Substantial GST Evasion Detected, Challenges Remain Unplugged
The Directorate General of GST Intelligence (DGGI) has uncovered GST evasion amounting to over ₹2 lakh crore in FY24, marking the highest figure recorded in a single fiscal year. Despite this alarming discovery, there remains substantial revenue leakage in the system that is yet to be addressed.
Anil Kumar Gupta, Principal Director General at DGGI, highlighted that numerous transactions within the “digital economy, digital sector, cyber, cryptocurrency, Banking, Financial, and Insurance (BFSI)” sectors remain unmonitored. In a candid exit interview on September 30, Gupta discussed the significant GST revenue leakage in these areas, stating that the anti-evasion agency encounters numerous challenges in tracking them effectively to minimize losses.
He emphasized, “Upcoming policy decisions and the new DG of the DGGI should focus on these sectors to curb GST leakage.” Gupta pointed out the difficulties in tracking transactions from these sectors, largely due to the storage of vast amounts of data in the cloud. He mentioned, “It becomes challenging for us to track, necessitating increased attention as a considerable amount of evasion remains uncovered.”
In addition to digital transactions, Gupta noted that traditional sectors such as gutkha, pan masala, timber and plywood, metals, alloys, and scrap also pose tracking difficulties. He explained, “Since these goods are consumed directly by the consumer, sellers do not maintain proper records. The records we receive are often limited to a day or two, which complicates our tracking efforts and requires attention.”
According to a recent annual report released by DGGI highlighting evasion trends for FY24, the agency has identified 6,084 cases of GST evasion amounting to ₹2.01 lakh crore. The online gaming and BFSI sectors, along with iron, copper, scrap, and alloys in goods, were identified as the most susceptible to evasion.
In FY24, the online gaming sector recorded the highest evasion, with ₹81,875 crore identified in 78 cases, followed by the BFSI sector with ₹18,961 crore found in 171 cases. Works contract services and pharmaceuticals registered 343 and 22 evasion cases, respectively, amounting to ₹2,846 crore and ₹40 crore in tax evasion.
The iron, copper, scrap, and alloys sectors were implicated in 1,976 cases of GST evasion, which accounted for ₹16,806 crore of taxes evaded. Other notable mentions included pan masala, tobacco, cigarettes, and bidi with 212 cases and ₹5,794 crore in evasion, while plywood, timber, and paper accounted for 238 cases involving ₹1,196 crore. Electronic items registered 23 cases amounting to ₹1,165 crore, followed by marble, granite, and tiles with 235 cases totaling ₹315 crore.
When probed about the influx of cases during election periods and the allegations often directed towards the agency regarding harassment and extortion from taxpayers, Gupta responded that the government is taking significant measures to address these complaints.
“There is a clear message from the top government to ensure there is no harassment or extortion during raids. Recently, guidelines concerning taxpayer rights have been established, and a grievances redressal committee has been formed to seriously evaluate all complaints against officers,” Gupta stated.
As for the increase in intelligence inputs during elections, Gupta stated, “During state or general elections, similar to other investigative agencies, we observe a rise in the flow of information and subsequent raids. While I cannot disclose which states have recorded the highest evasion, it is evident that in places like J&K and Haryana, where elections are currently taking place, we see heightened action. Goods commonly involved in evasion during elections include FMCG items, goods promised as freebies, and everyday domestic use items.”
