New Delhi ,

In a significant move to combat tax evasion and fraudulent activities, the Goods and Services Tax (GST) authority has embarked on a groundbreaking initiative to monitor the banking transactions of taxpayers in real-time. This proactive approach aims to detect instances of fake invoices issued by traders and the misuse of Input Tax Credit (ITC).

During the GST registration process, taxpayers typically provide details of a single bank account. However, it has come to light that many businesses operate multiple bank accounts, potentially facilitating fraudulent activities. By closely scrutinizing banking transactions, the GST authority can identify irregularities and discrepancies. This development is particularly crucial since, in numerous cases, companies have absconded by the time their banking transactions were traced. Recognizing this challenge, the GST authorities have decided to emulate the Income Tax Department’s approach by collecting real-time banking transaction data.

To further strengthen the fight against tax evasion, the Central Board of Indirect Taxes and Customs (CBIC) has taken up the matter. Collaborative efforts may involve seeking assistance from the Reserve Bank of India (RBI) if necessary. The GST authorities are also considering expanding the risk parameters for service-related industries by incorporating additional databases. This proactive measure aims to apprehend potential tax evaders. The decision to broaden the scope of risk parameters stems from recent investigations that have exposed the prevalence of shell companies employing fake bills for illicit purposes.

Campaign Launched to Curb Fake Registrations

Recognizing the gravity of the situation and the mounting menace of tax evasion, tax authorities at both the central and state levels have launched a two-month special drive. The primary objective of this initiative is to identify fraudulent GST registrations and apprehend individuals or entities who exploit the system by fraudulently claiming Input Tax Credit (ITC). Estimates suggest that GST tax evasion amounted to over Rs 1 lakh crore in the fiscal year 2022-23. In response, the tax authorities have initiated a rigorous crackdown on fake registrations.

As of now, the GST system has approximately 1.39 crore registered taxpayers throughout the country. This special drive aims to meticulously examine each registration and weed out any suspicious or fraudulent cases. By undertaking this exercise, the authorities aim to plug loopholes, enhance compliance, and ensure that only genuine taxpayers benefit from the system. The comprehensive scrutiny of registrations will undoubtedly play a vital role in curbing tax evasion and bolstering the integrity of the GST regime.


The GST authority’s decision to monitor the banking transactions of taxpayers in real-time marks a significant stride in combating tax evasion and fraudulent practices. By leveraging this advanced approach, the authority aims to identify instances of fake invoices and misuse of Input Tax Credit. Furthermore, the involvement of the CBIC and the possibility of seeking assistance from the RBI demonstrates a multi-faceted effort to strengthen tax enforcement measures. The inclusion of additional databases within the risk parameters of service-related industries and the launch of a special drive to curb fake registrations further emphasize the authorities’ commitment to combating tax evasion.

Ensuring a fair and transparent tax system is paramount for sustained economic growth and development. The collective efforts of the GST authority and tax authorities at various levels are crucial in safeguarding the integrity of the tax regime and promoting compliance. By effectively leveraging technology and data analysis, these initiatives will play a pivotal role in minimizing tax evasion, protecting legitimate businesses, and fostering a conducive environment for economic prosperity.


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