GST Officials Uncover 29,000 Bogus Firms, Unveiling Fake ITC Claims Worth Rs 44,000 Crore

The government reported on Sunday that GST officers have uncovered 29,273 fraudulent firms engaged in false Input Tax Credit (ITC) claims amounting to Rs 44,015 crore over eight months until December 2023, as part of a crackdown on counterfeit registrations. This initiative has safeguarded revenue totalling Rs 4,646 crore.

During the October-December quarter, authorities identified 4,153 dubious firms involved in suspected ITC evasion worth approximately Rs 12,036 crore. Among these, 2,358 fraudulent entities were uncovered by the Central GST Authorities.

Maharashtra led with the detection of 926 bogus firms, followed by Rajasthan (507), Delhi (483), and Haryana (424).

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The discoveries made during the December quarter secured revenue of Rs 1,317 crore, with Rs 319 crore recovered and Rs 997 crore protected by blocking ITC. Notably, 41 individuals were arrested in connection with these cases, with 31 of these arrests executed by Central GST Authorities, according to the finance ministry.

The ministry’s statement outlined, “Since the initiation of the special drive against fake registrations in mid-May 2023, a total of 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs 44,015 crore have been detected. This has saved Rs 4,646 crore, of which Rs 3,802 crore is through blocking ITC and Rs 844 crore through recovery. To date, 121 arrests have been made in these cases.”

In specific instances, Maharashtra saw suspected tax evasion by 926 bogus firms amounting to Rs 2,201 crore, resulting in 11 arrests. Similarly, Delhi recorded suspected tax evasion by 483 bogus firms worth Rs 3,028 crore, leading to 11 arrests.

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Moreover, Andhra Pradesh had 19 bogus firms involved in suspected tax evasion of Rs 765 crore, while in Haryana, 424 fraudulent firms were detected in evasion worth Rs 624 crore.

The government emphasized efforts to combat GST fraud and enhance compliance by conducting targeted drives against non-existent or bogus registrations, along with the issuance of counterfeit invoices without actual goods or services provided.

Furthermore, measures to strengthen the GST registration process were highlighted, including pilot projects introducing biometric-based Aadhar authentication during registration in Gujarat, Puducherry, and Andhra Pradesh. Additionally, strategies such as sequential filing of GST returns, system-generated intimation for reconciling tax liabilities, and employing data analytics to detect fake ITC were emphasized in the ministry’s efforts to curb tax evasion.