rs 73,238 crore and Rs 49,384 crore evasion on the GST network, respectively, the FM informed the members of Parliament in the Lower House.
While sharing the data on tax evasion, the finance minister informed the house about the series of measures being taken by the government to plug the loophole, including reduction in threshold for issue of e-invoice for B2B transactions from Rs 10 crore to Rs 5 crore from August 1.
She mentioned that the government was using robust data analytics and artificial intelligence to identify and track risky taxpayers and detect tax evasion.
Tip of the iceberg
The fraud detected so far points to a much bigger malaise, former Bengal finance minister Amit Mitra suggested in a letter to Sitharaman three days back.
Pointing out that of 69,426 GST identification numbers verified during the last two months, 20,893 were found to be simply non-existent - fraudulent, Mitra wrote: “May I point out that out of the 1.4 crore businesses registered with GST only 0.42 per cent of registered tax payers were verified, which yielded the shocking 30 per cent non-existent and fraudulent registrations.”
He went on to suggest that the actual number of frauds could be much higher if all 1.4 crore businesses registered with GST were to be verified.
Mitra pointed to the flaw in the tax return filing system which he blamed has led to the glitch. He argued that if GSTR 1-2-3 return filing methodology which was based on the concept of two-way communication and matching of information between the suppliers and the recipients was followed, such fraud may have been averted.
