GST evasion of over ₹7 trillion detected in five years: Centre
Of this, taxpayers have deposited ₹ 1.29 trillion voluntarily, minister of state for finance Pankaj Chaudhary informed Lok Sabha on Monday in a written reply. The extent of tax evasion detected has steadily risen from over ₹ 49,300 crore in FY21 to ₹ 2.23 trillion in FY25, the minister said.
Of the total tax evasion detected, ₹ 1.78 trillion is related to fake input tax credits. Of this, about 7% has been voluntarily deposited by the taxpayers.
To be sure, part of the disputed tax amounts get dropped in appellate proceedings, while some of the demands are challenged in courts.
The increase in tax evasion detected coincides with an expansion of data collection and reporting requirements implemented by the tax administration. The Centre and Goods and Services Tax Network, the company that processes tax returns, have taken several steps to improve compliance and prevent tax evasion, the minister said.
These include e-invoicing transactions, automated risk assessment of entities based on their compliance attributes, highlighting outliers based on system-flagged mismatches, identifying anomalies in taxpayer behaviour, and selecting returns for scrutiny and taxpayers for audit based on various risk parameters.
These measures are helpful in safeguarding the revenue and nabbing the evaders, Chaudhary said.
Chaudhary said newer techniques, like facial recognition systems and e-way bill data, were used to identify GST identification numbers with a propensity for fake or fraudulent activity early on.
'While the above measures contribute to revenue collection, impact of such measures in identifying systemic gaps, improving compliance and preventing recurring tax evasion is not ascertainable. The outcomes such as revenue growth and reduction in instances of tax evasion cannot be attributed solely to all or any individual such measure, as various other factors such as global economic conditions, economic growth in the country, level of domestic consumption of goods and services, tax rate, etc. are also relevant for this,' Chaudhary said.
In response to another question on reducing the 18% GST on health and life insurance policies, the minister informed the House that the issue was placed before the GST Council on 9 September 2024 in New Delhi.
After detailed deliberations, the GST Council recommended setting up a ministerial panel to review the matter. Samrat Choudhary, deputy chief minister of Bihar, is the panel's convenor.
During the 55th meeting of the GST Council held on 21 December last year in Jaisalmer, the convener sought more time for finalizing the panel's recommendations. The Council agreed to give more time to the panel, Chaudhary said.
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