GST Council to vet CBIC’s plan to check evasion with new validations

New Delhi: The GST Council in its meeting next month is likely to consider CBIC's proposal to introduce additional validations in the GST return filing system to check evasion and fake input tax credit (ITC) claims, a senior official said.

In a special drive since November 2020, central agencies have detected fake ITC claims worth Rs 62,000 crore and arrested 776 persons, including professionals. The move to introduce certain validations in the return filing system is aimed at checking frauds and revenue loss.

The Central Board of Indirect Taxes and Customs (CBIC) last week introduced validation and risk rating for GST registrations, as it looks to curb fake entities issuing fake bills just to claim ITC benefit and defraud the exchequer. The official said the strategy to go in for additional validation both at the time of registration and filing of return is aimed at eliminating tax evasion.

"We are planning to introduce validations in returns filing system in a way such that the process does not become cumbersome for honest taxpayers. The validation would be done by the tax department and ITC claims could be blocked in cases of mismatch," the official said.

The additional validations that would be introduced at the tax officers end will have to go through the GST Council, which is likely to discuss the issue in next meeting on July 11. Last week, CBIC Chairman Vivek Johri had said the Council will discuss anti-evasion measures to tighten the noose on fake GST registration and fraudulent generation of input tax credit (ITC). The GST officers have from May 16 initiated a two-month special drive against fake registration.