Over the last five years, from fiscal year 2020-21 to 2024-25, Central Goods and Services Tax (CGST) field officers have detected a staggering amount of tax evasion, totaling approximately ₹7.08 lac crore across 91,370 cases. A significant portion of this evasion, about ₹1.79 lac crore, is attributed to Input Tax Credit (ITC) fraud, spanning 44,938 cases. These figures highlight a persistent challenge in India’s tax administration and underscore the government’s ongoing efforts to curb financial misconduct. While the government’s measures, such as e-invoicing and GST analytics, have contributed to revenue growth, the precise impact of these specific interventions is difficult to isolate due to various macroeconomic factors .

Summary of Key Findings

The data on GST evasion reveals a clear upward trend in both the number of cases and the amount of tax evasion detected.

Total GST Evasion Cases (FY 2020-21 to FY 2024-25)

Period No. of Cases Detection (In Rs. Cr.) Amount Paid (In Rs. Cr.) Deposit Percentage to Total Collection
2020-21 12,596 49,384 12,235 25%
2021-22 12,574 73,238 25,157 34%
2022-23 15,562 1,31,613 33,226 25%
2023-24 20,582 2,30,332 31,758 14%
2024-25 30,056 2,23,375 26,799 12%
Total 91,370 7,07,942 1,29,175 18%

Total ITC Fraud Cases (FY 2020-21 to FY 2024-25)

Period No. of Cases Detection (In Rs. Cr.) Amount Paid (In Rs. Cr.) Deposit Percentage to Total Collection
2020-21 7,268 31,233 2,232 7%
2021-22 5,966 28,022 2,027 7%
2022-23 7,231 24,140 2,484 10%
2023-24 9,190 36,374 3,413 9%
2024-25 15,283 58,772 2,675 5%
Total 44,938 1,78,541 12,831 7%
Total Number of ITC Fraud Cases (FY 2020-21 to FY 2024-25)

In the last five years, GST evasion amounting to approximately ₹7.08 Lac Crores was detected, with recoveries from voluntary deposits totaling over ₹1.29 Lac Crores. The data shows a sharp increase in detected cases, with a peak of ₹2.30 Lac Crores detected in FY 2023-24. The number of cases also surged to 30,056 in FY 2024-25, more than double the number in FY 2020-21. Input Tax Credit (ITC) fraud remains a significant component, with detection in this category reaching ₹58,772 crore in FY 2024-25 alone.

In terms of Percentages, recovery is higher at 18% in overall cases detected so far but it reduces to 7% in case of ITC fraud cases. It also belies the fact that recoveries being low is due to the fact that these cases are pending at the appeal stages clogging the system. Many cases as proven by the High Court judgements on ITC are on made out on wrong interpretation of law by the department.

The Government’s Battle Against Evasion

The numbers presented in Parliament by the Minister of State for Finance, Pankaj Chaudhary, paint a clear picture of the scale of GST evasion in India. Over the last five financial years, CGST field officers have been at the forefront of this battle, uncovering over ₹7.08 lac crore in tax evasion. This includes about ₹1.79 lac crore linked to fraudulent ITC claims, which is a major area of concern for the authorities.

The steady increase in detected evasion figures from ₹49,384 crore in FY 2020-21 to a peak of ₹2,30,332 crore in FY 2023-24, before a slight dip to ₹2,23,375 crore in FY 2024-25, reflects both the complexity of the evasion schemes and the enhanced capabilities of the government to detect them. The number of cases also saw a substantial rise, from 12,596 in FY 2020-21 to 30,056 in FY 2024-25, highlighting a broader effort to clamp down on non-compliance.

ITC Fraud Analysis

A crucial aspect of this crackdown is the recovery of taxes. The data shows that over ₹1.29 lac crore has been recovered through voluntary deposits during this five-year period. This demonstrates that enforcement actions are leading to significant financial rectifications. However, the gap between the amount detected and the amount voluntarily deposited indicates the challenges in recovering the full amount of evaded taxes.

Detailed Explanation of Evasion Trends

A year-by-year breakdown of the data reveals specific trends in GST evasion. In FY 2020-21, a total of 12,596 cases were detected, with an evasion amount of ₹49,384 crore. The following fiscal year, FY 2021-22, saw a slight decrease in the number of cases (12,574) but a notable increase in the detected evasion amount to ₹73,238 crore, indicating larger-scale individual frauds.

