GST ITC fraud FY25: Massive ITC fraud unearthed as 25,009 fake firms detected in FY25.
GST ITC fraud FY25: In a significant crackdown on tax evasion, Central and State GST officers uncovered a massive network of fake firms during the financial year 2024–25. Authorities identified 25,009 bogus entities involved in fraudulently passing Input Tax Credit (ITC) worth a staggering ₹61,545 crore.
Enforcement teams recovered ₹1,924 crore by blocking fake ITC claims, and 168 individuals linked to these fraudulent activities were arrested. The scale of the fraud has raised concerns within the tax and finance departments, prompting calls for enhanced scrutiny and digital monitoring to combat such operations. Investigations are ongoing, with GST authorities expected to intensify enforcement efforts in the coming quarters.
42,140 Fake Firms Busted in Two Years, ₹1.01 Lakh Crore ITC Scam Uncovered
Over the two financial years—2023–24 and 2024–25—GST enforcement teams detected a total of 42,140 fake firms involved in generating fraudulent ITC claims amounting to ₹1.01 lakh crore. Official figures reveal that ₹3,107 crore was recovered through blocked ITC, and 316 arrests were made.
In response to the growing threat, the Central and State Governments, along with the GST Network (GSTN), have ramped up oversight. Measures include intelligence sharing, detection of suspicious registrations, and monitoring of irregular e-way bill activity.
GST Authorities Tighten Scrutiny to Combat Rising Fake ITC Scams
Under the GST framework, Input Tax Credit allows businesses to offset taxes paid on purchases. However, the emergence of fake firms exploiting this provision has created serious revenue losses.
To counter this, the registration process has been made more stringent. Applicants flagged as high-risk must now undergo physical verification and Aadhaar authentication before receiving GST registration. Genuine businesses continue to be cleared within seven days.
The GST Act provides strict provisions, including penalties for wrongful ITC claims, suspension or cancellation of GST registration, and provisional attachment of properties or bank accounts for recovery of dues.
Two national conferences of GST enforcement heads have also been held to refine strategies and improve coordination, with a focus on preventing fraud while maintaining ease of doing business for compliant taxpayers.
As GST compliance becomes more stringent, it’s essential for businesses to stay updated on evolving legal requirements and registration protocols. Whether you’re starting up or managing a growing enterprise, proper GST setup and timely filings can prevent legal issues and delays. Vakilsearch offers reliable GST registration and compliance support to your business. For GST-related guidance, visit Vakilsearch today.
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