“Goods and Services Tax (GST) officers have uncovered fake Input Tax Credit (ITC) claims of ₹15,851 crore in the April-June quarter of current fiscal, a 29% jump over the year-ago period, even though the number of fake firms detection was less year-over-year,” officers mentioned.
The whole variety of fake firms detected by Central and State GST officers throughout the first quarter of FY-26 stood at 3,558, lower than 3,840 such entities detected in the identical quarter of FY25.
A panel of State Finance Ministers, chaired by Goa Chief Minister Pramod Sawant, is presently finding out tax evasion in particular sectors and methods to examine ITC fraud.
“On an average, about 1,200 fake firms are getting detected every month. The number of fake firm detection in the April-June period is less compared to last year, which shows that the drive against fake GST registration has worked,” an official mentioned.
As per the information of the fake firms and ITC frauds detected by Central and State GST officers throughout the June quarter of FY26, ₹15,851 crore value ITC was discovered to have been fraudulently handed involving 3,558 fake firms. During the interval, 53 individuals have been arrested by GST officers and ₹659 crore recovered.
In the Q1 of FY25, GST officers had detected ₹12,304 crore fake ITC involving 3,840 fake firms; ₹549 crore was recovered and 26 individuals have been arrested.
Under the GST regime, ITC refers back to the taxes paid by companies on purchases from suppliers. This tax will be claimed as a credit score or deduction on the time of paying the ultimate output tax. Dealing with fake ITC has been a significant problem for the GST administration as unscrupulous components have been creating fake firms simply to assert ITC and defraud the exchequer.
During 2024-25, GST officers have detected 25,009 fake firms concerned in fraudulently passing enter tax credit score value ₹61,545 crore. GST officers have carried out two pan-India drive towards fake registration underneath the GST.
In the primary drive towards fake registration between May 16, 2023 and July 15, 2023, a complete of 21,791 entities having GST registration have been found to be non-existent. An quantity of ₹24,010 crore of suspected tax evasion was detected throughout the first particular drive final yr.
In the second drive between April 16 and October 30, 2024, GST officers have detected about 18,000 fake firms registered underneath GST, which have been concerned in tax evasion of about ₹25,000 crore. To take care of this, the GST registration course of has been made stringent with checks on dangerous candidates.
While non-risky companies are to be granted GST registration inside seven days, bodily verification and Aadhaar authentication are necessary for these these candidates who’re flagged as dangerous by information analytics.
As a measure to trace down the masterminds, the GST Act supplies for punishment for wrongly availed ITC, suspension or cancellation of registration of taxpayers concerned in fake ITC instances; blocking of ITC in digital credit score ledger; and provisional attachment of property/financial institution accounts, and so on. for the restoration of presidency dues.
