All about fake GST invoices

Post author:Ashish Jha
Post published:December 24, 2020

All about fake GST invoices

All about fake GST invoices: Nationwide, the Directorate General of Goods and Services Tax Intelligence (DGGSTI) arrested people for misappropriation or transfer of tax liability (ITC) through false GST invoices and caused damage to the exchequer. The use of fraudulent invoices to misuse ITC debt is steadily increasing and causing concern to the government.

In order to curb the GST fake invoice frauds, the Govt on the recommendations of the GST Council’s Law Committee has issued a notification to deal with the menace of fraudsters who avail & pass on ineligible ITC by fake or fly-by-night firms: Finance Minister Nirmala Sitharaman
— DD NEWS SRINAGAR (@ddnewsSrinagar) December 23, 2020

A GST invoice is a business tool issued by a supplier or retailer to the recipient or buyer of goods and services. Such a document identifies the names of the parties involved and the details of the goods or services provided under the provided transaction. It was found that the fraudsters had touched several dummy companies, obtained GST registrations, and issued illegal GST invoices without providing services. They forwarded the invalid ITC obtained from the fake invoices to the commission customers and then used it to make GST payments. The tax department found that promoters of some companies used fake invoices through a series of shell companies to transfer corporate profits and transferred tax credits from one company to another in a circular operation.

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The Issue

Duplicate invoices not only prevent GST from billing sales by obtaining unnecessary ITCs and converting additional ITCs into cash, but also help fraudulent bookings, money laundering, and money laundering to increase revenue by using these invoices. The reason for the increase in fake invoices is the main reason for the increase in the fraudulent use of ITC companies due to lack of due diligence during GST registration. The registration process has been simplified and embarrassing with the government so that businesses can easily access the system. The lack of data exchange between law enforcement agencies and banks has also led to an increase in fraud cases.

The Preventive measures that can be taken

The government plans to tighten the GST registration process and legal action to address the growing number of fake invoices.

Myths v. Facts on CGST Notification issued on 22.12.2020 to curb GST Fake invoice frauds. pic.twitter.com/xoPVUjhTuK
— CBIC (@cbic_india) December 23, 2020