Karnataka witnessed an unprecedented rise in Goods and Services Tax (GST) evasion detected by Central GST (CGST) officials in 2024–25, with the figure surging fivefold to ₹39,577 crore — the highest in the past three years. The data, shared by Finance Minister Nirmala Sitharaman in a written reply to the Lok Sabha on Monday, highlights a sharp escalation in enforcement drives.
During FY25, CGST authorities registered 1,254 cases, arrested nine individuals, and recovered ₹1,623 crore through voluntary tax payments. The spike marks a significant jump from 2023–24, when 925 cases worth ₹7,202 crore were booked, resulting in two arrests and ₹1,197 crore recovered. The latest numbers also exceed 2022–23 levels, when 959 cases worth ₹25,839 crore were detected, with two arrests and ₹1,705 crore collected.
Centre Distances Itself from UPI-Based GST Notices
The disclosure comes amid ongoing protests by Bengaluru’s trader community, who allege they are being served “excessive” GST notices based solely on digital payment records, including UPI transactions. Sitharaman clarified that Central GST authorities have issued no notices based on UPI data, attributing the recent wave of such notices in Karnataka to the State GST department.
Debate Over Enforcement and Compliance Burdens
The revelation is expected to add fuel to the debate over GST enforcement practices, particularly their impact on small and medium businesses. Karnataka, a leading state in GST revenue generation, has seen mounting criticism from local trader associations accusing tax officials of harassment under the guise of compliance checks.
Officials maintain that intensified surveillance and targeted action are key to curbing large-scale evasion, while trade bodies continue to call for a more balanced enforcement approach.
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