How to identify fake GST? Difference between original and fake GST

In 2017, India introduced a new Goods and Services Tax (GST) system to simplify the indirect tax process. This replaced various other taxes like VAT and service tax. However, as the GST network expanded, there's been an increase in fake GST invoices from fraudsters. 

To prevent fraud, it's essential to verify the authenticity of GST bills. These bills are often used for claims and filing Income Tax Credits. To stay safe, customers can easily check if the bill given to them is genuine.

What is a GST invoice?

A GST invoice is a document created by a supplier or seller for the buyer of goods and services. This invoice contains crucial details such as the buyer's and seller's identification, product name, description, quantity of items or services bought, supplier information, purchase date, discounts, and more.

What is a fake GST invoice? 

Well, the Union Ministry of Finance explains that it's basically a phony bill. This bill is made without actually giving any goods or services or paying GST. People do this to dodge GST, turn Tax credits into cash, write down fake purchases, and help hide dirty money.

Difference between Fake & Original GST

Due to increasing the GST, it is necessary to be aware of the original and fake GST. But it sometimes is not that easy to identify the difference. For that, we have mentioned the difference between fake and original GST. Read On to know more about it. 

Original Invoice: In the world of GST, an invoice, also known as a tax invoice, follows the guidelines laid out in section 31 of the CGST Act. If someone registered under GST buys things or services from someone not registered, they need to provide both a tax invoice and a payment voucher as per GST regulations.  The intent of the original GST is generally good and avoids fraud.

Fake Invoice: A fake invoice is like a pretend paper made to trick people or businesses. People use it to do tricky stuff, like saying they got things or services they never did, saying things cost more than they did, or getting money or credit for stuff that's not even real. The intent of the fake GST is to commit fraud against the GST laws.

How to ensure the authenticity of a GST invoice?

A fake GST invoice is one that is created without any actual supply of goods or services or without making a valid GST payment. Such invoices can be used for purposes like evading GST, converting Income Tax credits into cash, recording fake purchases, and facilitating money laundering.

To ensure the authenticity of a GST invoice, you can follow these steps:

1. Verify the GSTIN: Start by checking the supplier's GSTIN (Goods and Services Tax Identification Number). Each registered supplier has a unique 15-digit GSTIN that includes the state code, PAN, and registration number.

2. Visit the GST portal: Go to the GST portal (www.gst.gov.in) and click on the 'Search Taxpayer' tab. Enter the supplier's GSTIN and click 'Search' to confirm the validity of the GSTIN.

3. Check invoice details: Verify the uniqueness and sequence of the invoice number, along with the invoice date. Any irregularities may indicate a fake invoice.

4. Verify invoice value and tax: Ensure that the invoice correctly states the value, including the applicable tax amount calculated based on the relevant GST rate.

5. Validate HSN/SAC code: The invoice should list the accurate HSN (Harmonized System of Nomenclature) code for goods or SAC (Services Accounting Code) for services. Cross-check these codes on the GST portal.

6. Confirm supplier's signature: The supplier or their authorized representative should sign the invoice, and the signature should match their records with the GST authorities.

7. Verify tax payment: Check the supplier's tax payment status on the GST portal. If the invoice's tax has been paid, it will reflect in their GST return.

By following these steps, you can effectively verify the authenticity of a GST invoice and avoid falling victim to fake invoices and fraudulent activities.

Also Read: What is a Revised Tax Return? When And How Should You File It?

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