In a major anti-tax evasion effort that lasted seven months, authorities dismantled more than 29,000 sham companies implicated in GST fraud totaling over ₹44,000 crore, which led to the apprehension of 121 individuals.
The aggressive operation to target fraudulent billing by phantom entities was a collaboration between national tax boards and regional administrations. The use of deceitful invoices allows businesses to unjustly claim tax credits without actual trade of goods or services.
A crackdown starting from mid-May of the previous year unveiled the extensive network of fictitious entities attempting to exploit the system, ultimately conserving approximately ₹4,646 crore with a blend of ITC blockage and recoveries.
An analysis from the last quarter of the year revealed a sector of these operations implicating firms in suspected foul play involving around ₹12,000 crore. This act of vigilance saved around ₹1,317 crore in potential lost revenue, which included both recoveries and defensive measures to obstruct further illicit credit claims. During this period, 41 individuals faced arrests due to their involvement in these fraudulent activities.
To fortify the integrity of the GST registration system, several initiatives have been established such as biometric verification using Aadhaar in selected regions, aiming at diminishing the instance of GST fraud and ensuring more robust compliance within the tax framework.