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October 13, 2023

Unveiling the Government’s GST Reward Scheme for Fraud Informants

Unveiling the Government’s GST Reward Scheme for Fraud Informants

In the ever-evolving landscape of taxation, the Indian government has introduced a powerful weapon against tax evasion and non-compliance: the GST Reward Scheme. This initiative not only seeks to deter fraudulent activities but also encourages individuals, organizations, and even government employees to report instances of tax evasion in various domains, including GST, Sales Tax, Excise Duties, and more.

A Scheme with a Purpose

The GST Reward Scheme is designed to bridge the gap between informers and government agencies, aiming to locate and hold accountable errant registered entities attempting to evade taxes, duties, or penalties under the CGST Act, Customs Act, Central Excise Act, NDPS Act, and Service Tax. It also extends its scope to acts of fraud and misuse of export promotion schemes.

Who Can Participate?

This scheme is open to a wide range of participants, including individuals, organizations, officials, and employees within the tax department. It’s a two-pronged approach to reinforce compliance: the fear of being reported for evasion and the incentive of receiving a reward for reporting it.

Rewards: The Driving Force

The heart of this scheme lies in the rewarding of informants. However, not every piece of information will fetch a reward. Only information that leads to the recovery of arrears is eligible for a reward. This means that not only individuals but also government employees, under specific conditions, can be recipients of these rewards.

Calculating the Rewards

The rewards are calculated based on the value of goods seized or the taxes and duties evaded, along with the associated fines imposed. Informants, as well as government employees, receive 20% of this recovery amount or the value of the seized goods as their reward.

Navigating the System

The process for proposing rewards is regulated and systematic. The timeline for such proposals is well-defined:

Informants can apply for an advance reward within one month of the issuance of a show cause notice.

Final rewards are granted when the case reaches its conclusion from the department’s side, again within a month of this decision.

Officers of the department are also eligible for advance rewards within a month of the adjudication of the show cause notice.

Final rewards for department officers are processed once the case reaches a finality from the department, and it’s approved within one month.

The proposal for an award must be submitted within three months after the appeal process concludes without an issue of a show cause notice.

Behind the Scenes: Reward Committee

The entire process is streamlined through the Reward Committee, which convenes quarterly to assess and approve reward proposals. The Directorate General of GST Intelligence (DGGI) in New Delhi is the key authority overseeing the verification and authentication of these reward proposals.

How to Report Tax Evasion

The government has made it easy for individuals to report tax evasion. Simply log in to the Directorate General of GST Intelligence (DGGI) website and submit the necessary information. You can even send an email to add-dgdei@nic.in.

A Win-Win for All

This scheme not only empowers citizens to stand up against tax evasion but also discourages taxpayers from indulging in such activities, knowing that a financial reward system is in place to safeguard the government’s revenue.

In essence, the GST Reward Scheme isn’t just about penalties; it’s a powerful tool for fostering a sense of responsibility and integrity in the world of taxation, creating a level playing field for all and ensuring a fair and robust tax ecosystem.

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