The finance ministry's revenue department has detected fake invoices involving GST evasion of Rs 8,000 crore in the fiscal 2018-19. After registering nearly 2,000 cases, tax sleuths have managed to recover Rs 736 crore.
Data from the ministry shows that 1,959 cases of fake invoices were filed by taxmen in the last financial year.
Tax evaders use fake invoices to show supply of goods and services when none has taken place. Some cases relate to GST non-payment on invoices issued by traders, as per the department.
Cases have come to light where businesses ineligible to get input tax credit (ITC) avail false credit, falsify exports and claim refunds on it.
Currently, 241 cases are under inquiry, of which 136 pertain to non-filing of income tax returns.
Rampant falsification of invoices by businesses has pulled down government revenues. In June, GST collections dipped to Rs 99,939 crore after staying above Rs 1 lakh for three months.
With the indirect tax target for the current fiscal at Rs 13.71 lakh crore, the government needs to collect at least Rs 1.14 lakh crore per month.
"The issue of fake invoices continues unabated even under the GST regime. A new return form to be introduced in October, which will help match invoices of the seller and the purchaser, will largely take care of the sham. Next step is to move on to electronic invoicing," said Shashi Bhushan Singh, former member, Central Board of Indirect Taxes and Customs.
The ministry will launch e-invoicing on a pilot basis from January 1 to replace conventional paper-based system of hard copies. Under the pilot, businesses above a specific threshold will have to generate e-invoice for business-to-business sales.
The ministry is also carrying out a Know Your Customer (KYC) exercise for companies to detect tax leakage.
This is likely to lead to a significant reduction in tax evasion cases like no invoicing or invoicing with no goods supplied, claiming input tax credit on fraudulent exports and suppression of turnover.
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