The Goods and Services Tax (GST) authorities are steadfast in their pursuit of investigating 1.25 lakh companies, aiming to combat tax evasion specifically related to fraudulent claims of input tax credit. This rigorous investigation seeks to curb losses in government revenue caused by companies exploiting the input tax credit system. The investigations revolve around cases of fake invoicing, where companies attempt to claim tax credits based on counterfeit invoices, even when no actual supply of goods or services has taken place. This misuse results in substantial financial losses to the government.
Unveiling Fraudulent Claims in the Input Tax Credit System
The Central Board of Indirect Taxes and Customs (CBIC) previously launched a special two-month campaign, spanning from 14 May to 14 July. During this campaign, 77,200 entities were scrutinized, with 20,800 of them found to be engaged in fraudulent activities. This prompted a subsequent and intensified investigation phase focusing on the 1.25 lakh identified entities.
Collaborative Efforts to Expose and Prosecute Entities Involved in Tax Evasion
These companies, spread across the country, include a mix of potential non-existent or fake entities as well as government agencies and reputed companies. The ongoing investigation is a collaborative effort between central and state governments, aiming to expose the fake input tax credit chain and bring those involved to justice. For instance, a bogus company from Delhi supplied to five companies in states such as Madhya Pradesh, Bihar, and Chhattisgarh. The respective state governments are now conducting thorough investigations against these five companies.