As per officials, 25,009 fake firms have been detected by the Central and state GST officers who are fraudulently passing input tax credit (ITC) worth ₹61,545 crore during the assessment year 2025-26.
During the A.Y. 2025–26, ending March 2025, central and state GST officers recovered ₹1,924 crore by blocking ITC and arrested 168 individuals.
42,140 fake firms were detected in two financial years, 2023-24 and 2024-25, engaging in bogusly generating ITC of over ₹1.01 lakh crore. Through ITC blocking, Rs 3,107 crore was recovered, and 316 arrests have been made, as per Central and State GST officers who have discovered the data on ITC frauds.
Measures are opted by the Central and State Governments and GSTN to avert bogus ITC claims along with furnishing intelligence inputs, detecting fraudulent registration, and suspicious e-way bill activity.
The businesses that pay taxes on purchases to the suppliers are called ITC, as per the Goods and Services Tax (GST) regime. As a credit or deduction, the same tax can be claimed while paying the final output tax.
As bogus people create fake firms to claim ITC and defraud the exchequer, it is not easy for the GST administration to deal with fake ITC.
Risky applicants shall be examined under the stringent GST registration procedure to deal with the fake ITC issue.
Physical verification and Aadhaar authentication are mandatory for risky businesses, while businesses that do not involve risks are allotted GST registration within 7 days.
For fake ITC claims GST Act provides punishments like suspension or cancellation of registration of taxpayers, blocking of ITC in the electronic credit ledger, and provisional attachment of property/bank accounts, etc., for the recovery of government dues.
Concerning enforcement formation activities and the importance of facilitating business, two national conferences of enforcement chiefs of State and Central GST Formations have been held till now.
