GST officers have found that around 18,000 fake companies have been evading taxes worth nearly Rs. 25,000 crore. These companies were created only to cheat the Goods and Services Tax (GST) system by claiming tax benefits without doing any real business.
This nationwide investigation, which ran from August 16 to the end of October, involved verifying 73,000 suspicious GST registrations. After thorough checks, officials confirmed that 18,000 of these registrations were fake. These fake companies manipulated the Input Tax Credit (ITC) system, claiming tax refunds on fake transactions and costing the government close to Rs. 24,550 crore.
This investigation is part of the government’s push to handle fake GST registrations and protect public funds. It follows an earlier drive from May to July 2023, which uncovered 21,791 fake companies in Rs. 24,010 crore of tax evasion. Together, these two investigations show how widespread GST fraud is and highlight the government’s commitment to fighting it.
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How does the fraud work? The ITC system allows businesses to reduce their tax burden by claiming credit on GST paid for their purchases. These fake companies used this system by creating fake invoices and pretending to have made purchases. This way, they claimed tax refunds on transactions that never happened, taking money that should have gone to public services and government projects.
To prevent such fraud in the future, authorities have increased physical checks on GST registrations to make it harder for fake businesses to claim tax benefits. This new approach aims to ensure only genuine businesses receive ITC benefits.
With this success, the government plans to keep improving the GST system and fight against tax fraud. As they continue to strengthen compliance, businesses will face more scrutiny, making it harder for fraud to go undetected.
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