GST Evasion in Karnataka Soars Fivefold to ₹39,577 Cr in FY25: Lok Sabha Report

Swift Summary

• Central GST officers in Karnataka detected ₹39,577 crore GST evasion in FY 2024-25, marking a more than fivefold increase from the previous year.
• Finance Minister nirmala Sitharaman clarified during the Monsoon session of Parliament that Central GST authorities had not issued notices based on UPI transactions.
• A surge of high-value GST notices targeting small traders and shopkeepers based on digital footprints (e.g.,UPI transactions) was reported last month; these originated from State GST offices.
• Case Details:

– FY 2024-25:
– Cases detected: 1,254
– Evasion amount: ₹39,577 crore
– Arrests: Nine
– Voluntary payments recovered: ₹1,623 crore
– Comparatively:
– FY 2023-24: ₹7,202 crore evasion in 925 cases; two arrests; voluntary payment: ₹1,197 crore.
– FY 2022-23: ₹25,839 crore evasion in 959 cases; two arrests; voluntary payment: ₹1,705 crore.

Photo credit: PTI

Indian Opinion Analysis

The sharp rise in tax evasions detected by CGST officers indicates intensifying efforts to strengthen compliance under the Goods and Services Tax framework. The meaningful jump-from around ₹7,200 crore to approximately ₹39,577 crore within a single fiscal year-could reflect both greater enforcement focus and possibly growing instances of malpractices. Though, it also raises questions about systemic gaps enabling such large-scale fraud.

Additionally, concerns over disproportionate or incorrect targeting via digital transaction data highlight oversight challenges at the state level. While digital ecosystems improve traceability and compliance potential for indirect taxes like GST,reliance on such mechanisms without accurate evaluation could lead to undue stress for smaller traders.

These developments underline a dual challenge for India’s tax governance-preventing significant leakages while ensuring fair implementation that does not inadvertently burden honest taxpayers.

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