New Delhi: The number of input tax credit (ITC) fraud cases detected by Central GST formations in the last three years has more than doubled from 7,231 in 2022-23 involving an amount of Rs 24,140 crore to 15,283 cases in 2024-25 involving a sum of Rs 58,772 crore, the Parliament was informed on Monday.
The government has taken proactive steps to prevent and tackle the fraudulent cases of claiming ITC, which include allowing input tax credit only for invoices or debit notes which have been furnished by the supplier in the GSTR-1 form and details of which have been communicated to the registered person in the GSTR-2B form. As part of these steps, a registered person is not allowed to furnish the GSTR-1 form if he has not furnished a return in the GSTR-3B form for the preceding tax period, Minister of State for Finance Pankaj Chaudhary said in a written reply to a question in the Lok Sabha.
The filing of the GSTR-1 form has been made mandatory before filing the GSTR-3B form for a tax period, and the electronic invoicing system (e-invoice) has also been made mandatory for all B2B transactions for businesses with a turnover exceeding Rs 5 crore. Besides, OTP based verification of PAN on mobile number at the time of registration and email address has been linked with PAN, which will help in preventing GST registration using PAN of other persons without their knowledge, the minister said.
Risk-based biometric-based Aadhaar authentication of registration applicants has also been introduced, and an applicant who has not opted for Aadhaar authentication will also be required to visit the GST Suvidha Kendra for taking of a photograph and for document verification. Besides, physical verification in high-risk cases, even when Aadhaar has been authenticated, is being carried out.
System-based measures have also been taken to prevent fraud such as suspension of the registration in respect of such registered persons who do not furnish the details of valid bank account within the time period prescribed and suspension of registrations pertaining to registered persons who default in timely filing of returns is carried out in terms of provisions of rule 21A of the CGST Rules, 2017.
The requirement of geo-tagging of the place of business of the applicant for the new registrations has also been provided on the portal, and automated notices under Rule 88C/88D in the form of DRC-01B and DRC-01C are being issued.
The offence of fraudulent availment of ITC without invoice or bill has been made a cognisable and non-bailable offence and the beneficiary, who retains benefit or at whose instance a supply has been made without the issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed, has been made liable for penalty, the minister said.
The Invoice Management System (IMS) functionality has also been introduced on the GST portal in late 2024, designed to help recipient taxpayers manage incoming invoices more effectively. It allows recipients to accept, reject, or mark invoices as pending when these are saved or filed by their supplier taxpayers. With the implementation of IMS, registered recipients can now cross-verify and reconcile invoices reported by suppliers in their GSTR-1, thereby streamlining and strengthening the ITC claim process.
To weed out fake registrations, a special drive against fake Input Tax Credit and fake registration was launched during the period from May 16, 2023, to July 15, 2023 and August 16, 2024, to October 15, 2024, in coordination between state and Central GST administrations, the minister added.
(IANS)
