Karnataka Grapples with Massive Rs 44.1K Crore GST Evasion

Last updated: 09 December 2023

Central Tax Officials Uncover Massive GST Evasion in Karnataka: Recovery Efforts Fall Short

Between April 2019 and October 2023, central tax officials have exposed a staggering Rs 44,170 crore worth of Goods and Services Tax (GST) evasion in Karnataka, leading to the arrest of 30 individuals. Despite this significant detection, the recovery has been meager, accounting for only 20% of the evaded amount. This news highlights the challenges and complexities faced by tax authorities in curbing GST evasion.

Detection and Recovery Overview

  • Central tax officials discovered GST evasion totaling Rs 44,170 crore in Karnataka.
  • Recovery efforts have only managed to retrieve Rs 9,187 crore, representing a mere 20% of the evaded amount.
  • The detection and recovery efforts were independent of administrative jurisdiction, encompassing registrants under both central and state authorities.
 

Ministry of Finance Data Insights

  • The Ministry of Finance shares data emphasizing that detection and recovery are collaborative efforts.
  • The Directorate General of Analytics and Risk Management (DGARM) plays a crucial role in providing insights to curb evasion.
  • Initiatives by the Directorate General of GST Intelligence (DGGI) and central GST field formations include measures such as monitoring e-way bills and acting on specific intelligence.

Evasion Breakdown and Recovery Trends

  • Detailed breakdown of the Rs 44,170 crore evasion, with Rs 5,043 crore detected between April 1, 2023, and October 31, 2023.
  • The fiscal year 2022-23 witnessed the highest evasion at Rs 25,839 crore.
  • Recovery statistics reveal Rs 612.1 crore in the first seven months of the current fiscal year, with the highest recovery of Rs 4,435 crore recorded in 2021-22.

Challenges in Recovery Process

  • A Karnataka commercial taxes official emphasizes the challenges in the recovery process, citing a lengthy adjudication process.
  • The official notes that initial estimates of evasion may not align with the final adjudicated amounts, as registrants provide additional documentation during the process.

Enhanced Enforcement Measures

  • Both central and state administrations have intensified enforcement, with a particular focus on organized rackets.
  • Surprise raids are conducted based on specific intelligence to enhance the efficiency of enforcement measures.

National Overview of GST Evasion and Recovery

  • Nationally, GST evasion amounted to over Rs 4.4 lakh crore, with only 25% (Rs 1.1 lakh crore) recovered.
  • Maharashtra and Delhi recorded recovery rates of 19% and 28%, respectively.
  • Gujarat and Tamil Nadu reported recovery rates of 25% and 39.8%, while recovery remains generally below 50% in most states and union territories.

Conclusion

The revelations of massive GST evasion in Karnataka underscore the challenges faced by tax authorities in detecting and recovering evaded amounts. The need for a more streamlined adjudication process and intensified enforcement measures, both at the central and state levels, becomes evident in the face of consistently low recovery rates across the nation.



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