In the third quarter of the 2023-24 financial year, Delhi has gained notoriety for having the highest incidence of Goods and Services Tax (GST) evasion by fraudulent firms. Officials reported that between October and December 2023, 483 counterfeit firms were uncovered in the capital, implicated in suspected GST evasion totaling Rs 3,028 crore. Delhi ranked third, trailing behind Maharashtra (926) and Rajasthan (507), in terms of the number of counterfeit GST firms identified by authorities during this period.
Nevertheless, it was noted that the suspected amount of GST evasion in Maharashtra and Rajasthan stood at Rs 2,201 crore and Rs 197 crore, respectively, indicating a lower magnitude compared to Delhi.
Under the Central Board of Indirect Taxes and Customs, along with state and union territory governments, GST authorities have been actively conducting operations since May 2023 to detect fraudulent registrations and the issuance of fictitious invoices without genuine transactions of goods and services.
In the quarter ending December 2023, a total of 4,153 counterfeit firms engaging in suspected Input Tax Credit (ITC) evasion amounting to approximately Rs 12,036 crore were identified nationwide, resulting in 41 arrests. In Delhi, authorities managed to prevent input tax credit of Rs 90 crore and apprehended 11 individuals involved in the fraudulent activities. Following Delhi in terms of estimated GST evasion were Maharashtra, Uttar Pradesh (Rs 1,645 crore), Andhra Pradesh (Rs 765 crore), and Haryana (Rs 624 crore).
Since the launch of the special drive, a total of 29,273 counterfeit firms engaged in suspected ITC evasion amounting to Rs 44,015 crore have been unearthed across the country.
While there was no response from the office of Finance Minister Atishi, officials from the trade and taxes department asserted that measures were being implemented to combat the infiltration of fake firms into the GST network. An official, speaking on condition of anonymity, mentioned the establishment of a centralized GST registration cell to receive and process new applications. This initiative has contributed to reducing the number of firms obtaining “deemed approval” for GST registration without manual scrutiny of documents, which was observed in nearly 50,000 out of 1.46 lakh applications received by the department in 2022-23.