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

In 1,254 cases registered during FY25, CGST authorities arrested nine people and collected Rs 1,623 crore through voluntary tax payments.

Karnataka recorded a staggering five-fold surge in Goods and Services Tax (GST) evasion detected by Central GST (CGST) officers in 2024-25, touching Rs 39,577 crore, the highest in three years. Finance Minister Nirmala Sitharaman shared the figures in a written reply in the Lok Sabha on Monday, underscoring a sharp escalation in enforcement action.

In 1,254 cases registered during FY25, CGST authorities arrested nine people and collected Rs 1,623 crore through voluntary tax payments.

No UPI-based GST notices from Centre

The disclosure comes against the backdrop of trader protests in Bengaluru over alleged “excessive” GST notices. Many small shopkeepers claimed they were being targeted solely on the basis of digital transaction data, including UPI records.

Sitharaman clarified that Central GST authorities have not issued any notices based on UPI transactions, pushing the onus onto State GST field offices, which were behind the recent batch of notices in Karnataka.

Year-wise trend shows volatility

The jump in FY25 follows a relatively modest detection in 2023-24, when 925 cases involving Rs 7,202 crore in evasion were booked, leading to two arrests and Rs 1,197 crore in voluntary payments.

Interestingly, FY25 figures even surpass FY23 levels, when CGST officers uncovered Rs 25,839 crore in evasion from 959 cases, with two arrests and Rs 1,705 crore recovered voluntarily.

Political and economic context

The revelation is likely to feed into ongoing debates over GST enforcement and compliance burdens on smaller businesses. With Karnataka emerging as a top state for GST collections, tax enforcement has been under the scanner, especially after local trader associations accused authorities of harassment.

(With inputs from PTI)