Government steps up fight against fake GST registrations

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move, in accordance with Instruction No. 02/2024-GST dated 12 August 2024, follows the success of a similar campaign last year that uncovered nearly 22,000 fake registrations and over ₹24,000 crore in suspected tax evasion. GST registrations are deemed fake or bogus when entities are established solely to defraud authorities by falsely claiming Input Tax Credit (ITC) without any actual supply of goods or services.

These fraudulent set-ups often use shell companies to manipulate invoices and inflate turnover. The department employs risk profiling and scrutiny of taxpayers to detect such entities, focusing on red flags like multiple GST identification numbers (GSTINs) for a single address or discrepancies between declared premises and the volume of goods transacted. The CBIC’s special drive will focus on identifying and eliminating suspicious GST registrations.

Upon detection of non-existent or fictitious entities, the following measures will be implemented: Read this | Seven years of GST: Its adoption has been a remarkable success Suspension and cancellation of registrations: Under Section 29 of the CGST Act, 2017, fraudulent GST registrations will be suspended and subsequently cancelled. Blocking of Input Tax Credit (ITC): ITC linked to these fake registrations will be blocked in accordance with Rule 86A. Recovery actions: The department will deny ITC to recipients who have transacted with these bogus entities, recovering the availed credit along with interest and penalties.