The Central Tax formations under Central Board of Indirect Taxes and Customs (CBIC) detected Rs. 36,374 crore worth of fake Input Tax credit (ITC) that involved 9,190 cases in the Financial Year (FY) 2023-24. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in written reply to a question in Lok Sabha today.

The details of the fake Input Tax Credit (ITC) cases booked by Central Tax formations during the F.Y. 2022-23 and 2023-24 are as under:

F.Y.	No. of cases	Detection (Rs. in Cr.)	Voluntary Deposit (Rs. in Cr.)	No. of persons arrested
2022-23	7,231	24,140	2,484	153
2023-24	9,190	36,374	3,413	182

The number of cases booked by Central Tax formations during the F.Y. 2021- 22 to 2023-24 is as under:

F.Y.	No. of cases
2021-22	5,966
2022-23	7,231
2023-24	9,190

The Minister stated the steps taken by the Government to curb the ITC frauds that include:

1. Insertion of sub-rule (4A) in rule 8 of CGST Rules, 2017 to provide for risk based biometric-based Aadhaar authentication of registration applicants who appear to be risky based on data analytics.
2. Amendment in rule 9 of CGST Rules, 2017 to provide for physical verification in high-risk cases, even when Aadhaar has been authenticated.
3. Amendment in rule 10A of CGST Rules, 2017 to provide for requirement of bank account furnished as a part of registration process to be in the name of the registered person and obtained on PAN of the registered person and also linked with Aadhaar in case of proprietorship firm and that the details of bank account will be required to be furnished within 30 days of grant of registration or before filing of GSTR-1, whichever is earlier.
4. Restriction on availment of ITC to invoices and debit notes furnished by the supplier in their statement of outward supplies.
5. Filing of FORM GSTR-1 made mandatory before filing of FORM GSTR-3B for a tax period and filing of FORM GSTR-1 made mandatorily sequential.
6. Making the beneficial owner liable for penal action and prosecution similar to that of actual supplier/recipient, in cases where a supply has been made without the issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed/distributed.
7. Amendment in Section 83 of the CGST Act to provide that provisional attachment of property can be done in respect of any other person who has retained benefits of such transactions.
8. Restriction on generation of e-way bills by non- compliant taxpayers.
9. Reduction in threshold limit for issue of e-invoice for B2B transactions from Rs. 10 crore to Rs. 5 crore w.e.f. 01.08.2023.
10. Regular use of data analytics to identify or track risky GST registrations to detect tax evasion.

Fake Input Tax Credit detection triggers strengthened registration, verification and e-invoice controls to curb fraud. Central tax authorities detected widespread fake Input Tax Credit (ITC) cases with increased detections, voluntary deposits and arrests. To address ITC fraud the Government implemented risk-based Aadhaar authentication, mandatory physical verification in high-risk cases, bank-account KYC linkage to PAN/Aadhaar, restriction of ITC to supplier-reported invoices, mandatory sequential filing of GSTR-1 before GSTR-3B, liability for beneficial owners, provisional attachment powers, e-way bill and e-invoice compliance tightening, and routine data-analytics monitoring.