Complexity of GST framework - how companies can avoid fraud
The Goods and Services Tax (GST) was implemented with the primary aim of simplifying the taxation system. However, despite concerted efforts by authorities to achieve this goal, the GST framework remains inherently complex. This complexity not only poses challenges for taxpayers but also creates loopholes that can be exploited by fraudulent entities, leading to significant revenue losses for the government.
During a special drive spanning from May 2023 to December 2023, the government identified a concerning number of 29,273 fraudulent entities, suspected of evading Input Tax Credit (ITC) to the tune of ₹44,015 crore.
Similarly, between the fiscal years 2020-21 and May 2023, authorities unearthed a staggering 43,516 instances of GST fraud, involving a substantial ₹2,68,537 crore. These figures may just be a tip of the iceberg and indicates a possibility of numerous undetected cases. Moreover, fraudsters have exploited the complexity of the system, impersonating as tax authority and sending fake summons or notices to unsuspecting taxpayers.
