How Companies Can Avoid Unnecessary GST Frauds

The Goods and Services Tax (GST) regime was implemented with the primary aim of simplifying the taxation system. However, despite concerted efforts by authorities to achieve this goal, the GST framework remains inherently complex. This complexity not only poses challenges for taxpayers but also creates loopholes that can be exploited by fraudulent entities, leading to significant revenue losses for the government.

During a special drive spanning from May 2023 to December 2023, the government identified a concerning number of 29,273 fraudulent entities suspected of evading Input Tax Credit (ITC) to the tune of INR 440.15 billion. Similarly, between the fiscal years 2020-21 and May 2023, authorities unearthed a staggering 43,516 instances of GST fraud, involving a substantial INR 2685.37 billion. These figures may be the tip of the iceberg and indicate a possibility of numerous undetected cases. Moreover, fraudsters have exploited the system's complexity, impersonating the tax authorities and sending fake summons or notices to unsuspecting taxpayers.