Within 45 days of a special drive, fake input tax credits worth Rs 162 crore by about 5,000 entities were recorded by the Goods and Services Tax (GST) authorities in Karnataka. The detection nationally is Rs 45,000 crore, a GST official said. The special drive began on May 15. In a state that has high compliance, it was a shocker to officials that every second person they targeted turned out to be fake. Karnataka has over 3.8 lakh GST registrants. Officials attributed the high detection rate to the better data techniques they used. K Balamurugan, additional director general, DG Systems, Bengaluru, said the earlier system of 100% verification by officials has been replaced by a risk management system (RMS) that helps identify fraudulent people or defaulters. “We get 30 crore invoices on a quarterly basis across India. Even if one lakh more officers are recruited, we would not be able to identify the fraudsters, but the computer will do it,” he said.
At present, GST officials have a two-pronged approach to detecting fraud using technology — one, audit-based verification of documents which also depend on red flags raised by the computer. For instance, if any entity does exceptionally well after five years of poor business, it will be followed by document scrutiny. The second is preventive check. RMS helps in identifying fraudulent people or defaulters. Roopam Kapoor, principal chief commissioner of central tax, Bengaluru zone, however, said Bengaluru sees comparatively lower fake input tax credits. Another official from the department explained that creating fake entities using other people’s Aadhaar cards, the details of which are got in connivance with random Aadhaar centres, is among the mostly commonly used methods of fraudsters. The card holder will be paid Rs 500 and the contact numbers will be changed for creating the fake entities and claiming input credit. Going ahead, Balamurugan said the cost of fraud also increases, as every digital footprint is recorded everywhere, so to have local drivers store data and then hide it from others will be cost-heavy. Blockchain technology will soon be introduced in GST transactions.
The cost of fraud also increases, as every digital footprint is recorded everywhere
Creating fake entities using other people’s Aadhaar cards, the details of which are got in connivance with random Aadhaar centres, is among the mostly commonly used methods of fraudsters.
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