The trend of increasing evasion amounts continued in FY 2022-23, with detections reaching ₹1,31,613 crore from 15,562 cases. This was a significant jump, more than double the amount detected two years prior. The peak of detection occurred in FY 2023-24, where a whopping ₹2,30,332 crore was identified across 20,582 cases. This fiscal year also saw a modest recovery of ₹31,758 crore through voluntary deposits. In the most recent fiscal year, FY 2024-25, while the number of cases surged to 30,056, the detected evasion amount slightly decreased to ₹2,23,375 crore.

The Persistent Problem of Input Tax Credit (ITC) Fraud

ITC fraud has emerged as a particularly concerning category of tax evasion. This type of fraud, where businesses claim credit for taxes they never actually paid, has constituted a significant portion of the total evasion. Between FY 2020-21 and FY 2024-25, ITC fraud was detected in 44,938 cases, with a total evasion amount of about ₹1.79 lac crore.

The data shows that ITC fraud cases have been steadily increasing, both in number and in the amount detected. In FY 2020-21, 7,268 cases were detected, with an evasion of ₹31,233 crore. This number saw a temporary dip in FY 2021-22 and FY 2022-23 before rising sharply. In FY 2023-24, 9,190 cases of ITC fraud were detected, with an evasion amount of ₹36,374 crore. The most recent fiscal year, FY 2024-25, witnessed an unprecedented surge, with 15,283 cases of ITC fraud and a detected evasion of ₹58,772 crore. This fiscal year’s numbers alone account for more than a third of the total ITC fraud cases and value detected over the five-year period.

Government’s Proactive Measures to Combat Evasion

In response to these challenges, the central government and the GSTN (Goods and Services Tax Network) have implemented several measures to prevent tax evasion. These initiatives focus on leveraging technology and data analytics to improve compliance and identify anomalies. Key measures include:

Digitization through E-invoicing: The mandatory e-invoicing system helps in creating a digital trail for transactions, making it harder for fraudulent activities to go undetected.

GST Analytics: The system uses automated risk assessment based on compliance attributes of taxpayers. It highlights outliers based on system-flagged mismatches and provides actionable intelligence to manage GST revenue risks.

“Project Anveshan”: This is a specialized initiative that utilizes newer techniques like Facial Recognition Systems (FRS) and e-way bill data. The goal is to identify GSTINs with a propensity for fake or fraudulent activities early on and generate intelligence reports to aid in investigations.

Targeted Scrutiny and Audits: The government selects returns for scrutiny and taxpayers for audits based on various risk parameters, focusing resources on areas with the highest potential for non-compliance.

According to the Minister of State for Finance, these measures are proving helpful in “safeguarding the revenue and nabbing the evaders”.

GST Collections vs. Estimates

The efforts to curb evasion are also linked to overall GST revenue performance. The data on Net Central GST collection, which includes CGST, IGST (residual), and Compensation Cess, provides a snapshot of the government’s fiscal health.

Net Central GST Collection (FY 2020-21 to FY 2024-25)

Financial Year Budget Estimates (BE) (In Rs. Cr.) Revised Estimates (RE) (In Rs. Cr.) Actual Collection (In Rs. Cr.) % of RE Achieved
2020-21 6,90,500 5,15,100 5,48,777 106.5%
2021-22 6,30,000 6,75,000 6,98,114 103.4%
2022-23 7,80,000 8,54,000 8,49,132 99.4%
2023-24 9,56,600 9,56,600 9,57,208 100.1%
2024-25 [P] 10,61,899 10,61,899 10,26,490 96.7%
The actual collections have largely aligned with or surpassed the revised estimates in most years. In FY 2024-25, the actual collection was over ₹10.26 lac crore, which was 96.7% of the revised estimate of nearly ₹10.62 lac crore. This suggests that while evasion remains a problem, the overall system is performing close to expectations.

The Evolving Landscape of Tax Enforcement

The data on GST evasion for the period of 2020-21 to 2024-25 highlights a clear and continuous effort by the government to tackle tax fraud. The rising figures of detected evasion cases and amounts, particularly in the ITC fraud category, can be interpreted in two ways: either the scale of evasion is increasing, or the government’s detection capabilities are becoming more effective. Given the proactive measures like e-invoicing and Project Anveshan, the latter seems more probable.

However, the government itself acknowledges that the direct impact of these specific measures on revenue collection and systemic improvements is not easily “ascertainable”. This is because various other factors, such as “global economic conditions, economic growth in the country, and level of domestic consumption of goods & services,” also play a significant role in tax revenue outcomes.

The journey to a more compliant GST regime is a complex one. The data indicate that the government’s technological and analytical tools are becoming more sophisticated, leading to higher rates of detection. However, the persistent nature of tax evasion, especially ITC fraud, suggests that continuous vigilance, adaptation, and enforcement are necessary to ensure the long-term success and integrity of India’s GST system.