Union Budget 2020: Fake invoicing under GST a non-bailable offence

In order to crack down on fake invoicing and fraudulent input tax credit (ITC) refunds under the goods and services tax (GST), the Budget  has introduced strict penal provisions under the GST legislation, making it a non-bailable offence. The move has already been approved by the GST Council.

Besides, Finance Minister Nirmala Sitharaman announced that the new GST return framework and e-invoicing would be implemented from April 1, to  improve compliance and plug the tax revenue leakages.

According to the government, the masterminds of fraudulent ITC rackets involve people like daily wagers, rickshaw pullers etc. As per the changes in the law, those fraudulently availing ITC without invoice or bill in cases where the amount of tax evaded or the amount of ITC wrongly availed or utilised or refund claimed worth over Rs 5 crore will be punishable with imprisonment for a term which may extend to five years and with fine and shall be cognizable and non-bailable.

“Further, the scope of Section 132 has been expanded by extending the provisions to a person who causes to commit and retains the benefits arising out of different offences,” said Abhishek 

A Rastogi, Partner at Khaitan & Co.

GST collections touched Rs 1.11 trillion  in January, the second highest monthly collection since the roll out, the third straight month of GST receipts crossing the Rs 1-trillion mark. 

“With an eye on the future of Indirect tax regime in India, this year’s Budget has aimed at simplification of tax compliances. New GST return framework and E-invoicing would be implemented from April 1, 2020, primarily in an attempt to plug the tax revenue leakage on account of fake invoicing and fraudulent claims of input tax credit,” said Anita Rastogi - Partner, Indirect Tax & GST, PwC India.