Fraudulent tax claims worth ₹15,850cr detected in Q1 FY26
What's the story
Goods and Services Tax (GST) officers have detected fraudulent Input Tax Credit (ITC) claims worth ₹15,851 crore in the April-June quarter of the current fiscal. This marks a 29% increase over the same period last year. The jump comes even as the number of fake firms detected during this time has decreased compared to last year.
Fraud increase
Decrease in number of fake firms detected
In the first quarter of FY26, GST officers detected a total of 3,558 fake firms. This is a decline from the 3,840 such entities found in Q1 of FY25. However, despite the decrease in fake firm detection, there was a significant rise in the amount of fraudulently claimed ITC during this period.
Fraud details
Comparison of data from FY25 and FY26
The data from central and state GST officers for the June quarter of FY26 shows that ITC worth ₹15,851 crore was fraudulently passed through 3,558 fake firms. During this time, 53 people were arrested by GST officers and ₹659 crore was recovered. In comparison, in Q1 of FY25, GST officers detected fake ITC worth ₹12,304 crore involving 3,840 fake firms, with a recovery of ₹549 crore and arrest of 26 people.
Registration crackdown
Measures taken by government to curb fake ITC cases
To combat the rising cases of fake ITC, the GST registration process has been made stricter with checks on risky applicants. While non-risky businesses are granted GST registration within seven days, physical verification and Aadhaar authentication are mandatory for those flagged risky by data analytics. The GST Act also provides for punishment for wrongly availed ITC, registration suspension of taxpayers involved in fake ITC cases, as well as provisional attachment of property/bank accounts, etc. for recovery of government dues.