GST Officers Uncover 25,009 Fake Firms Involved in Rs 61,545 Crore ITC Fraud in FY25

Officials have said, the Central and state GST officers have uncovered 25,009 fake firms involved in passing input tax credit (ITC) fraudulently worth Rs 61,545 crore during the financial year 2024-25.

In the 2024-25 fiscal year, Central and state GST officers recovered Rs 1,924 crore by blocking input tax credits (ITC) and arrested 168 people.

Between the financial years 2023-24 and 2024-25, a total of 42,140 fake companies were discovered, involved in forming fraudulent ITC of worth more than Rs 1.01 lakh crore. Authorities recovered Rs 3,107 crore by blocking ITC and made 316 arrests.

An official said to PTI, “The Central and State Governments and GSTN have taken various steps to prevent fake ITC claims, including providing intelligence inputs, detecting fraudulent registration, and suspicious e-way bill activity.”

The Input Tax Credit (ITC) are the tax paid by businesses on their purchases from suppliers under the Goods and Services Tax (GST) regime. This tax can be claimed as a credit or can be deducted at the time of paying the final tax.

Tackling fake ITC fraud has been a big challenge for the GST system, as dishonest people were creating fake companies to claim ITC and cheat the government.

To address this, the GST registration process has become stricter, with extra checks for risky applicants.

Non-risky businesses will get GST registration within 7 days, while those flagged as risky through data analysis will have to undergo physical verification and Aadhaar authentication before being granted registration.

To catch the people behind fake ITC schemes, the GST Act includes penalties for wrongly claimed ITC, suspension or cancellation of registration for those involved in such frauds, blocking of ITC in electronic credit accounts, and even temporary attachment of property or bank accounts to recover the government’s dues.

So far, two national meetings have been held with enforcement chiefs from both State and Central GST departments to discuss ongoing actions and the need to balance enforcement with the ease of doing business.