Nearly Rs 2,000 cr claimed via fake GST refunds

The government has detected fake GST refunds of Rs 1,926 cr since the new system was introduced in 2017, ministry of finance said on Monday.

GST refunds are issued by the government when an entity, such as a business, has paid more tax than it was required to under the Goods and Services Tax regime. In such cases, the entity can claim refund at the end of the year.

A fake refund claim refers to cases where an impostor claims the refund that was genuinely due to another entity, an entity claims refund based on fake documents and so on.

Fake GST claims have been detected against the accounts of 637 entities, minister of state for finance Anurag Thakur said.

A total of 35 persons have been arrested in such cases since July 2017, when the GST replaced central excise, sales tax and other levies.

Out of the Rs 1,926 cr falsely claimed as GST refunds, a total of Rs 239 cr was able to be recovered, he added.

The actual fraud level may be higher, as the above amounts refer only to those cases that have been detected.

Thakur said tax departments are deploying data analytics and intelligence gathering technologies to detect false claims.

An entity can claim GST refunds in case GST was collected by tax authorities on a transaction that was supposed to be exempt from it.

For example, export transactions, sale to entities inside special economic zones and sale to embassies are all considered non-domestic transactions, and therefore exempt.

Refunds are also issued when excess tax is paid in error, or a higher amount is pre-deposited as tax.

GST refunds can also be claimed when a transaction is reversed: For example, when tax is paid on an advance which is subsequently returned after the deal is canceled.

The total GST revenue collected last month was ₹1.11 lakh crore, including ₹23,481 crore collected on imports and a cess of ₹8,637 crore.