GST Fraud Crackdown: Over 25,000 Fake Firms Illegally Claimed ₹61,545 Cr ITC in FY25
Over 25,000 fake firms exposed for illegally claiming Rs. 61,545 crore input tax credit in a major GST fraud crackdown during FY25
GST officers from the Centre and states have found more than 25,000 fake companies involved in illegally claiming input tax credit (ITC) worth Rs. 61,545 crore during the financial year 2024-25. According to The ET reports, these companies were created only to cheat the government by showing fake transactions and passing on tax credits without any real business activity. The government...
GST officers from the Centre and states have found more than 25,000 fake companies involved in illegally claiming input tax credit (ITC) worth Rs. 61,545 crore during the financial year 2024-25. According to The ET reports, these companies were created only to cheat the government by showing fake transactions and passing on tax credits without any real business activity.
The government has been able to recover Rs. 1,924 crore so far by blocking these fake ITC claims. A total of 168 people have been arrested in connection with these fraud cases. The authorities said that fighting such fake ITC scams remains one of the biggest challenges under the GST system.
Read More: How to Register for GST in 2025: Required Documents, Timelines, and Verification Steps
Looking at the last two years together, including 2023-24 and 2024-25, around 42,140 fake firms have been detected, with the total amount of illegal ITC claims crossing Rs. 1.01 lakh crore. During this period, Rs. 3,107 crore has been recovered and 316 people have been arrested for their role in these frauds.
Stay Updated with the Latest Audit Report Formats & Audit Trials Requirements! Click here
The government has taken several steps to stop such fraud, including stricter rules for GST registration. Now, businesses flagged as risky need to go through physical verification and Aadhaar authentication before they get a GST registration. The system also uses data analytics to identify suspicious activities like unusual e-way bill movements and fraudulent registrations.
Under GST rules, businesses can claim input tax credit on the tax they pay for purchases from their suppliers. However, fake firms misuse this by creating false invoices and claiming credit without any actual purchase or sale of goods. To stop this, the law allows authorities to suspend or cancel registrations, block credits in electronic ledgers, and even attach property or bank accounts of those involved.
Got a GST ITC Notice? Read This Before You Reply: Click Here
Officials said that two national-level meetings of GST enforcement heads have been held to discuss strategies and improve coordination between the Centre and state teams. The government continues its crackdown on fraud but it also aims to make sure that honest businesses do not face unnecessary trouble and that the ease of doing business is maintained.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
