CBIC to conduct two-month-long special drive to curb ITC fraud menace

"The move would likely help in curbing tax evasion," said Saurabh Agarwal, Tax Partner, EY

The Central Board or Indirect Taxes and Customs (CBIC) will conduct a two-month-long special drive to detect fake GST registrations and curb menace of input tax credit (ITC) fraud. 

“The menace of fake registrations and issuance of bogus invoices for passing of fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government", CBIC said while releasing guidelines for the special drive on Friday.

Various modus operandi of obtaining such fake registrations have been detected by Central and State Tax administrations. In some cases, forged documents, such as forged electricity bills, property tax receipts, rent agreements, etc. are being used as proof of principal place of business to obtain GST registration, the apex body highlighted.

Fake/non-genuine registrations are being used to fraudulently pass on input tax credit (ITC) to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both, it said.

"A special All-India Drive may be launched by all Central and State Tax administrations during the period May 16 and July 15 to detect suspicious/fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard Government revenue,” CBIC said.

“The move would likely help in curbing tax evasion. It would also help the Central and State administrations to share the information amongst each other, which would further help in better tax administration. Though the impact of such drive on GST collections would be seen after next few months, said Saurabh Agarwal, Tax Partner, EY