Ever looked at a GSTR-3B and thought, “Everything looks fine”? That’s exactly what someone trying to hide tax evasion wants you to think. The truth is, mismatches and manipulation don’t scream at you—they whisper. And for lenders, auditors, and NBFCs, missing these red flags means green money silently walking out the door. So let’s unpack where the trouble hides—and how to spot it before it bites.
1. Mismatch Isn’t a Mistake—It’s a Message
You’re going through a client’s GST data. GSTR-3B says ₹50 lakh in outward sales. But GSTR-1? Only ₹38 lakh. Maybe it’s just timing, right? Or maybe not.
That ₹12 lakh gap could be a subtle attempt to inflate ITC, delay tax liability, or worse—classic tax evasion wrapped in clerical disguise. And it’s more common than you think. A 2023 audit survey found nearly 21% of GST-registered businesses had unexplained mismatches lasting over two filing periods.
You don’t need to jump to conclusions, but you do need to ask better questions.
2. Reversals and ITC Games That Seem… Too Timed
Let’s get honest: not every Input Tax Credit reversal is a red flag. But patterns? Those tell stories. Say a business keeps claiming huge ITC in one month and reversing it the next, just before filing. It’s like borrowing money from the government temporarily.
It’s clever. But it’s also a warning sign.
Lenders should look for:
- Frequent ITC adjustments in the same quarters
- Reversals that don’t align with actual purchases or debit notes
- Sudden spikes in eligible ITC during cash flow crunches
In isolation, they might pass. But in context, these could be soft indicators of planned manipulation—and yes, tax evasion too.
3. GSTR-1 Looks Like a Marketing Brochure, Not a Sales Sheet
If every month a borrower’s GSTR-1 looks too neat, too consistent, and too rounded, it might be… manufactured. Legit businesses have fluctuations. They face returns, delays, late invoices. When the data looks “too perfect,” it’s worth a deeper peek.
For example, ₹10 lakh sales. Exactly. For three months straight. Across unrelated sectors. Odd, isn’t it?
Even small signs like:
- Repeating customer GSTINs
- No B2C invoices for a retail-heavy business
- Zero export or SEZ invoices despite past trends
…can indicate report-stuffing. It’s not dramatic, but it adds up. And it’s how quiet tax evasion sneaks into loan books undetected.
4. One Branch, All the Action
Here’s a conversation you might’ve had:
“Why is 92% of your GST credit being claimed from one branch?”
“That’s our central warehouse.”
“But the purchase invoices show delivery across five states…”
Yep. Centralizing credit claims while decentralizing purchases is not illegal—but it can be sketchy. It opens the door for wrongly pooled credits or unsupported cross-branch adjustments. Some businesses use this loophole to maximize ITC without the documentation to back it.
This becomes more critical when you’re underwriting loans based on reported liabilities and credits. Because one misstep, and you’re approving based on fiction.
5. Nil Returns Are the New Camouflage
“Sir, we didn’t have any outward supply this month.”
Really? For three months in a row? With the same vendor network, ongoing contracts, and salary payments?
Nil returns might sound harmless, but they’ve quietly become a cover for under-reporting. Many firms use this period to regroup, shift invoices outside GST purview, or even raise backdated invoices later.
If you see consistent nil filing alongside:
- Active e-way bills
- GSTR-2A showing large inward supplies
- Bank statement inflows not matching GST filings
…you’re not dealing with slow business. You’re probably seeing a version of tax evasion that’s too shy to show up in audits.
Final Thoughts: The Report Isn’t the Problem. Ignoring It Is.
Most GST reports don’t lie outright—they just don’t speak up unless you know what to listen for. And with tools like Proanalyser’s GST tool insights, those soft-spoken inconsistencies become loud signals.
In a world where loans are approved on surface-level financials, it’s the backdoor patterns that really matter. Stop just checking boxes—start spotting the cracks.
👉 Curious if your borrower’s GSTR-3B is whispering secrets? Try our GST Data Analysis Tool and let the red flags surface before the losses do.
