Lok Sabha Question No. 435 (UNSTARRED), answered on 2024-02-05
Subject: Unearthing of Fake Input Tax Credit
Ministry: FINANCE
Asked by: Andimuthu Raja, A. Ganeshamurthi

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTION NO. 435

TO BE ANSWERED ON MONDAY, 05 th  February, 2024 Magha 16, 1945(Saka)

## Unearthing of Fake Input Tax Credit

435. SHRI A. RAJA:

SHRI A. GANESHAMURTHI:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  has  announced  unearthing  of  fake  input  Tax Credit Claims amounting to Rs. 44,000 crore;
- (b)  if so, the details thereof;
- (c)  whether it does not reveal towards a deep-rooted systemic failure and the ability  of  fraudster  to  exploit  loopholes  and  vulnerabilities  in  the  GST system; and
- (d)  if so, the effective measures taken or likely to be taken by the government to plug the loopholes and rectification in the system?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) & (b) Yes Sir. The press release issued by Ministry of Finance on 07.01.2024 (Annexure  1)  brought  out  that  29,273  bogus  firms  involved  in  suspected Input  Tax  Credit  (ITC)  evasion  of  Rs  44,015  crore  were  detected  in  a sustained  drive  against  non-existent  tax  payers  by  GST  formations  across the  country  since  May  2023.  An  amount  of  Rs.  44,015  Crore  (Rs.15240 Crore (State) + Rs. 28775 Crore (Centre)) of fake ITC has been detected.
- (c) & (d) The registration process under GST offers robust checks in the form of physical verification of premises and Aadhar authentication. The said checks have  enabled  in  early  detection  of  fraudulent  registrations  and  has also curbed  fraudulent  registrations  to  a  great  extent. Further  pilot  projects  of biometric based Aadhar authentication at the time of registration have been launched in the States of Gujarat, Puducherry and Andhra Pradesh to further strengthen  the  registration  process.  Besides,  to  curtail  evasion  of  tax  the Government has taken measures such as sequential filing of GST returns, system  generated  intimation  for  reconciliation  of  the  gap  in  tax  liability  in GSTR-1 & GSTR-3B returns and of the gap between ITC available as per GSTR-2B & ITC availed in GSTR-3B returns, use of data analytics and risk parameters for detection of fake ITC. To curb frauds in Goods and Services Tax (GST) and increase compliance, the GST formations, under the Central Board of Indirect Taxes and Customs (CBIC) and the State/UT Governments,  across  the  country  regularly  take  action  to  detect  and  take action  against  non-existent  /  bogus  registrations  and  issuance  of  fake invoices without any underlying supply of goods and service.

*****

## Ministry of Finance

29,273  bogus  firms  involved  in  suspected  Input  Tax  Credit (ITC) evasion of Rs. 44,015 crore detected in a sustained drive against  non-existent  taxpayers  by  GST  formations  across  the country since May 2023; 121 arrested

## Posted On: 07 JAN 2024 6:01PM by PIB Delhi

To curb frauds in Goods and Services Tax (GST) and increase compliance, the GST formations, under the Central Board of Indirect Taxes and Customs (CBIC) and the State/UT Governments, across the country are carrying out a focused drive on the issue of non-existent / bogus registrations and issuance of fake invoices without any underlying supply of goods and services.

Since the initiation of the special drive against fake registrations in mid-May 2023, a total of 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs. 44,015 crore have been detected. This has saved Rs. 4,646 crore of which Rs. 3,802 crore is by blocking of ITC and Rs. 844 crore is by way of recovery. So far, 121 arrests have been made in the cases.

In  the  quarter  ending December, 2023, 4,153 bogus firms that involved suspected ITC evasion of around Rs.12,036 crore were detected. 2,358 of these bogus firms were  detected  by  the  Central  GST  Authorities.  This  has  protected  revenue  of  Rs. 1,317 crore of which Rs. 319 crore has been realised and Rs 997 crore has been protected  by  blocking  ITC.  41  persons  were  arrested  in  these  cases.  31  of  these arrests were by Central GST Authorities. State wise details are annexed.

