GST evasion in construction, works contracts exceeds ₹10,000 crore in FY24

The Narendra Modi government's crackdown on Goods and Services Tax (GST) evasion has revealed over ₹10,000 crore in evasion related to works contracts and construction services in the last fiscal year, according to sources. The Directorate General of GST Intelligence (DGGI) attributes the evasion to various factors such as fake Input Tax Credit (ITC), wrongful exemptions, undervaluation, and non-payment of taxes. Out of the alleged evasion, approximately ₹8,900 crore remains unpaid by taxpayers. \r

The DGGI has initiated 1,813 cases of evasion, amounting to around ₹10,600 crore, with taxpayers voluntarily paying around ₹1,640 crore upon investigation. Under current laws and rules, ITC is not available for works contract services used in the construction of immovable property, except for plant and machinery or for further supply of works contract services. Additionally, circular No.177/09/2022 TRU clarifies that the GST rate for such services increased from 12% to 18% effective July 18, 2022.