Finance Ministry to block ITC for entities caught using fake invoices
Move comes amid efforts to boost GST collections in last three months of FY20
In an effort to plug revenue leaks, the Central Goods & Services Tax (CGST) administration has started blocking input tax credit (ITC) for assessees who availed credit against fake invoices, or against invoices without the receipt of goods or services, or both.
The move comes at a time when the Revenue Department has increased the collection target for January and February by ₹5,000 crore each. It aims to collect ₹3.55-lakh crore over the last three months of the current fiscal year.
In the first nine months of FY20, the department collected over ₹9.08-lakh crore, against ₹8.71-lakh crore during the corresponding period last fiscal. Though there was an increase it did not meet the average monthly collection expectation of ₹1.10 lakh crore.
Now, in effort to boost revenue, the Directorate General of GST Intelligence (DGGI), under the Finance Ministry, has dispatched a letter to all the 26 field formations urging them to make a list of entities that availed fake credit and block ITC for those located in their respective jurisdictions.
If the formations have data on such entities located outside their jurisdictions, they have been asked to forward a list of those, along with their GSTN particulars, to the concerned field formation with a request to block the input tax credit immediately, the letter added.
In line with this, the lists were prepared by last Friday. Data is being collected from all the zones to assess how much credit has been blocked and how it will impact revenue collection.
The issue of fake invoices figured in the review meeting held on Friday. It was decided that GST authorities would look into issues such as mismatch of supply and purchase invoices, data analytics of mismatch in GSTR-1, GSTR-2A and GSTR-3B, failure of filing returns, over-invoicing, recuperation of fake or excess refunds availed beyond the permissible limits, patching tax leakages, action on checking fake or huge ITC claims, and a data analytical review of all refunds under the inverted duty structure.
SMSes and emails will be sent to fraudulent or excess ITC claimants, targeted defaulters, non-filers and those who provide mismatched information in their returns or over-invoice, or who have been identified through data analytics as having evaded tax by ‘duping’ the system.
Taxpayers who have taken ITC wrongfully can voluntarily repay the amount equal to the inadmissible credit before punitive action is taken against them following verification.
According to data collected by the DGGI, 148 cases of GST evasion were booked from July 1, 2017 to March 31, 2018, and over ₹750 crore was recovered.
In FY19, the number of such cases rose to 1,473, with recovery amounting to nearly ₹20,000 crore. Till October this fiscal year, nearly 1,000 cases had been booked with over ₹8,000 crore recovered.
Source- Business Line.
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