Here’s a detailed overview along with important points regarding the rise in recovery of fraudulent GST input credit and how ordinary citizens are being trapped by fraudsters:
- Increased Recovery Rate:
- The recovery rate in Goods and Services Tax (GST) cases related to input tax credit (ITC) fraud has surged to over 12% in FY24, a significant increase from the previous years’ 2-3%.
- Detection by DGGI:
- The Directorate General of GST Intelligence (DGGI) has detected GST frauds amounting to Rs 21,089 crore during FY24, with Rs 2,577 crore already recovered.
- Adoption of proactive strategies by DGGI and utilization of new means such as artificial intelligence and data tools have contributed to early detection of ITC frauds.
- Challenges in Recovery:
- Despite the detection and arrests of alleged masterminds, recovering the fraud money remains challenging, especially in cases where culprits have alienated ill-gotten gains.
- Modus Operandi of Fraudsters:
- Fraudsters create fake invoices to avail GST benefits, particularly prevalent in sectors like manufacturing and real estate.
- Complex schemes are employed to obtain double benefits, such as providing raw goods without a paper trail and generating fake invoices for input tax credit.
- Impact on Commoners:
- Ordinary citizens are being ensnared in these frauds, with fraudsters collecting Know Your Customer (KYC) documents under false pretenses.
- Shell entities are created using these KYC documents without the individuals’ knowledge, leading to the production of fake GST receipts.
- Government Action:
- The government is taking stringent action against fraudulent firms and racketeers involved in creating fake invoices.
- Identification and crackdown on bogus entities in the GST scam continue, reflecting the government’s commitment to combat tax evasion and fraudulent practices.
- Continued Investigation:
- Investigations on entities involved in fake GST ITC will persist until December, indicating sustained efforts to uncover and penalize fraudulent activities.
Overall, the rise in recovery rates and proactive measures by authorities signify a concerted effort to combat GST frauds and protect the integrity of the tax system. However, the challenges in recovering fraud money and the impact on unsuspecting citizens highlight the need for continued vigilance and enforcement actions.
