India’s GST enforcement agency is shifting its focus. The Directorate General of GST Intelligence (DGGI) is now prioritizing high-impact tax evasion and fraud over minor technical disputes. The move aims to deter large-scale financial wrongdoing while easing the burden on businesses caught in routine compliance issues.
Two sources familiar with the development confirmed the strategy. The DGGI will concentrate on deliberate tax evasion that harms the economy, such as the use of shell companies, circular trading, and underreporting turnover. These activities not only drain government revenue but also distort markets and enable other financial crimes.
Circular trading, where businesses manipulate transactions to fraudulently claim tax credits, is a prime target. Some fraudsters inflate sales records to secure bigger loans or manipulate stock prices. Others simply skip issuing bills to evade taxes altogether.
Certain sectors are under extra scrutiny. Metal scraps, tobacco, and plywood industries have been flagged as high-risk for tax evasion. The DGGI is also cracking down on clandestine supply chains where goods are traded off the books.
Experts welcome the change. Rajat Mohan of AMRG and Associates believes this targeted approach will benefit honest businesses. Fewer investigations into technical errors mean less litigation and more time for growth.
Meanwhile, stopping organized fraud protects government revenue and strengthens the formal economy. It also boosts investor confidence, which can lead to job creation and sustainable growth.
The new strategy aligns with the government’s broader goals. Finance Minister Nirmala Sitharaman recently emphasized faster grievance resolution, quicker refunds, and stricter action against tax evasion. The numbers highlight the scale of the problem. Between 2020 and 2025, authorities detected over ₹7 trillion in GST evasion across 91,000 cases.
In the last fiscal year alone, evasion worth ₹2.23 trillion was uncovered. While some offenders voluntarily paid ₹26,799 crore, the DGGI’s sharper focus aims to recover more and deter future fraud. For small businesses, this could mean fewer audits and a fairer playing field. For big fraudsters, the heat just got turned up.