Centre may raise threshold for GST evasion cases from Rs 2 cr to Rs 3 cr

In a bid to improve the ease of doing business and reduce harassment, the Centre may soon increase the threshold for arrests and criminal prosecution in Goods and Services Tax (GST) evasion cases to Rs 3 crore from Rs 2 crore currently, The Economic Times (ET) reported on Wednesday.

Citing a government official, the report added that the industry had originally asked for an exemption of up to Rs 5 crore.

Moreover, the Centre may also tweak the rules of issuing summonses to the violators. The report further said that the Central Board of Indirect Taxes and Customs (CBIC) may not loosen the rules for the cases of fake invoices.

The official was quoted in the report as saying, "While compliance has certainly improved, fake invoice cases are still high, so this may not be the right time to give any relaxation."

In November 2022, the Centre launched a special initiative against input tax credit fraud. In the first half of 2023-24, it detected 1,040 cases involving GST evasion worth Rs 1.36 trillion. Out of this, Rs 14,000 crore is for input tax credit fraud.

So far in the year, 96 arrests have been made in the cases of GST evasion. It is lower than 460 in FY21, 342 in FY22 and 190 in FY23.

Earlier, Business Standard reported that over 100,000 small and medium-sized businesses are non-compliant with e-invoicing norms under the GST regime, a mandatory requirement for businesses with an annual turnover of over Rs 5 crore.

E-invoicing provides real-time access to invoices that are prepared by the supplier on the purchase of goods, allowing faster accessibility to input tax credit, thereby limiting the manipulation of fake credit as it has to be generated before the transaction. "The default has been reported mainly in businesses with a turnover between Rs 5 crore and Rs 20 crore," a senior official informed Business Standard.

According to the official, 20-30 per cent of businesses within the turnover threshold are not compliant yet. The authorities are issuing intimation letters to such businesses seeking compliance, failure of which would lead to "consequences", he warned.

The Central Board of Indirect Taxes & Customs (CBIC), an apex body for indirect taxation in India, has revised the turnover threshold to Rs 5 crore from August 1. This is to get more small enterprises that have a turnover between Rs 5 crore and Rs 10 crore within its ambit. With this, only micro enterprises (turnover less than Rs 5 crore in line with the new micro, small and medium enterprises definition) remain outside the purview of e-invoicing.