Central and state GST officers have detected 25,009 fake firms involved in fraudulently passing input tax credit (ITC) worth Rs 61,545 crore during 2024-25, officials said.
During the 2024-25 fiscal ending March 2025, Central and state GST officers recovered Rs 1,924 crore by way of blocking ITC and arrested 168 persons.
As per data on ITC frauds unearthed by Central and State GST officers, over the two years 2023-24 and 2024-25, 42,140 fake firms were detected, which were involved in fraudulently generating ITC of over Rs 1.01 lakh crore. Rs 3,107 crore was recovered by way of blocking of ITC, and 316 arrests have been made.
"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," an official told .
Under the Goods and Services Tax (GST) regime, ITC refers to the taxes paid by businesses on purchases from suppliers. This tax can be claimed as a credit or deduction at the time of paying the final output tax.
Dealing with fake ITC has been a major challenge for the GST administration as unscrupulous elements were creating fake firms just to claim ITC and defraud the exchequer.
To deal with this, the GST registration process has been made stringent with checks on risky applicants.
While non-risky businesses are to be granted GST registration within 7 days, physical verification and Aadhaar authentication are mandatory for those granting registration to those applicants who are flagged as risky by data analytics.
As a measure to track down the masterminds, the GST Act provides for punishment for wrongly availed ITC, suspension or cancellation of registration of taxpayers involved in fake ITC cases; blocking of ITC in electronic credit ledger; and provisional attachment of property/bank accounts, etc. for the recovery of government
dues.
So far, two national conferences of enforcement chiefs of State and Central GST Formations have been held with respect to activities being undertaken by the enforcement formations and the importance of maintaining ease of doing business.
