₹13,000 crore fake ITC detected in 2-month drive by GST departments

Nagpur: A two-month drive started from May 16 has unearthed as much as ₹13,000 crore fake input tax credit (ITC) availed for Goods and Services Tax (GST) in country.
The taxmen have also unearthed 45,000 dummy entities through which fictitious transactions are recorded to avail fake ITC, said Sanjay Kumar, member of the Central Board of Indirect Taxes and Customs (CBIC).

He was in the city to address representatives of business associations.
As part of a national effort, members of CBIC, which is the governing body of central GST department, and other senior officials are meeting businessmen across the country to understand issues faced by them.
Later, he told the media large amounts of fake ITC remains to be claimed through dummy entities formed using forged documents like rent agreements to get GST registration. The drive started in May is a joint initiative of the central and state GST departments. Kumar also mentioned another drive that began in November 2020, by the central GST alone, which had led to unravelling of over 60,000 dummy entities.
Kumar said a concentration of such dummy firms is found to be in the national capital region (NCR) though there are such companies in Gujarat, Maharashtra and southern states also.
ITC is an adjustment available in the GST liability on the basis of tax paid on purchase of input or raw material for making the end product or rendering a service. This is given in order to avoid cascading effect on the price due to taxing a commodity that is already taxed. The tax already paid in buying an input for making an end product is provided as credit, against which final GST liability can be adjusted. However, in a bid to evade tax, fictitious purchases are shown by businesses through such dummy firms to claim fake ITC. This leads to the government losing revenue.
Kumar said as the systems are streamlined by adding certain validations, the problems of fake ITC would be done away with.
Meanwhile, during the interaction with Kumar, businessmen raised issues of technical glitches faced in the GST portals. It was mentioned by a representative that even as documents are uploaded in the system they are not reflected on the dashboard, leading to issues in filing of returns.
It was also mentioned that some of the state government portals worked smoothly as compared that of the centre. Documents can be easily uploaded on portal of Gujarat’s state GST department but not in Maharashtra, pointed out a representative of one of the trade associations.
Kumar said the capacity of the GST portal has been increased, so three lakh people can log on at a single point of time. The capacity is expected to further increase in coming days, said the officer.
(Inputs from
Sumukh Kulkarni and Muskaan Agrawal)