The Goods and Services Tax authorities have unearthed over ₹ 31,000 crore of tax fraud committed by misuse of input tax credit (ITC) provision under the Goods and Services Tax (GST) regime during the financial year 2020-21 and booked more than 7,200 cases involving fake ITC. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha today.

Giving details, the Minister stated Input Tax Credit (ITC) fraud detected by CGST formations under Central Board of Indirect Taxes & Customs (CBIC) as following:

S. No.	Period	No. of Cases	Quantum involved (in Rs. crore)
1	2020-21	7,268	31,233.40

The Minister stated that the Government has taken many steps to prevent such frauds, such as:

• Introduction of AADHAR authentication for processing of new registration application;
• Facility to verify cancelled / existing registrations of the applicants seeking new registrations;
• Provisions to suspend / cancel registration of taxpayers found to the adverse notice of the department;
• Bulk suspension of registration by GSTN based on business intelligence and further follow up of the same by the CBIC;
• Additional grounds for cancellation of registration have been introduced where there is mismatch between FORM GSTR-1 and FORM GSTR 3B (Rule 21) of CGST Act, 2017, etc.;
• To prevent fake dealers and shell companies to pass on fake credit, without filing their GSTR-3B returns and paying taxes, a provision has been made to block furnishing of outward supply statement in FORM GSTR-1 by a taxpayer, if 2 or more GSTR 3B returns are not filed by the said taxpayer.
• E-invoices have been made mandatory for all B2B transaction with turnover above ₹ 50 crore.
• Generation of E-way bill by those taxpayers who have not furnished return for consecutive period of two month has been restricted.
• Blocking of ITC Credit under Rule 86A of CGST Act, 2017, was introduced if the proper officer has reason to believe that ITC has been availed fraudulently.

Input tax credit fraud detection spurred strengthened registration, filing, e invoice and ITC blocking safeguards to curb misuse. CGST formations detected ITC fraud totalling over thirty-one thousand crore in FY 2020-21 across 7,268 cases. To curb misuse the Government implemented measures including AADHAR authentication for new registrations, verification of existing or cancelled registrations, suspension and cancellation powers, bulk suspensions by GSTN, additional cancellation grounds for GSTR 1/GSTR 3B mismatches, blocking of GSTR 1 filing where multiple GSTR 3B returns are unfiled, mandatory e invoicing for specified B2B turnover, e way bill restrictions for non filing, and ITC blocking under Rule 86A where fraudulent availing is suspected.