21,791 Fake GST Registrations Detected, Says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday said GST officers have detected 21,791 fake GST registrations and over Rs 24,000 crore of suspected tax evasion during a two-month-long special drive.

In a written reply to a question in Rajya Sabha, the minister said to safeguard the interest of honest taxpayers and avoid extreme hardship to taxpayers, instructions have been issued from time to time, directing officers to exercise due caution and care in the exercise of powers such as summons, provisional attachment of property, blocking of tax credit etc.

"A total of 21,791 entities (11,392 entities pertaining to state tax jurisdiction and 10,399 entities pertaining to CBIC jurisdiction) having GST registration were discovered to be non-existent. An amount of Rs 24,010 crore (state - Rs 8,805 crore + Centre - Rs 15,205 crore) of suspected tax evasion was detected during the special drive," Nirmala Sitharaman said.

The minister was replying to a question on the number of entities identified as having fake registrations, and the total amount of evasion detected during the special drive against fake GST registrations conducted by the Central Board of Indirect Taxes and Customs (CBIC) from May 16 to July 15, 2023.

To a query on whether the government has considered the challenges faced by e-commerce enterprises in obtaining GST registrations, especially operating in virtual spaces, Nirmala Sitharaman said that considering the special nature of e-commerce operators, a simplified procedure for registration of e-commerce operators has already been notified.

It provides that when an e-commerce operator applies for registration in a particular state or Union Territory where he/she does not have a physical presence, he/she can apply for registration by giving details of the principal place of business located in another state or Union Territory.

Further, amendments have been made in GST Rules to strengthen the registration process, including biometric-based Aadhaar authentication, for high-risk registrants, along with the verification of the original copy of the documents.

A pilot project for this was launched in Gujarat. In July, the pilot project was extended to Puducherry and in November to Andhra Pradesh.

Also, details of bank account, name and PAN of the registered person are required to be furnished within 30 days of the grant of registration or before filing of the statement of outward supply, whichever is earlier.

Entities who do not furnish the details of valid bank accounts within the time period prescribed will be suspended automatically by the system. However, upon compliance with this provision subsequently, by the registered persons such system-based suspension would be automatically revoked by the system.

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