The  Government  has  taken  various  measures  to  strengthen  the  GST  registration process.  Pilot  projects  of  biometric  based  Aadhar  authentication  at  the  time  of registration  have  been  launched  in  the  States  of  Gujarat,  Puducherry  and  Andhra Pradesh.

Besides,  the  Government  has  endeavoured  to  curtail  evasion  of  tax  through measures such as sequential filing of GST returns, system generated intimation for reconciliation of the gap in tax liability in GSTR-1 & GSTR- 3B returns and of the gap between  ITC  available  as  per  GSTR-2B  &  ITC  availed  in  GSTR-3B  returns,  use ofdata analytics and risk parameters for detection of fake ITC, etc.

## Action against bogus firms during Quarter ending in December 2023

| Name of the State/UT   |   Number of bogus firms detected |   Tax Evasion suspected (Rs Cr.) |   ITC amount blocked / recovered (Rs Cr.) |   Arrests Made |   Fake firms per lakh registered firms |
|------------------------|----------------------------------|----------------------------------|-------------------------------------------|----------------|----------------------------------------|
| Andhra Pradesh         |                               19 |                              765 |                                        11 |              0 |                                      5 |
| Arunachal Pradesh      |                                0 |                               13 |                                        14 |              0 |                                      0 |
| Assam                  |                               19 |                              116 |                                        67 |              0 |                                      8 |
| Bihar                  |                               30 |                              148 |                                        88 |              0 |                                      5 |
| Chandigarh             |                                2 |                                5 |                                         1 |              0 |                                      6 |
| Chhattisgar h          |                               26 |                               83 |                                        34 |              1 |                                     15 |
| Dad. & Ngr Haveli      |                                0 |                                0 |                                         0 |              0 |                                      0 |
| Delhi                  |                              483 |                             3028 |                                        90 |             11 |                                     61 |
| Goa                    |                                4 |                               29 |                                         0 |              0 |                                      9 |
| Gujarat                |                              178 |                              445 |                                        25 |              3 |                                     15 |
| Haryana                |                              424 |                              624 |                                        76 |              3 |                                     81 |
| Himachal Pradesh       |                                4 |                               14 |                                         4 |              0 |                                      3 |
| J&K                    |                                3 |                                1 |                                         0 |              0 |                                      2 |
| Jharkhand              |                               23 |                              110 |                                         2 |              0 |                                     11 |
| Karnataka              |                              223 |                              397 |                                        59 |              2 |                                     22 |
| Kerala                 |                               42 |                              152 |                                         4 |              0 |                                     10 |
| Ladakh                 |                                0 |                                0 |                                         0 |              0 |                                      0 |
| Madhya Pradesh         |                               70 |                              158 |                                        22 |              1 |                                     13 |
| Maharashtra            |                              926 |                             2201 |                                       102 |             11 |                                     54 |

| Manipur           |    0 |     0 |    0 |   0 |   0 |
|-------------------|------|-------|------|-----|-----|
| Meghalaya         |    0 |     5 |    0 |   0 |   0 |
| Mizoram           |    0 |     0 |    0 |   0 |   0 |
| Nagaland          |    0 |     0 |    0 |   0 |   0 |
| Odisha            |  138 |   337 |    7 |   0 |  42 |
| Puducherry        |    2 |     2 |    0 |   0 |   8 |
| Punjab            |   82 |    75 |    4 |   1 |  21 |
| Rajasthan         |  507 |   197 |   31 |   1 |  59 |
| Sikkim            |    2 |     2 |    2 |   0 |  18 |
| Tamil Nadu        |  185 |   494 |  374 |   1 |  16 |
| Telangana         |  117 |   536 |  235 |   1 |  23 |
| Tripura           |    9 |    20 |    0 |   0 |  29 |
| Uttar Pradesh     |  443 |  1645 |   44 |   5 |  24 |
| Uttarakhand       |   66 |    88 |    0 |   0 |  33 |
| West Bengal       |  126 |   343 |   18 |   0 |  17 |
| And. & Nicobar Is |    0 |     0 |    0 |   0 |   0 |
| Lakshadweep       |    0 |     0 |    0 |   0 |   0 |
| Total             | 4153 | 12036 | 1317 |  41 |  29 |

## NB/VM/KMN

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