Govt Is Matching IT Returns & GST Claims to Nab Tax Evaders; Rs 71,500 Crore Of Bank Fraud Reported In 2018-19

Under the second tenure of Modi government, reforms have been introduced to curb tax evasion using data analytics. This is the first time since the launch of GST on July 1, 2017 that the Centre has started to match income tax returns and GST returns of businesses and have sent notices to those showing mismatch.

You’d be shocked to see the unprecedented fraudulent cases in banks and more importantly the amount of dent they leave on our economy. RBI reported that an amount of about Rs 71,500 crore has been marked in over 6800 bank fraud cases, in the fiscal year 2018-19.

The IT and GST Match Process for Detecting Tax Evaders

Now that the election is done with and the polls are over, the government has started off this session with stringent rules and punishments on complaints regarding leakages in GST. Initial look into this process led to discovery of many cases of understatement of I-T returns and overstatement of GST claims. This is the 1st time, govt is matching IT and GST returns to detect tax evasion and money laundering. Some arrests have already been made, like the Manpasand Beverages case.

With the recent Supreme Court judgement, refusing protection of GST evaders, it has become difficult for such fraudulent entities to hide for longer. Data analytics is seen to be the core focus of the Revenue Department this year due to offences with respect to customs. Amidst all this, it has been found that many shell companies are involved in such bogus claims and identity thefts. 

In such cases, a company is set-up and undertakes fake transactions with other entities. On these fake transactions, companies claim input tax credit but no transactions or income is reflected in their I-T returns. Such companies have slum dwellers, gardeners and drivers sign up forms related to their personal information, declaring them as directors.

The Bank Fraud Cases and Their Iconic Digits

Bank frauds are scary and have a direct impact over the economy. Cases of fraud recorded to RBI fall under  criminal complaints with law-enforcement. High profile cases like that of Nirav Modi and Vijay Mallya have led to analysis conducted by anti-corruption watchdog Central Vigilance Commission (CVC) releasing a report on top 100 frauds.

These frauds are classified and analysed for 13 sectors, involving measures to strengthen standard operating procedures and monitoring systems, among others. We would like to brief you on some numbers for a whopping effect.

• 2018-19 recorded over 6800 bank fraud cases, involving Rs 71,500 crore.

• 6,801 cases of fraud cases were reported by commercial banks and select financial institutions, marking Rs 71,542.93 crore in the last fiscal year.

• 2017-18 saw 5,916 such cases, involving Rs 41,167.03 crore.

• 2016-17  saw 5,076 fraud cases, amounting to Rs 23,933 crore.

•2015-16 marked 4,693 cases of Rs. 18,698.82 crore.

• In 2014-15, 4,639 cases were reported, involving Rs 19,455.07 crore.

• In 2013-14, 4,306 cases were recorded, involving Rs 10,170 crore.

• 2009-10 witnessed 4669 cases amounting to Rs 1,998.94 crore.

The govt has been taking steps to strengthen monitoring tools to plug gaps and prevent GST evasion.