Uncovering Fake Invoices under GST: Identifying, Penalties, and Mandatory Invoic

1. 1 | P a g e Fake invoices under GST: Identification, Penalty and Mandatory Invoice Fields As the GST system continues to evolve in India, businesses need to be watchful in identifying fake invoices to avoid being caught up in fraudulent activities. An invoice that has been made with the intent to claim input tax credit (ITC) or to use other GST benefits without actually paying for the products or services can be considered as a fake invoice under GST. Businesses may suffer large financial losses as a result, and the government may also impose penalties and fines. In this article, we will discuss some key ways to identify fake invoices under GST. 1) 1)What is a Fake Invoice Under GST? What is a Fake Invoice Under GST? Fake invoices are typically generated by an entity without any delivery of goods or services or any payment of GST. Another category of ‘fake invoices under GST’ is hiding details, and not mentioning all the mandatory details on the invoice.

2. 2 | P a g e 2) 2)How How D Do I o I F Find a ind a F Fake GST ake GST I Invoice? nvoice? 1. Ensure if all the mandatory Ensure if all the mandatory details an invoice under GST including Name, address and Goods and Services Tax Identification Number of the supplier. Ensure that the invoice all the required fields filled correctly. details are filled on the invoice: are filled on the invoice: There are 16 mandatory fields for 2. Check the GST registration number: Check the GST registration number: One of the most important things to look for when verifying an invoice is the GST registration number (GSTIN) of the supplier. This number should be provided on the invoice and can be verified on the GST portal or via the IRIS Peridot App. If the GSTIN is not valid or does not match the supplier's details, the invoice is likely to be fake. 3. Confirm if the GST rate charged by a supplier applies to you Confirm if the GST rate charged by a supplier applies to you: A consumer must validate the accuracy of the GST rate charged after confirming the validity of the GSTIN. By checking the GST rate chart on the CBIC portal, the consumer can confirm the GST rate. 4. Compare with past invoices: Compare with past invoices: Another way to identify fake invoices is to compare them with past invoices from the same supplier. Look for inconsistencies in the supplier's details, the value of the goods or services, or the GST amount. If there are any significant differences, the invoice may be fake. 5. Be aware of common red f Be aware of common red flags: aware of common red flags such as unusually high or low prices, missing or inconsistent information, or requests for immediate payment. lags: To avoid falling victim to fake invoices, it's important to be 3) 3)What is the penalty for issuing a fake invoice What is the penalty for issuing a fake invoice under GST under GST? ? Issuing fake invoices fake under GST is a serious offence and can result in severe penalties. It is important to note that these penalties apply not only to the person issuing the fake invoice, but also to any person who uses or causes to use such an invoice. This means that even if a business unknowingly uses a fake invoice, they can still be held liable for the offence. At the conclusion of the investigation, a Show Cause Notice (SCN) or any other penal steps may be issued.

3. 3 | P a g e The CBIC released GST Circular 171/2022 offering a clarification on issues relating to applicability of demand and penalty in respect of transactions involving fake invoicing Amount of tax evaded or utilized input tax credits (ITC) Penalty If the taxpayer used or obtained an ITC worth more than Rs. 5 crore using false invoices Imprisonment up to 5 years plus fine. Exceeds Rs.2 crore but does not exceed Rs.5 crore Imprisonment up to3 years plus fine. Exceeds Rs.1 crore but does not exceed Rs.5 crore Imprisonment up to3 years plus fine. Commit or raise the commission of any of the offences mentioned above. Imprisonment up to 6 months or fine or both. Also Read Also Read: : E-invoice under GST as per Rule 48(4) of CGST Rules 2017 Crossed the e-invoicing turnover limit? Here are 5 things to do next! Read more : https://einvoice6.gst.gov.in/content/fake-invoices-under-gst-identification-penalty- and-mandatory-invoice-fields/ all: : +91 22 6723 1000 Web: http://einvoice6.gst.gov.in/login E Email mail: : hello@irisirp.com C Call