GST evasion in Karnataka soars 5-fold to nearly Rs 40,000 crore in FY25, says FM Sitharaman

Karnataka Sees 5x Surge in GST Evasion Cases in FY 2024-25 — Highest in 3 Years

Karnataka has recorded a massive five-fold increase in Goods and Services Tax (GST) evasion detected by the Central GST (CGST) department in the financial year 2024-25. The figures, shared by Finance Minister Nirmala Sitharaman in a written reply to the Lok Sabha, reveal that evasion worth ₹39,577 crore was detected — the highest in the past three years.

The Finance Minister’s statement highlights a sharp rise in tax enforcement actions, raising questions about GST compliance and its impact on small and medium businesses in the state.

1. Key GST Evasion Figures for FY 2024-25

1. Total GST evasion detected: ₹39,577 crore
2. Number of cases registered: 1,254
3. Arrests made: 9
4. Voluntary tax payments collected: ₹1,623 crore

These numbers represent the largest-ever detection in three years, indicating that tax authorities have intensified their monitoring and enforcement efforts.

2. No GST Notices Based on UPI Transactions from the Centre

The data comes amidst ongoing protests by traders in Bengaluru, who allege they are being harassed with excessive GST notices. Many small shop owners claim they have been targeted solely on the basis of digital transaction records, including UPI payments.

However, the Finance Minister clarified that Central GST officers have not issued any GST notices solely based on UPI transactions. Instead, she stated that State GST field offices were responsible for issuing the recent notices in Karnataka.

GST Evasion Trends Over the Years

Here’s how GST evasion detection has changed over the past three financial years:

Financial Year	GST Evasion Detected	Cases Registered	Arrests	Voluntary Payments
2024-25	₹39,577 crore	1,254	9	₹1,623 crore
2023-24	₹7,202 crore	925	2	₹1,197 crore
2022-23	₹25,839 crore	959	2	₹1,705 crore

Observation:

1. FY 2024-25 shows a five-fold jump from FY 2023-24 levels.
2. The current figures even exceed FY 2022-23’s high evasion detection.

Why the Sudden Spike?

Experts believe several factors may have contributed:

1. Stricter GST compliance checks and use of data analytics.
2. Increased scrutiny of invoices and input tax credit claims.
3. Targeted drives in sectors with historically higher evasion risks.
4. Discrepancies flagged by digital transaction data cross-checks.

Political and Economic Context

The sharp rise in GST evasion detection is likely to intensify debates about GST enforcement practices.

1. Karnataka is one of the top states in GST collections, making it a focus area for tax authorities.
2. Local trader associations argue that small businesses are facing unnecessary compliance burdens, while the government maintains that strict enforcement is necessary to curb tax fraud.

What This Means for Businesses

If you are a business owner in Karnataka — especially a small or medium enterprise — this data is a wake-up call.

1. Maintain accurate GST records.
2. File timely GST returns.
3. Avoid fake invoices or questionable ITC claims.
4. Be prepared for document verification in case of any audit or notice.

Pro Tip:

Given the rising scrutiny, professional GST filing and compliance support can save you from heavy penalties and legal trouble.

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