GST: Fake ITC fraud of Rs 15851 crore exposed, 3558 fake companies caught

GST officials have uncovered Rs 15,851 crore in fake input tax credit (ITC) fraud during the first quarter (April-June) of FY 2025-26. This amount is 29 percent higher than the same period last year. However, the number of fake companies has decreased during this timeframe.

According to official data, 3,558 fake companies were identified by central and state GST authorities this quarter, down from 3,840 in the first quarter of FY 2024-25. Officials said about 1,200 fake companies are usually busted each month. This decline suggests that efforts to fight fake registrations are working. In this quarter, 53 people were arrested, and Rs 659 crore was recovered.

Last year during the same period, 26 arrests were made, and Rs 549 crore was recovered. Under the GST system, companies can claim the tax paid on purchases as ITC, but fake companies are often set up solely to exploit this credit, leading to significant revenue loss for the government. A total of Rs 61,545 crore worth of ITC fraud was detected in FY 2024-25, involving 25,009 fake companies.

As part of the crackdown on fake registrations, GST officials have conducted two major nationwide operations. The first drive, between May 16 and July 15, 2023, found 21,791 units with no physical existence and detected Rs 24,010 crore in tax evasion. The second drive, from April 16 to October 30, 2024, uncovered around 18,000 fake companies involved in Rs 25,000 crore in tax evasion.

Currently, a committee of state finance ministers led by Goa Chief Minister Pramod Sawant is exploring ways to prevent ITC fraud and combat tax evasion.