Investigations show that fake invoices are issued rampantly in the case of items such as metals, plastic granules, readymade garments, gold and silver, construction services, work contract services, agro products among others
NEW DELHI :
In a major anti-tax evasion drive, revenue officials have arrested 25 persons in 350 cases in the last four days for allegedly abusing tax credits using fake invoices, a government official said Sunday.
Fake invoices in these cases were useto evade Goods and Services Tax (GST) and income tax and to divert funds from companies, said the official with the Directorate General of GST Intelligence (DGGI), the agency that tracks intelligence related to tax evasion. The cases involve issuing of bogus invoices against more than 1100 entities.
Fake invoices are also used for showing non-existent transactions to jack up figures on books to obtain loans from banks and to siphon off funds. These are also used to claim GST refunds meant for exporters, said the official.
The extent of non-compliance has prompted the government to tighten the procedure for new GST registration, the official said.
As per this, businesses whose owners or promoters do not have commensurate income tax payment records will require physical and financial verification before their companies can be given GST registration, said the official.
Investigations show that fake invoices are issued rampantly in the case of items such as metals, plastic granules, readymade garments, gold and silver, construction services, work contract services, agro products, manpower supply and advertisement and animation services, said the official. Enforcement Directorate will also investigate the cases, said the official.
Direct and indirect tax authorities have been scaling up use of technology and data analysis to identify businesses with poor compliance track record. With the sharp reduction in tax revenues this year, the trend is expected to gain further momentum. Already, the GST authorities have made electronic invoice (e-invoice) compulsory for businesses with more than ₹500 crore sales from 1 October. This will be applicable for businesses with more than ₹100 crore sales from 1 April which will give officials an idea of transactions taking place in the economy on a real time basis and let them pre-empt fraud.