New Delhi: The government has detected an increasing amount of Goods and Services Tax being evaded each year, but recoveries have not kept pace with detection, the Ministry of Finance informed Parliament earlier this week. Further, it looks like Maharashtra has an outsized contribution to the GST evasion being detected, both in absolute terms and also in relation to the state’s share in tax collections.
The data on the amount of GST evasion the government has detected each year, the amount it has recovered, and the state-wise break-up of both was provided by the Ministry of Finance Tuesday to the Rajya Sabha in response to a question.
ThePrint’s analysis of the data shows that the government detected Rs. 40,853.27 crore of GST evasion in the financial year 2019-20, and was able to recover about 45 percent of this amount (Rs 18,464.07 crore).
Since then, however, while the amount of evasion detected has increased significantly, the recovery percentage has fallen quite sharply.
In 2022-23, the government detected Rs 1.3 lakh crore of GST evasion — more than triple the amount in 2019-20 — but managed to recover only about a quarter of this amount. That is, 75 percent of the evasion detected in 2022-23 remains unrecovered.
This financial year, the government has already detected Rs 1.5 lakh crore of GST evasion in the first seven months of the financial year (April-October 2023). However, it has so far recovered just over 12 percent of this amount.
Looking deeper at the data, it shows that the five states where the highest evasion has been detected cumulatively over the past five years account for a whopping 65 percent of the evasion detected by the government during this period. These five states are Maharashtra, Karnataka, Gujarat, Haryana, and West Bengal.
Among these, Maharashtra has an outsized contribution, accounting for 30 percent of the GST evasion detected over the past five years.
This higher share in the evasion detected would make some sense if it was proportionate to Maharashtra’s contribution to total GST collections. That is, the larger the tax base, higher the chances of there being evasion.
However, the data shows Maharashtra’s share in evasion detected is far higher than its share in taxes collected. Over the last two years, Maharashtra has accounted for about 17 percent of the total GST collected on behalf of the states. Over the same period, it has accounted for nearly 36 percent of the evasion that has been detected.
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